Is Sprint Killing Google Wallet?
David is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Sprint (NYSE: S), the third largest mobile carrier in the United States, and Google (NASDAQ: GOOG) have largely had good relations. Sprint was the second carrier to offer Android smartphones, after T-Mobile, and for years Sprint did not carry Apple’s iPhone. This largely limited Sprint to Android smartphones so they built up and pushed their "Evo" branded Android smartphones.
In 2011 Google announced that it was partnering with Sprint to bring Google Voice to all Sprint phone numbers. This was the first and thus far only carrier Google Voice has been integrated with. Sprint was also the only carrier to be a launch partner with Google on their mobile payment platform, Google Wallet. Unfortunately the Google Voice launch on Sprint was plagued with lots of issues and lacked support from Google. Now rumor has it that Sprint, which remains the only major player to embrace Google Wallet, may be dropping Wallet. With this potential move by Sprint, Google should be very concerned that Google Wallet has just been handed a death sentence.
Google Wallet hasn’t seen the adoption or growth that Google wanted, and losing Sprint would be a major blow in its efforts to get a bigger foot into the growing mobile payment sector. No Verizon phones have it and until very recently the only phones that supported Wallet were on Sprint (there is now one on AT&T). Verizon (NYSE: VZ) cited security concerns as the reason that they are not adopting Google Wallet. In fact Verizon is working with several other partners on competing mobile payment offerings.
On the security topic Google has had several security issues with their Google Wallet service and though they have issued a fix and allowed users to re-activate their accounts, trust is key when dealing with money and Google definitely lost some.
Even Apple (NASDAQ: AAPL), at their World Wide Developer Conference, made a small move toward the mobile payment market. A new feature called PassBook is a digital wallet for your plane tickets, movie tickets, frequent shopper cards and coupons. Though there are no mobile payment aspects to PassBook, the hundreds of millions of accounts Apple has through iTunes and the App Store could easily be leveraged and turned into a mobile payment system. We also did not see a new iPhone at WWDC, which leaves the possibility of the near field communications (NFC) technology being built into a future iPhone. A move like this by Apple could transform the success of NFC overnight.
Even though mobile payment processor Square has shrugged off the NFC technology that Google Wallet and others are using, they are still a major player in the mobile payment space. Square had over $2 billion worth of transactions in 2011 and is on track to double that in 2012.
Google has failed to position themselves as the market leader. This allows competitors to jump into the void and fight it out. The one thing that could be a saving grace for Google Wallet is that sales through the Google Play store could give Google a customer base for Google Wallet.
Google’s position in mobile payments, which was not strong to begin with, would be significantly eroded should Sprint actually jump ship. With Google I/O coming up this month and the new version of Android likely to be previewed there, it is possible that Google will integrate Google Wallet with the new version of Android. Google needs to do this -- Microsoft (NASDAQ: MSFT) is the latest tech giant to get into the mobile payment space and the Microsoft Wallet will be shipping on Windows Phone 8 smartphones. Microsoft also bragged that their implementation of the NFC technology was more secure than Google's current implementation. Should Microsoft include their Wallet across not only in Windows Phones but also in their Surface tablets and on the Xbox, it could become a very credible universal payment option.
Should Google Wallet not be fully integrated into Android, Google Wallet will take its place next to Google Wave and Google Buzz as a Google Flop.
ded004 has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services recommend Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. If you have questions about this post or the Fool’s blog network, click here for information.
