 How does Google Wallet 2.0 work? In a nutshell: 1) All payments will be made using a Pre-Paid Virtual MasterCard (VMC) issued by BanCorp Bank that, in turn, is linked to the user's preferred credit/debit card. All credentials for this VMC will be stored in the phone's Secure Element (SE), all other card credentials will be stored in the cloud. No need for Google to negotiate with issuers / networks to include them in the SE, as was the case with the first Google Wallet (GW) iteration. Note: At the moment, there is one notable exception to this rule: Citi MasterCard, Google's first - and still only - banking partner. Citi MasterCard credentials are stored in the SE. 2) Google is acting as 'merchant of record'. The merchant will authorize/settle transactions with Google - paying fees based on the use of a present pre-paid debit card. The VMC credentials will be sent via the MasterCard network to the issuing bank ( BanCorp Bank). In turn, and in real-time, BanCorp will map the VMC to the user's preferred method of payment and will seek authorization with the card issuer - paying standard fees related to the chosen card, probably as Card Not Present (CNP). Basically, the VMC is used by Google/BanCorp as a directory entry to link to the user's 'actual' card. These are two back-to-back processes. The graph below illustrates this process - in a very simplified manner - using the example of AmEx as being the preferred method of payment.
Note: Citi MasterCard cards will not be processed directly by Citi, without the intermediation of BanCorp given that they are also present in the SE. Note: Although AmEx has not approved Google to include its cards in GW, a user can link his/her AmEx card to GW. 3) The payment process may be a bit slower due to the need to perform these back-to-back processes. Google is probably making a loss with each payment given the difference between the fees they are charging to the merchant and the fees issuers are charging them. 4) Google/BanCorp have now full access to all payment information, making it extremely easy for them to work with merchants to develop loyalty programs and with consumers to organize their spending. I believe issuers still receive all (or most) of the transactional information and can apply rewards and protection programs to the transactions, although Google makes it very clear that it is up to the issuer to decide how to treat these transactions and whether or not rewards and protections apply. 5) GW can be implemented using an NFC-enabled phone but also just a plastic card (with mag stripe, contact or contactless technology) or even an NFC sticker. These alternative options would provide a much poorer experience and less security but they may be a way to get consumers comfortable with using Google as a payment method (this is precisely what PayPal is trying to do through their partnership with Discover). In any case, each transaction could always be instantly recorded in the cloud and immediately sent to the user's phone. 6) You can store a number of payment methods in your GW account but only have one linked to the VMC at any given time, meaning that you cannot change the card you are using to pay at the till. This seems to be a bit limiting... But it could easily be changed to, either have a set of rules to determine which card to use based on merchant and payment amount or to be able to choose the specific card you want to use at the till. 7) Google's approach for the 2.0 version of its wallet differs greatly from the approach it took when it developed the first version. At the same time, this approach seems to resemble that of PayPal - although with a different implementation - or, another way of seeing it, Google CheckOut with NFC capability. How does Google Wallet 2.0 'stack up' against the criteria listed at the beginning of this series (click here to review the list)?Reliability, Transaction Speed and Security: It is an NFC-based solution, connecting the merchant (or Google, as the merchant of record) to the banks through the traditional processors and card networks. This means the highest standards in reliability, speed and security. Because in this case we have two back-to-back transactions (between the merchant and BanCorp and then between BanCorp and the actual issuer), speed may suffer but I am assuming not enough to make it noticeable. Ease of Use: Again, as an NFC solution, use at point of sale is extremely simple - just tap-and-go. The interface is also simple and intuitive enough. Wallet Functionality: From a functionality perspective, it seems to be a bit limited. This could be easily changed but, at the moment, only one card can be linked to the VMC. This means that, although you may have all your cards stored with Google, you can only use one at the store. You need to log into your account online to change your preferred method of payment. Also, given the limited involvement banks currently have with this solution, it is difficult for them to use the wallet to create a more direct link with their customers. Acceptance: There is a limited number of NFC-enabled POS in the U.S. A much lower number than in Europe or other geographies. This will change in April 2013, once acquirer processors and sub-processor service providers will be required to support merchant acceptance of EMV chip transactions by Visa and all other card networks. This mandate will greatly accelerate migration of POS to provide support to, at a minimum, EMV contact cards and, in most cases, EMV contactless and NFC-enabled devices. Device Availability: At the moment, GW only works on a few devices on Sprint's network. This is an extremely limiting factor. Given that GW requires an NFC-enabled phone with access to its SE, there may be a long road to travel to good device availability. Value-add Apps: In theory, GW can support all types of value-add apps to enrich the user's experience and make the wallet truly valuable. Unfortunately, at the moment, there are no (or very few) apps available. Food for Thought Considering that PayPal, Visa and MasterCard (among others) are already also providing, or plan to provide, other payment services such as P2P or remittances (we will discuss these capabilities in detail when reviewing each solution), shouldn't Google also take a stance in those areas? Edit (08/30/2012) - It hasn't even been a week since I posted this blog and I already need to make an update! Google has spoken about the possibility of including P2P payments in its GW.
