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Why Sprint Doesn't Put Money on Isis

When Isis, the mobile wallet joint venture of Verizon, AT&T, and T-Mobile, was formed in 2010, Sprint looked like the odd man out. Now it's starting to look like the one that was smartest with its (mobile) money. (See: US Carriers Combine Mobile Wallets.)

Sprint Corp. (NYSE: S) recognized early on that it wouldn't dominate the mobile payments space, at least not on its own. It wasn't left out of Isis , according to Kevin McGinnis, vice president of Sprint's Pinsight Media+. Rather, it was one of the carrier catalysts for the formation of the joint venture. He told us it just decided to bow out once Isis turned into an opportunity to affect interchange and become a competitor to Visa and MasterCard. (See: Mobile Money: What's the End Game? and US Wireless Operators Spend Big on mCommerce.)

"If you believe you can take a smaller slice of a larger pie, that will equate to bigger returns and more revenue than trying to control the pie and take a greater part of the pie," he said, referring to the payments space, not the Thanksgiving dessert. "We think you can exponentially participate if you partner and take less."

McGinnis called Isis a "tedious and risky approach to the market." Sprint made the decision three years ago to focus on being the connectivity provider and partner with Google (Nasdaq: GOOG) to promote Google Wallet. (See: Google Taps Sprint for Tap-to-Pay and Sprint Stakes Its mCommerce Claim.)

Interestingly, Verizon Wireless infamously blocked Google Wallet on its network, claiming it was insecure when it was launched. so Sprint has essentially been Google's exclusive operator partner. (See: Verizon Ready to Flash Isis Mobile Wallet and Verizon Blocking Google Wallet? Poor Decision.)

McGinnis said Sprint has gotten three key takeaways from the 18 months it has offered Google Wallet:

  • Payments will be an ecosystem play. "It's obvious, but you feel it on a day-to-day business with implementation."
  • Go to the app, instead of making it come to you. Sprint recently launched Pinsight Touch to embed Near Field Communications (NFC) contactless payments in other apps, rather than just offering it as part of Sprint Wallet. (See: Sprint Plays by Its Own Rules, Too.)
  • Plastic isn't broken. Mobile payments aren't actually needed per se, so customers have to be educated about the value beyond just tap-to-pay. The exception might be in the prepaid space. Sprint's Boost Mobile just launched a branded wallet, because its customers are cash driven and contract free. So there is a clearer value proposition for them in mobile banking. Sprint will follow that up with a Virgin Mobile USA Inc. (NYSE: VM) wallet.

"I think payments are the bright shiny object of NFC, and if we're not careful, it'll lessen the impact of NFC in the marketplace," McGinnis said. "It's not the use case that will draw the most usage. It's about prompted discovery by touching your phone to something and content transfer."

McGinnis commends Samsung Corp. on getting this part of the equation right. He's seen a lot of traction from the access community using the phone for secure access to doors, machines, and computers. "Once consumers understand the concept of touching your device to something to unlock a capability, then payments make more sense."

Sprint is placing most of its bets on NFC as the connectivity of choice, but McGinnis said no single technology or app will win the day. In fact, the company could still join Isis now that it has relaxed its requirements and opened up a bit. The conversations are ongoing, but they would involve "enabling" Isis, not joining it, by letting Isis put its wallet on Sprint phones. He doesn't expect Isis to welcome any Sprint apps or competing wallets on its handsets anytime soon. (See: NFC to Come Standard in Sprint LTE Phones.)

"If you try to control all of this, you all of the sudden get people who should be partners fragmented in a competitive way," he said. "As an industry, carriers have to be careful because OTT players don't see it that way. They are not fragmented on a network-centric consumer basis… For us, partnering is the best strategy."

— Sarah Reedy, Senior Editor, Light Reading

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KBode 11/8/2013 | 11:06:22 AM
Re: Isis opening up I agree a lot of that is likely Android fanboys, but there's also a lot of people in there noting that the app simply doesn't work well.

