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iWallet from Apple

iWallet – Apples new iOS feature is on its way

This week, Apple AAPL -1.4% unveiled the first large-scale integration of iBeacon, a technology that, when coupled with their fingerprint identification system, may be another building block in building a revolutionary new payment system.

What is iBeacon?

Before we go into the details as to how this new frictionless approach to payment will work, let me explain what its component pieces are. In very simple terms, iBeacon is an indoor positioning system. While your GPS can identify where you are, its accuracy can be limited by a number of factors when you are indoors. So iBeacons are little radio transmitters that use very small amounts of electricity and can send information to a smartphone. The technology leverages improvements in the Bluetooth standards called Bluetooth Low Energy and is available on every iOS device since the iPhone 4S and every Android phone that supports Bluetooth 4.0 and Android OS 4.3 or later (that means that popular devices like the Samsung Galaxy S III and 4, the Nexus 4 or later, HTC One, and Droid DNA all support it).

When a consumer gets close to an iBeacon, information can be pushed to their device via push messages and the consumer’s location is made available to the retailer, which can allow for such uses as in-store specific promotions or payment capabilities.

This week, Apple rolled out the technology in all its stores. The iBeacon was incorporated into its Apple Store App, which allows consumers to skip the register lane and purchase items directly from their device when shopping for holiday items. With over half a billion users on iTunes, the company has a large trove of credit card numbers from most returning members, allowing it to optimize the payment process for existing customers.

How they rolled it out is an interesting case in widespread enablement of new technology. In order to understand how such a rollout can happen quickly and quietly, one needs to delve into the technical specification for what is happening. And that’s where things get interesting.

The following line was buried in the iBeacon specifications for developers:

“The Objective-C interfaces of this framework allow you to do the following:

•Scan for Bluetooth accessories and connect and disconnect to ones you find

•Vend services from your app, turning the iOS device into a peripheral for other Bluetooth devices

•Broadcast iBeacon information from the iOS device

Objective-C is the programming language used by iOS developers. Vending service from an app made it clear that the technology is not just about location. But the last line about broadcasting iBeacon information from the iOS device is the important clue here. With this, Apple has essentially declared that every iPhone, iPod Touch, or iPad sold since the iPhone 4S can turn into an iBeacon.

In a world where an increasing amount of point of sales systems are being replaced by iPads, this is a revolution in the making as Apple can now have local broadcasting in every store using an iPad. But how does that tie to payments?

Apple iWallet

In order to understand how Apple can do payments quickly, one has to take a step back and think of where Apple stores information: for most users, that information is stored in iTunes, gathered the first time they paid 99 cents for a music track, TV episode, movie, or app. That information has quietly added up to around half a billion different customer, a trove of data only match by Amazon in terms of sheer size.

Earlier this year, with the rollout of iCloud Keychain on mobile devices, Apple started taking information from iTunes and Mac computers down to their users’ devices. With loyalty cards increasingly being stored into Passbook and credit card information being stored in iCloud Keychain, Apple has been downloading the content of consumer wallets onto its devices, leaving only cash as the use case it does not directly compete with.

To secure all this, the company has been leveraging the one unique thing that customers will always have with them when they’re using their phone: their fingers. With the release of the iPhone 5S, the Cupertino giant unveiled the touchID system, which allows users to use their fingerprint to unlock a device. It is clear that Apple has found ways to uniquely tie that fingerprint to information on the device, creating a secure key based on a user’s unique pattern.

The net result is that, when combined with iCloud Keychain and Passbook, an iOS device sporting touchID is now more secure than a physical wallet.

And since any iOS phone can turn into a point of sale, the last thing remaining in your wallet can easily be replaced as Apple has turned your phone into both an outbound payment system and a system that could potentially receive money too, with no physical credit card being required.

Winning through reduced friction

With such a large opportunity, it’s obvious that competitors are bound to emerge and they have. Square, for example, was an early mover, offering a credit card scanner that attaches to smartphones and iPads. Meanwhile Google GOOG +1.16% has been trying to push the Google Wallet, a piece of software that was supposed to replace user’s wallets but has been increasingly moving away from the space; the large mobile companies (Verizon, AT&T T +0.82%, Sprint) have banded together to back ISIS, a solution that is supposed to allow users to pay with their phones.