 Boku may not be very well known to the general public but it is quickly becoming a force to reckon with in the world of mobile payments as it moves from on-line payments of digital goods to both on-line and off-line payments of physical goods. Through this expansion, it is now targeting a much larger market - $9 trillion dollars used globally at the point of sale, compared to the $350 billion spent on-line. It is also entering the Mobile Wallet Wars against giants such as Google and PayPal. Let’s start by reviewing Boku’s key services, starting with the company’s bread-and-butter offering and moving to its latest launch: Mobile Direct Billing via Premium SMS service – It provides payment services for digital goods on-line in 66 countries, and over 4 billion customers, including US (AT&T, Verizon, Sprint and T-Mobile), UK ( Vodafone UK), Germany ( Deutsche Telekom) and France ( Bouygues Telecom and SFR) This is a convenient and widely accepted method of payment for digital goods but not for physical goods for two main reasons: - High charges imposed by the telcos – from 30% to 50% of the price.
- Only basic fraud protection and customer service offered due to limitations inherent to the Premium SMS service.
These are the steps that need to be taken when paying with Boku via Premium SMS service: - The customer selects an item to purchase from her favorite website – for example, an invisibility cape for an on-line game or a ring-tone.
- She then selects Boku as payment option in the checkout page.
- She enters her mobile number when requested.
- Shortly after, she will receive an SMS requesting that she confirms the purchase by replying to the SMS sender with a ‘Y’.
- Her cell phone bill is then charged with the price of the invisibility cape or the ring-tone.
- In the background, without her knowing it, her mobile carrier will keep between 30% and 50% of the amount she has been charged, with the payment intermediary (in this case Boku) taking a small percentage and the rest going to the content provider (i.e. seller of the cape or ring-tone).
Mobile Direct Billing via direct integration with carriers’ back-end and payment systems – Payment companies providing this service are fully integrated with the carrier’s back-end and billing system, providing tighter security, better fraud protection, full customer service and even rebates. In addition, carriers’ costs for this service is much lower and are thus open to negotiating lower fees with payment companies (for example, around 15% in the US and even as low as 5% to 7% in South Korea). Together, all these factors make this payment method suitable for on-line purchases of physical goods. Boku has been actively working with telecom companies in the US and Europe to develop this type of tight integration and offer this service. At the moment, it is trialing the solution with Vodafone in the UK but has not been successful with the US carriers, all of which have signed agreements with BillToMobile (US subsidiary of Danal Corp. headquartered in South Korea). The current plan in the US is to offer the service by using BillToMobile as gateway to the carriers while it continues to negotiate with with the Big Four to develop its own solution. These are the steps that need to be taken when paying with Boku via direct integration: - The customer selects an item to purchase from her favorite website – for example, a pair of earrings.
- She then selects Boku as payment option in the checkout page.
- She enters her mobile number along with some sort of additional identifier when requested. This additional identifier could be, for example, a pre-defined passcode or her zip code (this will be defined by the carrier).
- Shortly after, she will receive an SMS with a one-time passcode that she will need to enter in the checkout page.
- Her cell phone bill is then charged with the price of the earrings.
- In the background, without her knowing it, her mobile carrier will keep around 15% of the amount she has been charged, with the payment intermediary (in this case Boku) still taking a small percentage and the rest going to the retailer.