I've heard some try to argue that Google's to blame because Wallet demands use of the phone's secure element, but that doesn't justify a carrier telling consumers how the OS and hardware on a phone they own should interact. Especially given Verizon has a long, long history of trying to curtail handset advancements they don't like to either promote their own services (blocking Blackberry apps from being able to use the GPS radio so users have to pay Verizon $10 a month, or trying to cripple Blutooth, Wi-Fi or tethering so users have to pay more). Ranted a little bit about this yesterday over at DSLREPORTS.
Sarah Thomas 11/8/2013 | 10:55:19 AM
Re: Isis opening up Wow, I hadn't seen those reviews and Isis' whopping 1.4 rating score. Some of the highlights:

- "limited and greedy"

- "hateful carrier bullying"

- "garbage" x 2

I think a lot of these people are Android fans that are pissed about Google Wallet, so the low scores may be more a reflection of that than the performance of Isis itself, but still. No one is buying the "security threat" angle Verizon tried to sell on blocking Google Wallet. 
KBode 11/8/2013 | 9:30:03 AM
Re: Isis opening up This does seem like a good call by Sprint. I think one only needs to read the reviews for the Isis Android app over at the Google Play store to get a good idea of consumer feedback to the Isis product. I continue to think that telco carriers without much of a history of software innovation (outside the network) should stick to what they do best and get out of the way.
Sarah Thomas 11/7/2013 | 12:50:09 PM
Re: Isis opening up Ah yes, the cool factor. That's partly why Starbucks picked Google for WiFi too, right? The cool factor + promise of new revenue/promotional/ad opportunities.
Sarah Thomas 11/7/2013 | 12:49:21 PM
Re: Back to the Past Ha, good analogy. Sprint told me nearly two years ago that all its handsets would include NFC. I will have to check on that to make sure it happened. Its retail site doesn't even list NFC as a feature you can search for, so I'm not sure if it was able to stick to that promise. Well, we know it couldn't because the iPhone doesn't have it. Handset makers haven't helped the cause much either.
MordyK 11/7/2013 | 12:45:18 PM
Re: Isis opening up Online Google is the best, in the real world?

When Google Wallet just launched I met the guy at Macy's who did the participation agreement, and when I asked him why he allocated the resources he said he thought Macy's would get some cool factor rubbing off of Google.
RitchBlasi 11/7/2013 | 12:43:42 PM
Back to the Past Ah, ISIS and NFC – both so much hyped and little or no uptake.   I remember the first Nokia phone with NFC that I helped introduced for AT&T Wireless (the company that was spun off from AT&T, acquired by Cingular and re-acquired by AT&T (formerly Southwestern Bell) in the early 2000's.  The technology that would change how we buy everything.  10-12 years later, same old same old, but now you have two technologies each spinning their wheels with no traction.  Reminds me of the courtroom scene in "My Cousin Vinny," where Marisa Tomei is explaining how in Alabama "when a car is stuck in the mud one wheel keeps spinning and the other does nothing."  
Sarah Thomas 11/7/2013 | 12:39:58 PM
Re: Isis opening up I'm not sure if they have a revenue-share agreement, I think they were more excited about the potential of revenues coming from related ads and services. They aren't exclusive with Google and are pursuing other routes, including their own services/wallets, but I think of any partner to start with, Google is a pretty good one. 

But, you're right, I've never seen anyone use Google Wallet at least...
MordyK 11/7/2013 | 12:36:40 PM
Re: Isis opening up The question is not why Sprint allowed certain functionality in Google Wallet, its why they aligned with a party and trusted them to bring their approach to market.

Google Wallet is now in its 3rd incarnation with little uptake to show for it. SO my question is really what was in it for Sprint? rev share?
Sarah Thomas 11/7/2013 | 12:28:26 PM
Re: Isis opening up Thanks, Mordy. What are your main questions re Sprint and Google Wallet?
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