Nexus S – Verizon’s Plan B

6 December 2011

Today’s WSJ article that Verizon plans to block Google’s wallet on its new Samsung Galaxy Nexus .  While the mainstream press sees this as a slam on Google… I see this as Verizon constructing a fallback strategy. Why on Earth would Verizon want to allow the Nexus S on its network at all? It is a 2 year old Google designed phone which embeds a “non-standard” NFC architecture (embedded SE) which is controlled by Google (and cannot be controlled in a UICC based architecture).

As I stated yesterday, the ISIS is experiencing delays in its “go to” architecture. The rumor is that the current ISIS timeline is pilot in December of 2012 and production in mid 2013. I see this move by Verizon as accomplishing 3 things..

1)      The Google Nexus S is the only production NFC phone in the market (actively using NFC.. 50M blackberry’s have it.. but element is cold and lonely). It could allow Verizon and the ISIS team to reconfigure their CSAM wallet platform to this “non standard” architecture to accelerate time to market for a test.  The desired ISIS architecture is SWP/UICC based…  Note that if this is indeed Verizon’s plan, they will need Google participation as Google owns the SE keys in the Nexus S AND they have not published the APIs for the NXP element access

2)      Gives Verizon a phone in the market to pilot with Google. In other words they can play in the Google camp without a formal commitment. Verizon can play ISIS and Google off of one another to see which horse will win. This is very smart.

3) Gives Verizon access to NFC/Android much beyond payment. As Google has clearly articulated in Android Beam, NFC will be the tool for machine-machine communication. How you share pictures, videos, music and apps with another phone. VZ’s current NFC plans revolve all around ISIS and payment (and very closed), Google sees NFC as another radio to do many, many different things. As this week’s Comscore report shows.. Android’s 46%+  market share is a key driver of VZ’s success. VZ needs this handset not just for wallet.. but for access to all the other cool new Google toys that will come out supporting NFC. The question the analysts should be asking VZ is how their SWP/UICC architecture plays in the Google model. How will VZ allow many apps to access the NFC radio AND the secure data? There is only one software company that can help here and that is Sequent.. The other option is a multi SE architecture (see my previous blog, note blog was wrong on Apple), which RIM will likely support. In either of these scenarios, complexity reigns.. the only real option is to let Google drive the definition and the apps. Perhaps this is why VZ has thrown in the towl to Google’s Nexus architecture (hardware).. but not yet on software (wallet)

Don’t believe everything you read.  Verizon’s decision to commit to selling the Galaxy Nexus  is an indication of major strategic planning.

Related article on the ISIS Platform: Ecosystem or Desert?

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9 thoughts on “Nexus S – Verizon’s Plan B

  1. This is about the brand-new, state-of-the-art Galaxy Nexus, which Samsung is pretty proud of. This is NOT the Nexus S (which is exactly 1 year old BTW).

    • Point taken. Thanks for the feedback. I’ve corrected my mistake. Looks like I need to do some discovery to see if the new Galaxy Nexus is a Google Architecture only or if it also supports ISIS SWP

  2. What do you mean “The Google Nexus S is the only production NFC phone in the market”?

    The Blackberry Bold 9900 and9930, the Curve 9350, 9360 and 9370 are all NFC enabled and available., The Nokia C7 and N9 are both NFC enabled along with the Nokia 700, 701,600 and 603. And of course the Samsung Galaxy Nexus and the Galaxy S II are fully NFC enabled.

    You article is very misinformed.

  3. Tom, shouldn’t you disclose that you are working for Google ? It somewhat changes the optics on what you are writing about Google, Isis, PayPal et all don’t you think ?

    • I do.. see my legal disclaimer on top.

      I don’t own any google stock.. and I’ve been writing about ISIS for over 2 yrs. May have been one of the first topics on my blog. I think I’m pretty consistent with my earlier views that were formed just after Citi in 2008 (googlization). I’m certainly not a Google tool.. if I were asking them for input I would disclose. These are my own views and no one else’s.

      We all have our biases. I’m pretty sure mine are clear (see Obopay and Square blogs). Why do I like Google? Google is a very retailer friendly payment provider. How many companies do you know that are not taking a single penny off the table on a transaction. Nothing.. Am I an advocate for efficient transactions? you bet. Hard to disclose who I work for.. my NDAs tell me I can’t do that. ISIS has nothing in market.. Google does.. not much of a mystery on why.. ( 9 party err.. 12 party mess picture).

      I like PayPal too.. just not beyond your core in online. I stuck up for you guys in a bank forum just a few weeks ago. In my Gartner days.. an dedicated analyst visit would likely improve your position in the magic quadrant.. I don’t work that way. This means I’m consistent.. Of course I could be consistently wrong.. but hey for some reason people keep reading the stuff I put out here.

      This Blog was started to help investors and companies make better bets on what is going on. The payments and mobile commerce space is rather obfuscated and this hurts investment/hit rate. Payments is important to all businesses. I call it the worlds second oldest profession, because after the first, she had to settle. Companies need to make bets in this space.. I’m hoping I can help a few more make the right ones.

      Guys you are welcome to keep me honest. I try to admit my mistakes and changes in views (ex. Square card case.. not that stupid dongle). I’m sure my opinions have impact. In this NFC space there are 100s of companies that are depending on this to work. It is a complete mess.. which makes it both an exciting environment and one that is full of risk/frustration

      – Tom

  4. Tom, you may be bound by NDAs with your clients, but I am not. Intellectual propriety does require that you either disclose business relationships with people that you pitch in favor off in your posts, or that you refrain from posting on the topic. It’s call conflict of interest management.

    • I think I will refrain from further response. This is a blog.. pure opinion. Many things form the opinion.. Whether its my meetings with your exec team, or those of other industry leaders.

      I doubt if there is a single person reading this Blog who doesn’t think I’m rather keen on Google’s approach. If this blog were associated with a research organization, government or academia perhaps you would have standing for your point. I’ll tell you what… I will update my legal disclaimer to clearly state all of my views are biased. This is also what I tell all the institutional investors I talk to.

      What I was hoping to achieve was dialog.. knowing how big a fan of Google I am.. perhaps you can tell me where I’m wrong… or why your team will win. I’m certainly fine with that.

  5. Pingback: PayPal and Home Depot « FinVentures

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