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NokiaMoney/Obopay – The Wallet

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January 19, 2010 

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My quote of the day is from a good friend now running all financial services and mcommerce for one of the major telcos in India: “[reaching the unbanked is a] goldrush with not a spec of gold dust in sight yet”.

The question most asked by MNOs and start ups: “what on earth is Obopay doing w/ $126M?”. Obopay and Nokia (Obopay’s largest shareholder) seem to be putting much emphasis on an embedded wallet application which will be an essential part of Nokia’s larger services strategy (Ovi) and Nokia Money. Nokia’s approach is “directionally” sound given that Apple has yet to succeed in monetizing either the app store or the iPhone (as a payment vehicle). However Nokia may be best serve its “network” of handset customers by opening itself (and mobile applications) to many payment types and formats. Nokia’s emphasis on Obopay significantly alienates both banks and MNOs both of which will be in a much better position to incent an agent network to market (and educate) consumers.

The Nokia Money “wallet” strategy is highly suspect, particularly in India.  As a quick background for those of you in the US, although prepaid accounts for only about 20% of subscribers in the US, internationally it represents approx 70% of plans (74% in Asia, 68% EU, 90% India). This means consumers purchase unsubsidized handsets which are not tied (or locked) to an MNO.

Nokia’s has developed a low cost handset strategy for India which will add a broad services component in order to maintain its 55%-60% market share (of 10M new Customers per month). Last week Nokia’s EVP of Handsets Rick Simonson gave an interview with the Economic Times and provided insight into Nokia’s plans on  service growth.

Nokia has a large number of developers, but you are way behind competitors when it comes to the number of apps you offer?

… We will win because our size and scale enables us to have an active dialogue with over a billion customers who use our products. We describe an active user as a Nokia consumer who has used at least one of our services or any other service in the past six months at least once and we have reached out to him/her at least once during this period (with his/her permission).

For instance, we can ask them: ‘Hi, we realised that you have activated Nokia Messaging on your E72. Would you like us to activate your Music Store too?’ And then we do it very simply. Thus, this active dialogue also opens up a very cheap way of marketing our services too. We have 80 million active users now within months of launching this concept. By the first half of 2010, we target to have 115 million active users and 300 million by end of 2011. …

Within India, a Nokia wallet will likely succeed in digital content (Ovi) but face tremendous competition (and regulation) for use at POS or for remote payment. India’s regulators recognized Obopay’s plans earlier this year and specifically formulated the RBI regulation with them in mind. The challenge for Nokia is to deliver value on both the existing bank and MNO networks, either separately or in conjunction with both. A more effective payment strategy may be for Nokia to provide an open platform that supports multiple standards for payment and authentication. Ovi and NokiaMoney have the feeling of a proprietary closed system… Google Android will compete very effectively here if this is indeed the approach.

Written by tomnoyes

January 19, 2010 at 6:18 pm