Boku Accounts – It is a safe and secure prepaid account – provided by MasterCard – that can be accessed via an NFC-enabled mobile (sticker or chip) or physical card and that is issued directly by a carrier or bank (i.e. white-label solution). It can be used at any retail store that takes MasterCard and / or is PayWave enabled. The fact that a physical card is part of the solution demonstrates Boku’s determination to overcome the limitation inherent to NFC, just like PayPal is doing. Also, just as with PayPal, customers can access their account on-line or via the app to setup transaction and budgetary alerts and to review promotions and offers from their favorite merchants at the most appropriate times. This new service has been launched and will be promoted using $35 million in fresh VC funding received from New Enterprise Associates and Telefonica Digital (the growth arm of Telefonica) as well as from existing investors bringing Boku’s total to $75 since its launch in 2009. Backing from the world’s third largest carrier lends credibility to the product and the benefits it brings to the carriers and even the banks: Boku is providing them with technology to increase the value they bring to their customers instead of trying to disintermediate them. All of this activity, particularly the launch of Boku Accounts, has helped the company attract some very senior and seasoned talent from PayPal (Martin Buhl, now head of Boku’s German office), Visa (Jon Prideaux, Exec VP for Visa, now Senior Exec) and Barclaycard (Stuart Neal, MD of International Development for Barclay card, now Senior VP of Biz Dev). Perfect complement for the knowledgable founders Mark Britto, Erich Ringewald and Ron Hirson. Does Boku’s expansion and its high-flying talent make it a good acquisition target ( http://www.privco.com/research/featured-acquisition-target-mobile-payment-service-provider-boku)? Let’s review the points we have made above: - Good set of services across on-line and off-line for digital and physical goods.
- Reputable founders with additional senior talent joining from major players, bringing additional knowledge and credibility.
- Well funded with good partnerships in place.
- Scalable infrastructure that will be strengthened with this infusion of money.
PayPal already acquired Zong, a direct competitor of Boku, in July 2011. Could Boku fit within Google or Apple’s strategy?
 From Drop Labs Blog by Cherian Abrahan: ‘Being on Week 3 of a self imposed Google Wallet embargo, I had instead been writing about the ongoing turf wars between Platform providers and Carriers, which is starting to sound like an episode of ‘Mob Wives’. Though the bulk of it was to be focused on Android, it became impossible to ignore rumors around iPhone 5 and NFC. ‘ Continued. Trish’s Comment: Today I just want to share with you all Cherian Abraham’s latest post. It is a very thoughtful and insightful review of the options that Apple may be considering around NFC and mobile payments. I agree with all the points he makes and the questions he raises. Maybe I would just add another question: Will Google change its strategy to focus on a cloud-based wallet? Could this be the key to overcome the current issues and gain traction? Certainly worth reading his blog and, why not, the comments! Thank you Cherian!
 From GigaOm by Patrick Baillie: 'Last year’s fairly significant — AWS outage highlighted the challenges that delivering consistent data center uptime presents. The ongoing challenge of keeping a data center online is a highly complex and often underestimated task, but one that provides the bedrock of any public cloud availability. If the data center fails, the cloud will be offline, and a cloud is only as good as the data center in which it resides.' Continued.
Trish's Comments: I found this post quite confusing. I understand that it is written by the CEO of a successful IaaS company and he is using this opportunity to explain his business model and highlight its benefits. The bottom line is: If you are an IaaS company, you are mainly a software company, you know about networking and software development and management . Don't divide your resources between your core competency and running a data center, which requires a totally different set of skills and capabilities. That is precisely the model that CloudSigma, Baillie's company, has followed and, at first glance, I found his position reasonable and, probably, correct.
Then I started to follow some of the links in the article which help educate us about how Google, Facebook and Rackspace are companies that have followed the opposite model and have been wildly successful. And not only are these companies running cloud services and maintaining their own data centers, they are going one step beyond and getting down and dirty with the design and definition of the servers themselves.
1) In the case of Facebook and Rackspace via The Open Compute Initiative. This initiative was launched by Facebook and has been backed by Rackspace, and other technology giants, since it launched on April of last year. It introduces open source servers that are expected to be 38% more power efficient and cost 24% less to make than current designs. How is that for having knowledge and resources spanning hardware and software at multiple levels?
2) The same can be said about Google. Although it was not of it initial members, it has now been involved for a few months with Facebook's initiative. In addition, it has historically been one of the most innovative companies when it comes to creating its own efficient designs for its data centers and it could be considered as a company that has paved the way for The Open Compute Initiative to launch.
Granted, size matters and all three companies are forces to be reckoned with but it is still interesting to see software companies successfully leading efforts on the improvement of server design.
So, why did I say that I found this post confusing? Every link in his article provides examples against the point that he is trying to make: data center management and cloud services should be ran by two separate companies. I think it is fantastic that he is open and transparent enough as to refer his readers to interesting information even if not in-line with his opinion. At the same time, wasn't this information enough to make him consider that both options are good and that it is the company's specific situation - size, location, target markets - that determines which option might prove most beneficial?
