Gimlet Eye: 225 Million Users Are Hard to Ignore

We plead guilty this month to adding fuel to the fire of speculation surrounding Apple Inc.'s plans–if any–for moving into electronic payments. There are several reasons our story starting on page 22 deals with widespread industry speculation about whatÕs going on behind those closed doors in Cupertino.

First, what Apple does, or may be about to do, in a market as fraught with change and competition as payments is an unavoidable matter for any publication claiming to cover this business. Second, to be frank, the fact that so many people are wondering about Apple, and perhaps fearing it, is as newsworthy as the tech giantÕs intentions.

But our story was also prompted by a number of tantalizing facts. Apple's dominance in tablet computers (another market we cover this month, as youÕll see on page 42) positions it for a run at a fast-evolving point-of-sale market as merchants increasingly look to untether sales clerks from checkout counters. Its iconic iPhone, the first mass-market smart phone, isnÕt yet enabled for near-field communication (NFC), the technology most players are relying on for mobile payments. But Apple has applied for a range of NFC-related patents, and a number of experts expect NFC to be part of the next iPhone release. We'll see.

Finally, in a critical way, Apple is already in the payments business. Its iTunes online service claims fully 225 million active users. In what is rapidly turning into an age of wallets (ahem, page 30), that's enough users to make Apple the wallet kingpin–bigger than PayPal, bigger than Google, bigger than any of the mobile operators behind the Isis NFC venture. And late last year Apple extended this wallet to the physical point of sale, making it usable as part of a mobile self-checkout service called EasyPay. Don't forget, Apple maintains 245 U.S. brick-and-mortar stores.

With all those assets in its corner, it's little wonder Apple attracts attention. But there\'s one other factor that explains the urge to speculate. Apple plays its cards, so to speak, close to its corporate vest, not just in the payments market but across the board. Indeed, its secrecy is cult-like, and by now the stuff of legend. As markets abhor an information void, rivals and observers can only guess. Some guesses are more informed than others, but are only guesses in the end.

We don\'t pretend to have inside knowledge. But our own guess is that Apple is preparing to stake a bigger claim in this business, particularly in mobile payments, in a way that will doubtless surprise even the most observant Apple watchers. After all, it's the Apple way.

John Stewart, Editor

john@digitaltransactions.net