While Square has focused on leveraging the existing payment systems (credit or debit cards), all the other players have had difficulties trying to enable a frictionless approach to mobile payment. Google wallet required widespread deployment of NFC on both registers and devices, a solution that was too expensive for more businesses; the ISIS conglomerate found its different stakeholders arguing over control, bringing its product to the market in a fashion that requires not only specialized hardware on the device but also a trip to the wireless carrier store to replace one’s SIM card in order to enable the capability.

The net result is that those previous efforts have largely failed because they required too much work on the part of the user. By building the components one by one and providing value around each of them, Apple may be close to assembling a complete payment revolution.

In the past few years, it has gotten user’s payment information by asking them to enter it into ITunes when they bought an app, a video, or some music. This allowed the company to build up a large database of payment details. Then it added iBeacon to every new device it rolled out without asking anything of its users. Later, it pushed users to share their payment information on the device through iCloud keychain by saying it would also synchronize passwords in the process; and finally, it unveiled fingerprinting as an easier way to unlock the iPhone.

Every step of the way, the company focused on reducing friction and providing increased value for the user when its competitors asked the users to do more work. The net result is that users have voluntarily provided all the components Apple now needs to enable a payment revolution. And we’re about to witness the rise of the iWallet, maybe not this year but pretty soon.

Microsoft’s Xbox One Launch

Microsoft’s Xbox One game console went on sale in the UK at midnight.

About 300 game shops and 100 Tesco stores across the UK stayed open so gamers could buy the device.

Microsoft held launch events in London, New York and Los Angeles to mark the arrival of the successor to the Xbox 360.

The launch comes a week after the US launch of Sony’s PlayStation 4 and sees the two start their fight for dominance during the key Christmas season.

No advantage

Although the PS4 launched first in the US, it will not go on sale in the UK and Europe until 29 November. By contrast the Xbox One went on sale in 13 countries on Friday, 22 November. Neither console is set to be available in Japan until 2014.

Marc Whitten – and chief producer officer, Xbox One, told the BBC Microsoft had experienced an unprecedented number of pre-orders for the Xbox, far exceeding those of the Xbox 360. “I feel very very good about where we are. Today’s launch is just the beginning of an amazing journey.”

Launches are typically staggered so console makers keep manufacturing costs down, to give makers time to translate content into different languages, and to ensure deals covering what media can be seen on the gadget are in place.

In the UK the Xbox One is expected to cost about £429 (514 euros) and the PlayStation 4 £349 (418 euros).

The more expensive Xbox includes a bundled Kinect sensor that does a better job of spotting movement and hearing sounds than the first generation of the device.

Microsoft also has ambitions for its console to act as a hub for anything seen on a TV, and the device can act as a controller for cable and satellite set-top boxes. Microsoft’s Skype net calling system is also integrated into the device.

The technical specifications of the two devices are broadly similar and the graphics on games are much improved on the preceding generation of consoles. Experts suggest that Sony’s PS4 has the edge on graphics and early reports revealed that two games – Battlefield 4 and Call of Duty: Ghosts – would play in higher resolution on the PS4.

Both consoles attempt to round out the social side of gaming, giving owners tools and services that let them play with or against friends or find opponents online.

“If history has anything to say about it, core gamers tend to favour Sony,” said Brian Blau, research director at analyst firm Gartner. “There is nothing I’ve seen to say that one platform is going to have an advantage over the other.”

Rob Crossley, associate editor of, called Microsoft’s build up to the launch “luckless and calamitous” because it had had to drop features, such as restrictions on used games, that had been widely criticised.


“With Sony’s PlayStation 4 being such a similar device and £80 cheaper, Microsoft will face significant challenges convincing shoppers that Xbox One is the smarter investment,” he added.

In 2013, Microsoft and Sony face a very different games market than that seen when the Xbox 360 and PS3 were launched. The past few years have seen the rise of indie and casual games, a renaissance in PC gaming and the emergence of rivals such as Valve, which is preparing its own gaming gadget.