 MasterCard approach to mobile commerce and payments seems to be a bit different from the approach taken by Visa and American Express. There are fewer partnerships, at least in the US, and for the moment, no relevant acquisitions. For starters, there isn't a 'MasterCard Wallet' in the US although the company is involved in two major initiatives: - Google Wallet: They were the first to partner with Google - at the moment, only two cards are accepted in Google Wallet: Citi MasterCard and Google's prepaid card - and this partnership continues to be the main company focus. Participating in the testing process and then in the national rollout has allowed them to learn a few things around mobile commerce, NFC and consumer adoption such as the need to have a good locator service and an audio confirmation of the correct download and deployment of the app. Small things that greatly contribute to consumer experience and, thus, to adoption.
Their position as single provider will soon change as Discover, Visa and American Express will also be available in the next release of Google Wallet - planned for later this year. But this is not an issue for MasterCard, in fact, the company understands and supports this development since they also believe that in order for an e-wallet to become widely adopted, it needs to be convenient and actually improve upon our current physical wallets. Having several e-wallets would reduce the value to the consumer and limit adoption.
- ISIS: Isis is a joint venture in the United States of AT&T, Verizon Wireless and T-Mobile USA, the top three telecommunications operators, and the credit card companies Vis, MasterCard, Discover and American Express The approach taken by ISIS is fundamentally different to that of Google: The carriers that are part of Isis will charge banks / credit cards for the network and cell phone space used for mobile payments. Not only the corresponding data charges – as Sprint does in the Google Wallet solution – but additional, or alternative, fees. MasterCard, like the other credit card companies, has opted to back both approaches since, from their perspective, the choice should be left to the consumer and they want to be part of whatever solution their customers favour.
The fact that Isis will not launch its first trial until the first half of 2012 - it will take place in Salk Lake City, Utah, and Austin, Texas - will allow MasterCard to apply the knowledge acquired while working with Google to make this deployment easier and smoother for themselves.
Outside of the US, MasterCard has been involved in a number of initiatives in markets as diverse as Canada, the UK, Turkey and India. Some of these initiatives have been large-scale trials that may not yet have developed into full-fledge commercial products - for example in Canada or India - while some other - the most notable case being the UK - are now services available at a national level. Let's look in more detail at a few of these initiatives: - India - Partnership with Vodafone and Citibank: This was the first large-scale trial launched in India. It started in June 2009, reaching over 3,000 customers and involving the 250 retailers that accepted PayPass for the 6-month duration of the trial. Over 43,000 transactions were recorded (an average of 14 transactions per user). Considering that there was a financial incentive to use the mobile payment application over 12 times, it could seem that the main reason for usage was financial benefit rather than convenience or interest for the technology. However, it is also true that users that participated in the trial and that also had Citi card, steeped up the use of the latter ones with retailers that did not have PayPass. Possibly proving that, easier methods of payment will be well received in developing markets even though adoption may be slow and need to include education and incentives.
Possibly, this first foray into mobile payments in India gave MasterCard a good platform from where to jump into other opportunities within emerging markets such as the two that are presented below.
- Kenya and across Africa - Partnership with Airtel: In partnership with Standard Chartered and Airtel - Airtel Wallet and Airtel Mobile Money, Mastercard is launching a service that allows on-line purchases from your mobile phone using a 24-digit number uniquely assigned to a customer for a specific transaction. The purpose, once again, is to empower the large number of mobile users across Africa to purchase goods more easily.
There are also other opportunities that, although have not yet crystallized, could turn out to be great wins for MasterCard including possible deployment of MasterCard Mobile Payment Gateway in Indonesia - the company already has the blessing of the Central Bank but needs to get banks and telcos on board - and testing of in-flight contactless technology with GuestLogix - with cards and NFC technology to achieve real-time online card authorization and reduce fraud. Clearly Mastercard is working hard to further promote and leverage PayPass, its contactless payments system, which is already widely used across the world. It is only reasonable to assume that the company will use this infrastructure to move ahead with NFC as the next wave of contactless payments. Next week we will discuss some of the other initiatives where Mastercard is involved, focusing on their R&D activities around the QkR app, motion with Xbox, sound and QRs in ads.
