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Are reports of Google Wallet’s struggles premature?

March 23, 2012

Google Wallet continues to add new retailers such as Pinkberry

Reports suggesting that Google is rethinking its Google Wallet are based on revelations that two executives recently departed the project and that the search giant is scrambling to sign deals with wireless carriers to offer its mobile wallet. However, at least one analyst says Google Wallet is on track with where it should be.

Google is reportedly pursuing agreements with several wireless carriers to offer its Google Wallet app that would include a revenue-sharing component. This week it was also revealed that  Jonathan Wall, one of the creators of the Google Wallet software, has left to start his own company focused on mobile shopping and that Marc Freed-Finnegan, lead product manager for Google Wallet, went with him.

“We’re enthusiastic about the progress we’re making with Google Wallet, including Monday’s announcement of our newest national retail partner Pinkberry,” said Nate Tyler, a spokesman for Google, Mountain View, CA.

“We continue to work hard to develop Google Wallet and build the partner ecosystem to make it possible for everyone to pay with their phones and get great deals while shopping,” he said.

Mobile wallet competitors
Back in December, it was reported that Google Wallet will not be available on Samsung Galaxy Nexus phones from Verizon. While reports suggested that Verizon was blocking the availability of Google Wallet, the wireless carrier insisted the app’s non-appearance had more to do with technical issues and the need to be integrated into a new propriety hardware element in its phones.

At the time, Verizon said it was continuing its commercial discussions with Google.

The latest reports suggest Google’s negotiations with carriers may have reached a new level, with the search giant offering to share revenue as an enticement to get them make Google Wallet available on the phones they offer.

“I do not think there is trouble at Google Wallet,” said Mark Beccue, senior analyst at ABI Research, New York. “Google is not moving any slower than I thought they would.

“This is not going to be a wildfire,” he said. “It is not going to send a huge amount of people to get wallets on their phones and the media should not expect it to because there are not enough phones out there.

“In 2012 and possibly into 2013, Google’s job is to prove its case through their partnership with Sprint. The idea is to prove whether Google Wallet will work or not, which does not mean it has to have mass-market acceptance.”

Getting Google Wallet onto more handsets is certainly an objective as this will help drive adoption of the mobile.

However, with Verizon, AT&T and T-Mobile readying to launch their own mobile wallet — ISIS — mid-year, they are probably in no rush to reach an agreement with Google, something the company had to be aware of when it launched Google Wallet.

The rumors that Google Wallet is struggling are also being fed by the departure of several different team members over the past few months.

In addition to the departures revealed this month, Google’s head of consumer payments Vikas Gupta resigned earlier this year while vice president of Commerce Stephanie Tilenus, who played a key role in the roll out of Google Wallet last year, was moved to a more global role.

However, Google Wallet is in its test market phase and continues to pick up new retailers. Just this week frozen yogurt chain Pinkberry said it would implement Google Wallet in its stores.

Google can use the data that it collects around how Google Wallet is used during this year to leverage a role with the other carriers at a later date, per Mr. Beccue.

“Google’s job is to focus on Sprint customers, getting as many Google Wallets into as many Sprint hands as possible and collect data that it can take to retailers and other carriers so it can say, this is what we did with Sprint,” Mr. Beccue said.

“As the handsets get out there, we will begin to see some customer data about this, how it is working, what’s good and what’s bad,” he said.

However, it is possible that the two mobile payments solutions will coexist at some later date.

“The rumor that Google is negotiating with AT&T doesn’t surprise but I don’t think it is because Google is in panic mode,” Mr. Beccue said.

“I would be willing to bet that AT&T, Verizon and T-Mobile won’t do anything with Google Wallet until after ISIS is launched,” he said.

“Google Wallet and ISIS could coexist on the networks at some point and customers could pick if they want ISIS or Google Wallet.”

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