Apple aficionados were clogging up bandwidth yesterday, hanging on every word spilling from the Apple media event in San Francisco that unveiled company’s newest flagship product, the iPhone 5. The cool features that we like, but really don’t impact us directly include its bigger screen, more power powerful processor, and new high speed LTE.
The major disappointment – at least for me – is that the new phone will not be equipped with an NFC chip in the iPhone 5. Candidly, the omission of near-field communications dashed the hopes of some (including me) who expected Apple to make a major push into payments. (At least for now…)
The absence of NFC does not diminish the potential impact of iOS6, the phone’s new operating system, and its key feature — Passbook.
Street Fight has some interesting comments yesterday (go here for the full article: http://streetfightmag.com/2012/09/12/with-passbook-iphone-5-answers-mobiles-dirty-little-secret/)
- Shiller glossed over Passbook but did highlight that Passbook will be mostly used for digitalizing interactive content like movie tickets, boarding passes, and loyalty cards.
- Apple spotlighted several high-profile Passbook launch partners, including from American Airlines, Target and Starbucks to Sephora and Fandango, amongst others.
But Passbook’s potential extends well beyond these use-cases. Loyalty companies are looking at Passport as an important, possibly game-changing catalyst in what is currently an inexperienced and fragmented industry.
Here are a few comments that I picked up from Street Fight that makes me think about the potential impact that Passbook could have on old-school/traditional “transaction-enablers”:
- “It’s taking mobile phones into a true integration into real life,” Cyriac Roeding, CEO of Shopkick, a loyalty system that uses an in-store device to connect to retailers and consumers through a mobile application. “Previously it was not possible to just show an alert that turned into a graphical interface without launching an app. It’s very fast and all local on the handset, so it works even when you don’t have service.”
- Part of what Passbook looks to solve the problem in the app world is not downloads, but retention and engagement.
- Fragmentation is a problem for developers, and Apple, which drives much of its value from its position as a highly engaged platform.
- Passbook enables developers to push interactive content to consumer based on location, driving down the cost for a user to engage with content regularly. Passbook notifications are more about geography, not time, as the primary filter.
- “The hype over payments and NFC has overshadowed Passbook’s value as a CRM tool. Its potential impact on the fragmented, location-dependent loyalty and rewards space will be to render certain services irrelevant. Shopkick, and its in-store positioning technology, is largely insulated: “It’s presence-based.”
- Passbook is about vicinity
- “Apple has a tremendous relationship with the consumer and they can do a lot of with that focus [on loyalty],” Angus Davis, CEO of Swipely, a venture-backed loyalty and payments service that recently pivoted from the consumer space, told reporters in an interview. “It’s the universal loyalty guys – the ones that have their own app – that will have to move quickly to integrate Passbook because over time there will be more and more things baked into iOS to make it advantageous to use [Passbook].”
- It’s as a content management system that Passbook solves one of the fundamental value propositions that has traditional fueled the universal loyalty pitch: fragmentation and convenience. By surfacing passes only when they’re relevant, Passbook has essentially made fragmentation (i.e. having a card or application for each merchant) a non-factor in user experience for 33% of the U.S. smartphone market.
- This is not to say that the loyalty space is doomed, only that the introduction of Passbook will likely recalibrate the value dynamics in the space. And much of this will depend on the extent to which Apple, a notoriously controlling company, opens the service as a platform. Either way, Passbook erases some key consumer experience issues that only Apple could solve.
- “Every one of us is fighting against indifference and inaction,” Derek Webster, CEO of LocalBonus told Street Fight in an interview. “It’s not a winner-take-all land grab. We’re all in a fight over consumer indifference.”