 Visa has also been very active in the world of mobile commerce and mobile banking, striking a number of acquisitions and collaboration agreements with companies all around the globe. In addition, they will launch a mobile wallet at some point this fall that will rival Google Wallet’s offer. Visa’s mandate, as explained by Carleligh Jaques – Head of Corporate Development and M&A, Visa – at Web 2.0 Expo NY 2011, is to convert cash and check transactions to electronic transactions and to do it in a safe, secure and seamless manner across all environments: brick-and-mortar establishments, e-commerce, digital commerce, mobile commerce… They want to provide tools and capabilities to consumers, merchants and banks that will deliver clear benefits to everyone while helping Visa generate new revenue streams and strengthen its position as a facilitator of electronic funds transfers. Although Visa sees itself as a technology company, electronic funds transfers is Visa’s core business and this will not change overnight. Their strengths are: a) The size and efficiency of their existing network (VisaNet). b) Their strong ties with consumers, banks and merchants: 2 billion cards outstanding, agreements with 13 thousand financial institutions and 30 million merchants. Let's first discuss the Visa Wallet solution, which should be released this fall in the US and Canada, and next week, analyse Visa's key acquisitions, investments and partnerships. Visa Wallet The service is built on the VisaNet processing network, existing credit / debit / prepaid / commercial product platforms and new capabilities from its acquired companies. The plan is for Visa Wallet to go live in the US and Canada during fall of this year – almost at the same time as Google Wallet. Visa is very aware of the barriers of adoption for this technology and, as Steve Perry, commercial director for Visa Europe, explains: ‘If the digital wallet isn’t as sexy as my current wallet, then it won’t take off’. This is probably the reason why they have taken quite a different approach to other incumbents and gone with a solution very similar to that of Google: An open wallet that will allow users to include all types of credit / debit / pre-paid cards - Visa/Mastercard/AmEx/others -, as well as all kinds of loyalty and rewards cards and even, possibly, different forms of ID such as driver license information. Bill Gajda, global head for Visa Mobile, said he doesn't necessarily view Google as a competitor but, after analysing both companies' strategies, the similarities are quite striking. Visa Wallet's key characteristics: 1) Click-to-buy: Consumers will be able to make purchases online by simply entering an email address, alias or online ID and a password, instead of a billing address, account number and expiration date. In addition, Visa says it is "exploring dynamic authentication technologies that will bring added layers of security to online purchases. 2) Cross-channel payments: The wallet will be able to store multiple Visa and non-Visa payments accounts and it will be possible to use it in mobile, ecommerce, social network and retail point-of-sale environments. The plan is to also include the capability to look at spending across all cards and maybe even to perform some basic banking transactions, although this would require agreements with banks and financial intermediaries. 3) Preference management: A menu will enable consumers to set preferences for how their wallet will work, allowing them to customize and control the features of their personal wallet. This will allow them to choose privacy setting options and designate which the default account will be at particular types of merchant or for particular purchase amounts. 4) Merchant offers: Consumers will be able to personalise their shopping experience by opting-in to receive money-saving discounts or promotions from participating merchants. You can watch a short video where Jim McCarthy, Visa Head of Product Development, describes Visa's vision for the digital wallet. Main differences between Google's and Visa's approach: 1) Visa will charge a fee to the retailer for each client that pays using its solution while Google will not. This means that, most likely, merchants will favor Google's solution but the consumer will have the final say based on the benefits and convenience of each of the solutions. The difference in approach is probably due to the different business models: Google doesn't charge for its services and generates revenue via advertising; Visa has always charged for its services and has done so on a transaction-by-transaction basis. Both companies are transferring their traditional 'modus-operandi' to this new service. 2) Visa plans to leverage its financial reputation initially marketing the digital wallet service through banks. A participating bank could offer the digital wallet application - with all or some of its capabilities - as part of their online banking service. By marketing the service first to online banking customers or directly through its own Visa Web site to online users, Gadja believes the company will have a chance to build an audience before NFC technology becomes more widely available: 'Banks will be an important distribution channel for the digital wallets, [...] So that's why we will first target these online customers by providing one-click shopping. And then we'll promote NFC.'
 Who will consumers trust? The Retrevo Pulse, a research firm that tracks trends and consumer demand in real-time, has just finished a poll around mobile payments including more than 1,000 US consumer of varying ages and backgrounds. The key question was: Who would you like to be the provider of your digital wallet?
