Gemalto will essentially hold the payment keys for Isis, controlling which service providers are able to tap Isis for contactless payments. It won’t participate in the actual transactions but will enable a host of applications, from payments to coupons and loyalty cards.

The deal is an important step for Isis, which is moving ahead toward a launch in the first half of 2012 in Salt Lake City and Austin before a larger nationwide roll out. The joint venture will compete with Google Wallet, which launched in September with partners Sprint, MasterCard and Citibank and First Data as its trusted service manager.

Gemalto is becoming a major player in the emerging market for TSMs. It has signed a deal to become the TSM for Deutsche Telekom and also Singapore’s nation-wide NFC system. It has also secured TSM deals with Barclaycard and Orange. Sebastian Cano, SVP Telecommucation for Gemalto, said the company has 45 NFC projects underway but the Isis deal would be the largest.

The deal is interesting because it follows word last week that Google Wallet has not been enabled to run on the Galaxy Nexus, Google’s flagship Android device which is expected to go on sale soon with Verizon. Verizon said it has not blocked the NFC application but is working on commercial talks with Google, which many have interpreted as Verizon holding back the wallet until its own Isis payment tool is available.

I asked Ryan Hughes, the CMO of Isis, about the situation and he declined to comment on the Verizon situation. But he said that the secure element must be managed by a TSM and the owner of the device, which will be the carriers in the case of Isis. Creating a completely open situation where any company or developer can access the secure element would not be safe or practical, he said.

“The secure element will not be an open asset to allow people to write content to it or it will lose the first portion of it birth name,” said Hughes. “Any suggestion that a secure element is an SDK that sits on top of an open OS is a fanciful argument.”

That suggests to me that we shouldn’t expect to see Google Wallet instantly enabled on Isis phones. It can still happen eventually and Verizon makes it sound like it’s just a matter of working things out with Google. But each Isis carrier will be able to decide what service provider gets access to their secure element, and it looks like it will not be a free-for-all. That makes sense on some level for security reasons but my hope is that ultimately, Isis members won’t find reasons to keep Google Wallet or other competing applications off their phones for too long. The NFC wallet market is just emerging and it will be good to have competition and options for consumers.

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A micro-SIM. The nano-SIM is 30 percent smaller.

SIM cards, those tiny slivers of silicon that carry your identity inside a cell phone or connected device, are once again poised to get smaller as Giesecke & Devrient introduces the nano-SIM. And if adopted, smaller SIM cards could mean thinner, sexier devices or more room for useful things such as larger batteries.

The nano-SIM is a third smaller than the micro-SIM, which can be found inside Apple’s iPhone 4 and 4S, and it is 60 percent smaller than the SIM cards found inside many of today’s GSM handsets. It’s also 15 percent thinner. The nano-SIM could find its way into the first mobile devices as early as next year.

G&D, a Munich-based company, produced the world’s first SIM card, and like Apple, it is seeking to shrink the form factor as far as it will go. In May Apple submitted a nano-SIM standard to the ETSI (European Telecommunications Standards Institute). G&D says the organization aims to standardize the nano-SIM by the end of the year, and an adapter will make the nano-SIM backwards-compatible with older devices.

Carriers seem amenable to the idea, so it could soon become that much easier to lose your SIM card. Happy hunting.

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Gemalto first demonstrated its Facebook for SIM at February’s Mobile World Congress event in Barcelona, Spain. While any phone today can shoot Facebook status updates via SMS, Gemalto’s solution brings a richer, more robust experience without the addition of an expensive data plan. The software provides a menu system for sending Facebook updates, viewing Facebook posts from friends and even commenting on their status.

Although the unique service doesn’t require a costly data plan, there is a fee involved. A free trial is offered, but once it expires, customers are charged a subscription — $1 for a day, $3 for a week, $9 for a month — for unlimited access to Facebook for SIM. This provides an additional revenue opportunity for both the carrier and Gemalto, while allowing customers to get more usage from their basic handsets.

