Rumour has it… Softcard is in trouble - “glassless” Google to the rescue?
Can you spare a little sympathy for the mobile wallet joint venture Softcard? Either a small show of sympathy or a dose of ‘schadenfreude’ (the please derived from the misfortune of others)? They just don’t seem to be getting it right, no matter what they do. Judging by last week’s news of layoffs, it could be that the partners are finally losing patience with the venture. Although, there may be the possibility of a helping hand from Google if some rumours are to be believed.
To re-cap; the payment technology consortium backed by Verizon Wireless, AT&T and T-Mobile has reported that it will have to lay off 60 employees in a ‘restructuring action’. This has fuelled rumours that the MNO backers have decided to stop putting more funds into the joint venture. The layoffs affected between 12 percent and 30 percent of its employees. Finextra has reported that the companies workforce is in the hundreds but this is a bit of an educated guess as the company never released actual employee figures. This percentage was calculated by going through LinkedIN to find how many people put down Softcard as their place of employment.
“Softcard is taking steps to reduce costs and strengthen its business,” the company said in a statement. “This includes simplifying the company’s organizational structure and consolidating all operations into its Dallas and New York offices, which involves layoffs across the company. We believe these efficiencies will best position Softcard in the marketplace while maintaining focus on serving our market.”
Softcard has had its fair share of misfortune, even having to change its name from Isis to distance itself from the muslim jihadist terrorist group of the same name. The venture created an app that lets shoppers pay in stores using their phones instead of a credit card or cash. It transmits payments using NFC in the same way that Apple Pay does. Apple’s entrance into the market meant that Softcard is locked out of Apple phones. But at a payments conference in November, Softcard’s CEO, Mike Abbott tried to frame this as a positive for his company and mobile payments on the whole. “We faced an industry that’s been fragmented, confused and riddled with inaction,” he said. “We can all now bet on NFC.”
However, despite reporting that the app had been downloaded more than four million times and using a muppet to educate users about the benefits of using Softcard, it still faces stiff competition from the likes of Apple Pay, Google Wallet, MCX, PayPal and a range of mobile wallet start-ups. At the start of last week it looked like this could be the beginning of the end for the mobile wallet joint venture.
Then news leaked out this weekend that search giant Google had made an approach to Softcard and stated their interest in buying the company. The price may be under $100 million, according to Techcrunch sources. Says Techcrunch, “That is either a huge bargain or a testament to Softcard’s difficulties as an enterprise: sources tell us that AT&T, Verizon and T-Mobile — the three carriers that started Isis in 2010 — have collectively invested hundreds of millions of dollars in the joint venture. Google (also) declined to comment. “We don’t have a comment, background, deep background, off the record steer, nod, wink or any other verbal or non-verbal response to these sorts of rumors,” the company said in an emailed statement.” Another Techcrunch source says that at one point the company’s burn rate was around half a million dollars per day, or around $15 million per month.
Google is not the only company interested in Softcard. According to other sources, PayPal and Microsoft have also expressed in the company. However, rumour has it that Google are specifically interested in Softcard’s patents, or more specifically what appear to be applications for patents. The company has just over 120 in all. As you can imagine, moral is supposed to be pretty low in the company at the moment. Ed Busby, the ex-COO of Softcard has gone on record saying, “It’s unfortunate that they’ve chosen now as a time to scale back. Externally, for the first time since I’ve been in this industry, the signs are pointing positively for mobile payments. I just think everyone realised that this would be a longer haul than people thought going into it, and as a result they aren’t willing to make the types of investment that would be required to sustain this.”
Even Google has a history of misreading markets that need a long haul approach to them. The wearable markets may be taking off (at least if you believe the forecasts) but Google has decided to discontinue selling their Google Glass headsets. It was reported last Thursday that the company is planning to stop the sale of the £1,000 smart glasses next week, just months after launching in the UK. That may be true but let’s be real: Even from the early days people loved to hate Google Glass. There was even a new word ‘Glassholes’ that was coined to describe those who went around wearing the headsets.
The company will also discontinue its ‘Glass Explorer' programme. Now that really WAS a stroke of marketing genius. This was a club where, for small price of $1500, if you were chosen, you could own your very own Glass. Google got people to pay for the privilege of beta testing their new wearable technology and reporting back to the company with their findings. And people did! How smart an idea was that from Google?
However, Google insisted it is not abandoning the project altogether. The company will continue to invest in its Glass at Work offering for enterprise developers and companies, and plans to release a new version of its wearable device "when it's ready".
The Google Glass team, led by Ivy Ross, will be moved out of the Google X division, where Google projects are incubated, and become its own entity within Google.
Analysts and industry commentators said the move was a backward step. Nicky Danino, senior lecturer in computing at the University of Central Lancashire, said: "It’s patently obvious that Google released this product before it should have. People spent a lot of money to get hold of the ‘beta’ version, but when they actually did, there’s wasn't much they can do with it. Personally I think the biggest disappointment is the lack of apps for it. In my opinion, Google should have kept this project under wraps for longer and waited to release when it was more reliable, and had other uses."
My point is that some of these new markets are long haul rides and so many companies these days seem to expect short term returns that seem out of phase from what should be genuine expectations. After seeming to miss the bus a few times and initial delays, Softcard may have finally had a half decent wallet and (apart from ‘Tappy’ IMHO) showed some decent marketing acumen by focusing on specific special offers for wallet users but ultimately they needed to account for that with revenue generation. Which can be slow. Or you could just be ahead of the curve with a product that only the early, early adopters will embrace. Either way, miss your correct window and the market will punish you for it.
Or create a really nasty name to call the users of your product. Either way; #fail.
Until next week.
Steve Atkins
Contactless Intelligence