In the study, smartphone owners tended to lean toward their phone operating system with 61% of iPhone owners prefering Apple as their provider and 46% of Androd owners prefering the Google Wallet. The most interesting finding though was that all providers closely associated with credit cards and cell phones ranked consistently below Google and Apple when looking across all smartphone owners. For example, MasterCard/Visa/AmEx (32%), AT&T/Verizon/Others (26%). Visa in Europe: After the US, Europe is Visa’s second largest market. The European version of Visa Wallet will launch in August / September of 2012. No specific explanation has been given for the delay with respect to the US / Canadian wallets but it is probably tied to the fact that Visa wants to make it available across all of Europe and not just the Eurozone, which means they will need to support a number of currencies and comply with a myriad of different legislations. In the meantime, as announced by Visa Europe CEO Peter Ayliffe at the EFMA conference in Paris, Visa will launch in Europe a mobile person-to-person payment system developed in partnership with Monitise. Visa Mobile Person-to-Person allows registered users to transfer funds to any Visa cardholder in Europe from their mobile phone. The app makes it easy to send money to an address book contact, to a mobile phone number, or to a specific Visa card number – whether or not the recipient is registered with the service. Launching this service will allow Visa to gain mind-share with consumers in preparation for next year’s launch. Visa's involvement in other Wallets: Although we have focused on Visa Wallet in this article, the company is hedging its bets and is also participating in the payment solutions designed by Google and Isis. The same way that it wants Visa Wallet to be open to all competitors to build the most convenient solution for its clients, it wants to be available across all possible channels to provide convenience to those same clients irrespective of their choice of wallet. This is an extremely smart move from Visa. Conclusion Although we still need to review Visa's key acquisitions, investment and partnerships - which have been fundamental in their ability to build a digital wallet - just based on what we have discussed, it is fair to say that Visa is not resting on its laurels when it comes to mobile commerce and that it is ready to compete with all players, new and established, across all areas and markets.
 The term cloud computing is widely used in computing today. This blog sets out to try and answer two fundamental questions: · What is Cloud Computing? · What are Cloud Services? Whether you realize it or not, you’re almost certainly already using cloud-based services in the form of Gmail, Google Docs, Office Web Apps, Facebook, Twitter, iCloud (coming shortly) and DropBox. These are applications that run on the ‘Internet’ or, we could say, on the ‘Cloud’. They are all different applications with different purposes but they all have in common that they are not running on you PC, laptop or tablet. You access them on-line (although they may have off-line versions that synch-up as soon as you are back on-line, like Gmail and Google Docs) from any location and computer; you do not worry about updates or upgrades; you do not worry about viruses or security; you do not worry about disk-space. They are in the Cloud and somebody else is responsible for all those things. Although this definition is not completely accurate, as a first approach we could say that cloud computing is the delivery of computing as a service rather than a product, whereby shared resources, software and information are provided to computers and other devices as a utility (like the electricity grid) over a network (typically the Internet). Many authors have specifically outlined the parallel that can be drawn with the electricity grid, wherein end-users consume power without needing to understand the component devices or infrastructure required to provide the service. The evolution has taken place over 100 years where we have gone from each company / household having its own source of electricity, to local / regional companies providing it to a small area, to national / international companies providing it across a nation or an entire continent. This evolution is similar to the changes we are seeing in computing and applications but at a much faster pace. Now, think about this same concept applied to a company, whether big or small. All the applications that the corporation uses – CRM, ERP, accounting, finance, logistics… - can move from local hard-drives, on-premise servers and data centers, where they reside today, to the cloud. The company doesn’t have to invest in buying, maintaining and improving its servers and database infrastructure, it uses a global infrastructure provided by a specialist and shared with many other companies in a secure manner. Before we go any further, it is important that we understand the distinction between ‘Cloud Computing’ and ‘Cloud Services’. IDC describes them as: Cloud Services – Consumer and Business products, services and solutions that are delivered and consumed in real-time over the internet. Cloud Computing – Is the IT environment that enables the development, delivery and consumption of cloud services. That is, the applications that you use that reside in the cloud are cloud services. The people that developed those applications did so using cloud computing tools. Cloud Services So, what are the key attributes of a cloud service? IDC provides a handy checklist to determine whether or not something should be called a ‘cloud service’. Some of the key points are: · Third-party provider – It is a commercial offering · Location agnostic – The service could be running anywhere in the cloud · Accessed via the Internet – Probably via a web browser but it could also be via a ‘gadget’ you have downloaded on your laptop / tablet. This is the case, for example, for Twitter. · Minimal/no IT skills required to implement – You, or your company, use it as a utility but are not responsible for it. You have instant – or very quick – access to it from day one · Pricing – Consumer apps are often free. Corporate offerings have clear, usage-based pricing · Shared resources – A single service will be shared by many customers while allowing for different tailoring for each of them You will also hear cloud services being called Software as a Service. We will focus on this concept in a future blog. Cloud Computing But then, what is cloud computing? It is the IT foundation for cloud services and consists of a growing list of technologies and IT offerings that enable cloud services. It includes:
 From Wikipedia's definition of 'Cloud Computing' Cloud Platform Services – Also known as Platform as a Service (PaaS). It delivers a computing platform and/or solution stack as a service. It facilitates deployment of applications without the cost and complexity of buying and managing the underlying hardware and software layers.
Cloud Infrastructure Services – Also known as Infrastructure as a Service (IaaS). It delivers computer infrastructure – often platform virtualization – along with storage and networking capabilities.