In regions where smartphone adoption is fast progressing, Facebook for SIM likely has a limited audience. Those consumers already have a capable handset and data plan for the full Facebook experience. But as Erick Tseng, head of mobile for Facebook, told me on stage at our Mobilize event last month, mobile access to Facebook is nearing half of all usage. Facebook is moving to a common HTML5 code base and bought Snaptu to help it reach more feature phones, but those strategies require a data plan.

When you realize that most of world still uses a basic phone — without a data plan, but with SMS capability — it’s easy to see Gemalto’s Facebook for SIM has huge potential for a few years yet, even as Facebook itself tries to target the same feature phone audience.

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Gemalto, a company that makes SIM cards for phones on GSM networks, earlier this year announced a service which puts Facebook access directly on the SIM card, making it usable by even the most basic mobile user. Now, Gemalto has announced its first customer, Telecom Argentina’s mobile operator Personal.

Facebook has made significant inroads into targeting smartphone users with apps and mobile web access, and has even been rolling out apps for feature phones. It says it now has some 350 million people using the social network through these mobile channels.

This newest service is something different. It targets those consumers in markets where there is very little smartphone penetration, mobile data is too expensive for the average consumer, and the main use of mobile phones is still for voice and texting. (And yes, there are still a lot of people in those advanced smartphone-loving countries that still fall into that category, too.)

Accordingly, Gemalto’s SIM offering gives users the most basic iteration of Facebook that can be used without a data plan. A user can post status updates, access their contact book and see status updates from their friends, all through the SMS system.

While that could mean services that let users send status updates for the cost of a text, Gemalto says that Personal, which already has 17 million subscribers and will be targeting Argentina’s large prepay customer base with the service, will be selling weekly and monthly “passess” so that users can send and receive unlimited Facebook texts for a fixed fee. Users will need to upgrade their SIMs to the new Facebook-enabled SIM in order to get access.

Vincent Truffier-Blanc, a marketing director for Gemalto who worked on the service with Facebook, says that the pass system, in Gemalto’s experience, is the “most efficient” way of packaging and selling the service: the company also offers access to Microsoft’s Messenger instant messaging service. That service, available with operators in Thailand, Morocco, Argentina and Brazil, has picked up between four million and five million users so far since being deployed in 2009. That’s approximately 15-20 percent of those collective operators’ subscriber basis, he said.

As with several other third-party services that link in with Facebook (including those “Facebook phones” from HTC and INQ), this service has been created by Gemalto, not Facebook.

“Facebook is aware of what we are doing but we are acting as a classic Facebook partner. We sell the service to the operator,” said Truffier-Blanc. He notes that part of Gemalto had to be certified by Facebook, which it did after meeting with Gemalto to develop the app.

That also meant that it could use Facebook’s private APIs for the service, rather than those that are publicly available. That gave the service the added benefit of contact book access and makes the service more sellable to carriers. “With operators you have to provide them with a robust solution,” he said. “You cannot play with APIs that may change from one day to another.”

Truffier-Blanc says that Gemalto is in conversation with more operators to sign on for the Facebook offering, and it is also negotiating with other leading social networks to enable access to their services on the SIM as well. He’s not naming names, but you can see big potential here not just for Twitter but those many nationally-focused social networks in countries like China and Russia that specifically target users in markets with lower smartphone usage.

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A few days ago, AppleInsider spotted a patent filing from Apple that proposed a way for a smartphone to store multiple wireless carrier configurations on a single phone that would allow the owner to switch between them at will:

Apple could help users find the carrier that is best for them by ranking the features and prices of service providers based on personal preferences. For example, some users may be interested primarily in voice plans, while others may need features like unlimited text messaging.

Based on a user’s needs, Apple’s system could assign a priority ranking to carriers and their respective configuration profiles, allowing users to easily find a plan and provider that are right for them.

That follows a similar patent published in February.  In October, Stacey Higginbotham reported here that Apple is working on a SIM card with Gemalto that would allow consumers in Europe to buy an iPhone and choose a carrier online or through the App Store without having to buy from a specific provider.

