ISIS – The Antonym of Nimble

Last week’s announcement that ISIS is abandoning plans for its own payment network (NFC Times) is not a surprise. This blog has covered ISIS since 2009 (before it had a name). Now we can add ISIS to the great names in mobile payments: PayBox, Obopay, Firethorne, Monitise, Enstream, …

• ISIS Ecosystem or Desert (March 2011)
• Mercury New Co Sept 2010
• ATT/Discover Pre-paid March 2010
• NFC Breakout – Visa/AT&T (Dec 2009).. BTW I was wrong on the Visa part
• New Mobile Payment Rails (Nov 2009)

It turns out ISIS was a Desert.. why have they failed?

• Business Strategy based on “Control” instead of value.
• Consortiums are not nimble, MNOs are not nimble, and a consortium formed around a poor business strategy will not be able to adapt without a very strong and experienced CEO.
• Existing networks and ecosystems did not align with (or support) ISIS initial strategy.
• Building a new network is an expensive undertaking.. building one without a value proposition is impossible

From my perspective the tipping point that killed ISIS was their inability to exert control over the secure element. Their entire business plan was dependent on this. When RIM announced its SE architecture 2 weeks ago, with Apple likely to follow.. it became perfectly clear that ISIS could not control and provision wallets, cards and applications that access the SE (related blog).

Mobile payments are still firmly in the hype stage. Until a real consumer value proposition develops that leverages the handset’s unique assets, consumer’s data, payment, retailer integration in a way where multiple parties can “participate” it will remain a niche. Getting excited about NFC is like getting Satellite radio in your car.. sure it’s cool and all cars will eventually have it, it may even improve your life.. but there are plenty of alternatives and many people have no need of it at all.

That said, there are many useful software products that could use this technology to deliver real consumer value. Most innovations are either targeted to either the top end (cutting edge performance) or to the bottom end (lower cost) of requirements. NFC adoption will take place within multiple solutions targeting the “top end”, each of which has a strong network effect component. Solutions will succeed either by delivering the most value point-point or through network scale. Payments are but one core service that NFC must deliver on.

From my previous Blog

Globally, MNOs are looking for a platform where Operators can benefit from interaction between consumer and merchant, with flexibility to deal with a heterogeneous regulatory environment. The competitive pressures on Visa/MC are much different then they were 5 years ago (when both were bank owned). The network fee structures and rules were written with banks and mature markets in mind. …

All of this leads to the case for a new “Mobile Payments Settlement” network, a network which will alienate many banks. I expect to see Visa roll out the initial stages of this network in the next 2 months with an emphasis on NFC. Quite possibly the best kept secret I have ever seen from a public company. I’m sure many Silicon Valley CEOs are crossing their fingers (with me) on this, as a “new wave” of innovation is certainly close at hand that will drive growth (and valuations).