Servers – It is the hardware (multi-core processors) and software (cloud-specific operating systems) products that are at the foundation of cloud services.
On top of these layers Software and Applications are built. The overall These layers are built on top of each other with the complete stack looking like the diagram above.
These are not easy concepts and, although they needed to be introduced here, we will go into more detail in a later blog.
Next week we will introduce the concepts of Public, Private and Hybrid Cloud.
 Amazon, Google and Microsoft are the three biggest names in cloud computing. Amazon pioneered the public cloud when it decided in 2002 to use its vast infrastructure to offer computing facilities to customers and launched a range of services to developers including storage and a development platform. Now Amazon Web Services, after less than 10 years, has hundreds of thousands of customers and an annual revenue of $750 million, as estimated by analysts at UBS. Microsoft launched Windows Azure Platform, it’s Platforme as a Service (PaaS) product in 2010 and Microsfot Online Services, it’s Software as a Service (SaaS) product in 2011. Google has launched a number of initiatives starting in 2006 with Google Calendar, Google Talk and Google Page Creator and continuously expanding their SaaS offer through under the banner name of Google Apps. These three giants are up against the traditional infrastructure makers such as AT&T, EMC, HP, IBM, Oracle and Verizon. According to data supplied by International Data Corp. and Gartner, they collectively control 95% of the corporate infrastructure market, valued at around $1.5 trillion, through their data center solutions, the option traditionally taken by corporations to cover their storage and computing needs. At 5% for Amazon, Google and Microsoft are starting small but the growth in this segment is particularly strong. Building, maintaining and evolving corporate infrastructure is a lucrative business for providers and an area of strategic importance for companies. Cloud solutions are bound to greatly alter the way corporate infrastructure is built and used. It represents a completely different approach and, just as importantly, a major cultural and behavioral change. Because it is so important, I will be devoting a number of posts to this topic in the coming weeks. Some of the areas that I will be covering are: 1) What is cloud computing? And cloud services? 2) Public vs. Private vs. Hybrid Clouds – Pros and cons of each model 3) Cloud APIs – Software, Platform and Infrastructure as a Service 4) Small Print – What to look for when signing up with a provider of a new, and not yet standardized, offering Stay tuned if you are interested in discovering and learning about the cloud.
 Why did Google acquire Motorola Mobility? There is no shortage of hypothesis and opinions being published and discussed but, as we all know, it will take some time to fully understand the risks and opportunities that Google will face and enjoy as result of this move. One reason everybody seems to agree on is the large patent portfolio that will now belong to Google. This is clearly stated in Larry Page’s blog post on the acquisition as it will “enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies”. Motorola’s Mobile Devices business segment has a total of 14,600 granted and 6,700 pending patents, including patents related to 2G, 3G, 4G, H.264, MPEG-4, 802.11, OMA and NFC. The Home business segment has 1,900 granted and 1,300 pending patents. Having said this, as FOSS Patent points out, these patents may not be enough to win the on-going all-out patent war between Google and its rivals. Both Apple and Microsoft are in the middle of legal battles with Motorola and, it would seem, they have the upper hand. So, does this mean it is not really about patents? Not so fast… As Om Malik reports, Microsoft was also negotiating to buy Motorola’s patent portfolio and that Google’s negotiations kicked up five weeks ago, shortly after they lost the bid for Nortel’s patent portfolio. The negotiations have gone very fast with Google CEO Larry Page and Motorola CEO Sanjay Jha talking directly and only involving a handful of executives – it seems that Android co-founder Andy Rubin was brought into the talks only very recently. Something made Google react quickly and, it could very well be, a combination of Microsoft’s interest and their loss of Nortel’s patent portfolio. In any case, the acquisition gives Google the opportunity to be ‘playful’ in a number of new businesses into which they had not reach before. One of those new business opportunities may be connected TV and using Motorola’s home solutions – automation, set-top box and broadband gear business – as a platform to jump into the home space and take part in the convergence of broadband and data. This is right in line with Larry Page highlighting that Google has acquired Motorola not only because of its strength in Android smart-phones and devices, but also for being a “market leader in the home devices and video solutions business”. Motorola could help Google improve the less-than-stellar results it has achieved with Google TV. Motorola manufactures a large percentage of the set-top boxes in the US and, even if not successful, Google TV has some good features and the products of the two companies could be integrated. This is a very profitable business and together they could make it even more profitable. Another, possibly great, business opportunity is for Google to become the new Apple, integrating hardware and software to create a unique experience for its customers. Granted, it will be difficult for the software company to fully integrate the hardware giant – not in the least because Google will see the size of its work-force double – but the combination of the two corporate cultures could still bring out the best of both. At the very least, why not use Motorola as a test-bed for its latest-and-greatest releases, for the acceptance of ‘straight-up’ Android interface and for the use of specific form-factors? At the end of the day, Google has already treated device makers differently, with some getting ‘private branches’ of the code in advance. Maybe the idea of an artificial Chinese Wall put up inside Google is not realistic. This would seem to go against what Google’s initial PR release and all its further public comments where they have clearly stated that Android will continue to be an open system and that they will continue with full support of all of their OEM partners. And this would seem to make sense. Google allotted plenty of time during its latest (8) I/O conference to discuss the future of Android and it included Android-powered car consoles, refrigerators, dish-washers, clock radios and, basically, everything that had an LCD screen. Therefore, why limit themselves to a single manufacturer? Android needs to increase its mindshare as quickly as possible and to generate loyalty, this may be best done through multiple OEMs. All in all, it is clear that we don’t yet know why ‘Googorola’ was born or what it will achieve but, for sure, it will be an interesting ride for all of us and it will, it has, challenge many current assumptions as to what the industry will look like in 5 to 10 years.