This is still a looming prospect, but would be vastly cheaper and cut out the regulatory headache and responsibility of Apple suddenly becoming experts in being a wireless operator. It may not be something ready for the next iteration of the iPhone, but if any phone maker is going to pull off cutting out the carrier it’s Apple, says Rodman and Renshaw analyst Ashok Kumar in a published a report Monday. Referring to the patent filing from last week, he writes:

If Apple pushes ahead with this offering, it will essentially sell devices at unsubsidized prices through their retail channel. This would completely sidestep the carriers. Consumers will pay full price up front and then possibly chose the service provider through Apple’s cloud services. Carriers will then be forced to offer subsidies to entice users to sign on to their plans. The final hardware acquisition cost for the user may not end up being materially different with this model. This turns on its head the current sequence of buyers first choosing the carrier and then the device. In essence, it reflects the rising power of Apple.

We know this is potentially great news for consumers, but there is the possibility that all of these patents filed isn’t for a consumer audience at all. Companies such as iPass, which provide wireless access to corporations, offer a similar type of service already for their members, so perhaps Apple is testing out a patent to provide another level of service for corporate customers or a new cloud service that could help subscribers optimize their phone’s connection based on the cost of the network and its quality.

For example, if Enterprise A subscribes to the service, when employees see a free Wi-Fi hot spot, or a cheaper cell provider, their device might automatically elect to use that to connect as opposed to a more expensive cellular company. Plus, as consumers bring their own devices into the workplace, it’s possible that such a service could be implemented to push people over to the carrier that the enterprise already has a relationship with, when employees use their phones during work hours. This would allow people to divide their personal phone time and their work phone time more easily and still have work pay for part of the usage.

It also could allow Apple to sell one model of its phone around the world, depending on the radios it crams into the handset. So maybe it would be about letting the consumer choose, and thus take out the carriers, but it might also be a way for Apple to build one version of its phone and then let the company that activates it toggle it to the appropriate setting. Of course, once the capability is on the device, it would become a popular target for folks trying to disintermediate the carriers even without Apple forcing the issue.

Image courtesy of Flickr user mroach

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Gemalto announced Facebook for SIM Monday, a Facebook application that works through a GSM SIM card to enable Facebook features without the need for a data connection. The application, which is embedded on the SIM, relies on SMS to pass messages, status updates, wall posts and friend requests back and forth. Gemalto said it will work on 100 percent of phones that use SIM cards. Basically this is Facebook connectivity delivered via texting plans.

Meanwhile, Scanbuy said Monday it’s enabling bar-code scanning for phones via multimedia messaging using its expanded Scan & Send technology. Users will be able to get information on scanned items by taking a picture of a barcode and sending it to Scanbuy via a short code. The Scan & Send system works with QR, Datamatrix, EZcode, and UPC codes and allows users to gain information on prices, reviews and coupons. Think of this app as Scanbuy via picture messaging or MMS.

We’ve talked a lot about the explosion of smartphones but while the price of devices is dropping, a key sticking point for many is the price of data plans, which often run around $30 a month. That limits the adoption of smartphones, and by extension, applications that rely on smartphones for distribution. By leveraging cheaper unlimited SMS and MMS plans, these latest applications are finding they can reach out to the still massive number of consumers who haven’t made the step up to smartphones and data plans. Brian Madoff, a research analyst with Deutsche Bank, said in a note recently that while smartphone adoption is picking up quickly, data plans are one of the biggest barrier for users. “Even if phones are as cheap as [$100] many consumers will still prefer to stick with voice-only phones so they can avoid having to purchase a data plan,” he wrote.

By avoiding data plans, app makers can make their apps available to the millions of users who remain on feature phones and voice-only plans. Scanbuy says it can now make its scanning technology available to 190 million U.S. camera phones. Gemalto said Facebook for SIM will expand the number of mobile users who use Facebook, which is about 200 million of Facebook’s more than 500 million users right now, and will be available for pre-paid customers as well as monthly post-paid subscribers. Gemalto, however, said it plans on charging an undisclosed subscription fee for the Facebook app after a limited free trial period.

