Weekly Update

Hype vs. traction: What not to expect in mobile in 2015

Last week I offered thoughts on some of the most important trends in the mobile industry as we head into 2015, so for my last column of the year I’ll address a few segments of the industry that I expect to face serious headwinds over the next 12 months. The areas I expect hype to outpace actual traction next year include:

  • Mobile payments. I asked last week whether Apple Pay can pry open the market for competing services, and I think that will eventually be the case. The market faces too many hurdles to see anything resembling hockey-stick uptake next year, however. The inclusion of NFC in the iPhone 6 and 6S is a good start, of course, but most (probably the vast majority) iPhone models don’t support the technology. In fact, NFC still isn’t included in most new handsets worldwide, and users have shown very little interest in competing payments solutions that use alternative mechanisms such as QR codes or SMS. (And it isn’t like a majority of iPhone 6 and 6S users are tripping over themselves to use Apple Pay, either.) Meanwhile, the industry must develop complicated partnerships and business models that provide an incentive for retailers, advertisers, and consumers to use mobile payments. That will likely be the biggest hurdle of all. Apple Pay will almost certainly make some impressive strides next year, but the overall market for mobile payments at the point of sale will continue to fall short of many analysts’ expectations.
  • Beacons. Some merchants and shopping centers are rushing to deploy beacons in an effort to engage with consumers multiple times as they stroll through stores. But beacon-based campaigns require substantial consumer education, and retailers must explain not only which app shoppers must download but why they should in the first place. And there’s plenty of evidence that shoppers not only don’t want their movements to be tracked via their handsets as they shop, they don’t want to receive the in-app notifications that are the underpinning of typical beacon-based campaigns. I’m sure some savvy merchants will use beacons to tactfully deliver location-based information or promotional discounts that shoppers will actually value, but I predict we’ll see far too many ill-conceived campaigns that are poorly executed. Which is why I think beacons will see more initial usage at venues such as museums and mass-transit hubs, where users actually want more information.
  • Smartwatches. The Apple Watch hasn’t even hit the market yet, but T-Mobile CEO John Legere predicted this week that the device will “mark the tipping point when wearables go from niche to mainstream.” The device will almost certainly mark a substantial evolution in wearable hardware — combining notifications, health, and fitness features, advanced haptics and Siri on your wrist — but it’s tough to see how those offerings create a watch that’s compelling enough to blow open the wearables market, particularly at the expected starting price of $350 or so. Indeed, multiple surveys have found that only a small fraction of iPhone owners are interested in the Apple Watch, and the interest that does exist is already waning. If Apple’s initial foray into the smartwatch market isn’t a resounding success — and there are good reasons to think it won’t be — it’s difficult to see another manufacturer producing a hit smartwatch next year.

This wraps up another eventful year in the mobile industry, and I’d love to see your thoughts on what to expect, and not to expect, next year. I encourage you to leave any comments, and I wish you a fantastic 2015.