 'Android is not free. Android has a patent fee. You do have to license patents.' stated Microsoft CEO Steve Ballmer in an interview last year with The Wall Street Journal. A fee paid to Microsoft, not Google, mind you. If Samsung is made to pay this fee in the near future, as Microsoft is trying to do, it will be the end of Android as a free OS. If to this we add the fact that both Microsoft and HP are now offering their own rival mobile OSes backed by a vast array of patent protection, some of Android's OEM partners may begin to think twice about their firm Android commitments. Android as a free mobile OS that rivals iOS in terms of functionality is an unbelievable proposition. But Android as an OS that requires you to pay Microsoft for each unit shipped is less so. Google's last great chance to save Android in this regard may have been the Nortel patent purse with over 6,000 patents spanning LTE, wireless video, Wi-Fi and Internet search innovations. Unfortunately, the search giant lost the rights to those patents in a bidding war against its rivals. The bidding was an long and exciting game where, after 19 rounds, Rockstar (Apple, RIM, EMC, Ericsson, Sony and Microsoft) paid $4.5 billion for the patents leaving Ranger (Google and Intel) out of the game. Apple reportedly paid $2 billion for 'outright ownership' of the set of LTE patents, RIM and Ericsson paid $1.1 billion together for a license to the portfolio. In addition, RIM will receive Canadian tax breaks for shouldering some of Nortel's operating losses and could potentially break even on the deal. Lastly, storage maker EMC is said to have negotiated a side deal for exclusive ownership of a small set of patents. Legal experts have noted that Apple, with close to $70 billion in cash reserves, could have purchased the patents on its own and may have chosen to partner with others in order to diminish the chances of the deal being blocked over anti-trust concerns. Granted, Google, which itself holds around £37 billion in liquid assets, could also have bought the portfolio and still be left with almost 80% of its cash intact. Then, if these patents are really this important for Android's survival, why not shed the cash and place itself way ahead of all the competition? Furthermore, with Intel - and its also very deep pockets - as partner-in-crime, why did they not go all out for the bid? One interesting reason has been voiced by Bodgam Dimitru, a BlackBerry enthusiast and proud Canadian: Google will buy Research in Motion. Dimitru goes as far as to detail 10 'logical reasons' why this acquisition makes sense. Perhaps the most interesting ones: 1) Mobile Patents: Not only would Google get RIM's patents, it would also get Google into the Nortel patent acquisition that we have been speaking about in the above paragraphs and for much less than the full price... 2) QNX: The foundation of the new BlackBerry Tablet OS and future QNX-based BlackBerry 'superphones' is literally a drop-in replacement for the Android's Linux Kernel thanks to its POSIX compliance. Key benefits include improved stability, better security and ease of rolling out new hardware. 3) Enterprise: In a world where Google owns RIM and there's a QNX kernel on Android, targeting enterprise clients becomes viable for Android. 4) Carrier Relationships: RIM has done a great job over the years at expanding its footprint around the globe by building great partnerships with carriers, which would only help Google expand across all markets. 5) Existing Commitment to Android: RIM has already announced support for Android apps on the BlackBerry PlayBook and future QNX-based BlackBerry smartphones, which clearly shows that Android on BlackBerry is already doable. Granted, none of this will happen if RIM can turn things around but, if worse comes to worse, this acquisition could open a brand new world of opportunities for both companies.
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