Still, the opportunity is clear. Smartphones, while growing wildly, are still a distinct minority of all phones sold. IDC said phone makers shipped 1.39 billion phones last year, including 302.6 smartphones — about 22 percent of all phones. And in many emerging markets, 3G networks are still maturing. Facebook has also recognized the opportunity, recently releasing a version of its mobile app that works on feature phones from 14 operators around the world. Expect more application makers to follow suit. While smartphones are the big, sexy story going forward, the real storyline is the hunger for apps, which can be a lucrative business if extended to all mobile users, regardless of data plans.

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The answer may lie in a tweet which is related to the news we broke last year regarding an embedded SIM solution from Gemalto, a company that currently makes SIM and micro SIM cards.

@KevinCTofel @drizzled Crazy speculation but what about those rumors of Gemalto SIM from last summer?—
  (@Lessien) February 07, 2011

What if Apple wasn’t trying to bypass the carriers with the specially-designed hardware SIM, which would be built-in to the iPhone and be programmable to work with the carrier of a customer’s choosing? What if, instead, Apple is planning on doing away with the SIM card tray and multiple versions for the next iPhone, instead introducing one model that can work on both CDMA and GSM networks out of the box?

Based on Stacey’s original description of the Gemalto SIM, this makes a lot of sense. It would still allow users to sign up for and keep contracts with carriers at the time of initial purchase, but when travelling or roaming, a user could simply download an app or configuration setting to swap out carriers as required. Of course, it may mean that iPhones wouldn’t be as easy to lock to a specific carrier as they have been, but in markets outside the U.S., Apple has been selling iPhones unlocked off-contract since the introduction of the iPhone 4 anyway. Now that it’s opened up competition in the U.S., it might have enough leverage to make this happen.

A dual-mode iPhone 5 would also decrease Apple’s supply chain costs in the long run, and make the phone usable in a number of previously unreached international markets, too. CDMA isn’t nearly as popular as GSM internationally, but there are markets where it on fairly equal footing with GSM. Apple would be gain significantly from selling a phone in these markets with network interoperability.

Finally, it’s worth considering that Apple’s design preferences tend towards fewer and fewer outward protrusions and ports on the device’s surface. Steve Jobs and Jonny Ive would jump at the chance to make the iPhone’s minimalist lines even cleaner. And by removing the SIM slot, Apple could have more design room to fit additional components or utilize extra space for a larger battery.

If Apple wants to make a splash with the next iPhone with under the hood changes, this is definitely one that would do it.

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The GSMA, a worldwide consortium of telecommunications companies, lent credence to our reports last week by announcing the formation of a task-force to research the use of programmable SIM cards. The intent of the organization’s research is to set usage standards as early as this January, with the expectation that embedded SIMs will appear in devices starting in 2012. According to The Telegraph, a UK-based publication, carriers aren’t happy with the prospect of losing their direct customer relationships by way of embedded SIMs; some have reportedly threatened to cease phone subsidies to Apple if the handset maker continues its desire for embedded SIM cards.

The battle between Apple and the carriers may be over for now, although I expect this to be unfinished business between the two sides. In the meantime, embedded SIM technology represents huge benefits to the “Internet of Things” or web-connected machines, gadgets and appliances that are use the web in a near autonomous method.

Imagine you want a web-connected refrigerator that sends you a reminder text to buy milk when it realizes you’re running low. Would you want to contract with a carrier during the purchase of such a device, or would you rather have options to choose from? An embedded SIM would allow for the latter, and even better, enables easier network provider switching if you can find a better connectivity deal in the future. The same goes for smart electric meters that shoot your consumption data into the cloud, both for your own monitoring as well as your electric company to see. Do you really want to run outside to swap a SIM card if you change Internet service for your meter?

I suspect the carriers will continue to fight Apple in the embedded SIM war, but over the long term, it’s likely to be a losing battle. Other handset makers will see the same opportunity to own customer relationships that Apple does, and are sure to band together. If the largest telecom industry group sees benefit for embedded SIM cards in the growing number of web-connected devices, carriers may want to stop fighting and instead start figuring out new ways to prevent themselves from becoming dumb pipes.

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