Trends for 2016 [S11E07]

Happy New Year! In this first episode of 2016 the team consider the year ahead and the topics that will be making the biggest impact on mobile (they think - really… don’t stake money on this). They discuss virtual reality’s arrival in the home, apps that “aren’t apps”, the growth (and/or maturing - argue amongst yourselves) of mobile payments and the growth of “messaging as a platform”.

Ben: Hello and welcome to 361, a weekly podcast about mobile tech and everything around it. My name's Ben Smith.

Ewan: I'm Ewan MacLeod.

Rafe: And I'm Rafe Blandford.

Ben: This is season 11, episode 7, and this week we are talking about trends for 2016. Yes, we're looking at virtual reality, pondering apps that aren't apps.

Rafe: Speculating on the future for payments, and getting enthusiastic about messaging as a platform.

Ben: Welcome back chaps. How are you doing? Come on, let's do it.

Rafe: I'm feeling very happy after a Merry Christmas.

Ben: Oh yes I'd forgotten. Christmas has happened, hasn't it.

Rafe: It has, yes.

Ewan: The geese have got fat already.

Ben: Did you have/had a nice Christmas?

Rafe: I will have, I mean I have had a nice Christmas.

Ben: This reminds me of a school boy Latin, trying to get the verbs right.

Ewan: Did you do Latin?

Ben: I did, yeah. Did you not?

Ewan: No. Did you do Latin, Rafe?

Rafe: [Amor et meus, et meus immortus, immortus meant 00:01:26]

Ben: Exactly.

Ewan: Oh, come on. Veni, vedi.

Ben: Exactly.

Ewan: Next calca concede.

Ben: I think I've told this joke before. We had a textbook that was the story about some people who lived in Pompeii, and I was just praying for the volcano to go off. Just because, inevitability, surely the book had to end.

Ewan: So both of you did Latin?

Rafe: Very briefly, yeah.

Ewan: What did you do?

Rafe: [inaudible 00:01:46] Latin.

Ben: Well all I can do is decline verbs like Rafe just did. That was it. I can remember some slight unsavory Latin that sounds a bit like rude English words, but we won't go there.

Rafe: Oh that's very impressive.

Ewan: Not really. I'm representing those listeners that didn't do Latin.

Ben: Well exactly. Good, well that was an unexpected turn of events.

Ewan: Who knew?

Ben: How are you, Ewan MacLeod?

Ewan: Pretty good, thank you. Very, very good. I am welcoming the new year.

Ben: I'm currently enjoying a bit of time off, which will be jolly nice. Rafe Blandford, what are you currently doing?

Rafe: I'm also enjoying some time off.

Ben: Are you on the estate or are you back up in the London pad?

Rafe: I think I'll be on the estate, which is in your imagination, but I will be going back to Sussex.

Ewan: You say that.

Ewan: I just noticed that after 11 seasons we've finally now got you referring to as if it's a thing.

Rafe: Yeah. I'm slipping. It's like Pavlovian, almost.

Ewan: Any kind of dessert, really. Okay, excellent. Thank you to all of our loyal listeners. Hope you all had a nice, festive period.

Ben: Yes and thank you for all the nice messages and feedback and everything.

Ewan: All the gifts.

Ben: Oh. Did you get gifts?

Ewan: Yeah.

Ben: Fair enough. Now we are ...

Ewan: Because my address is published, that's why.

Ben: Fair enough. Rafe Blandford, what are we going to talk about today?

Rafe: We thought we'd talk about some big trends for 2016. It always happens this time of year, but we've kind of been gazing in to our slightly murky crystal balls and just wanted to talk about ...

Ewan: I'm sorry. He's walked in to that one, listeners.

Ben: Go on, Rafe. Tell us about your murky balls.

Ewan: Oh dear, come on.

Rafe: We thought we'd pick out a few topics to talk around. Things that we think are going to be big, are going to come to the forefront of consumer attention and the industry attention this year.

Ben: Yes, okay. Avoiding the obvious joke about what could be bigger than Rafe's murky balls, Ewan, let's quickly talk over the topics that we're going to cover. We cherry picked a few, because obviously you can't cover a whole year in 30 minutes. What are we going to have a quick look at this time?

Ewan: Okay, we're going to have a look at virtual reality. We have actually talked about that briefly on an episode last season, right? Then we are going to look at atomic, hold on a minute. Let me put my mouth in, or teeth in, or whatever it is. Atomisation.

Rafe: Atomisation.

Ewan: Dear me. Atomisation ... I'm terribly sorry ... of apps. Atomisation of apps. Mobile payments, payments via mobile or through mobile. Then messaging as a platform. There we are.

Ben: That all sounds a bit nerdy.

Ewan: Right, no. It's fun.

Rafe: Just because I came up with them, they're are not nerdy, Ben.

Ben: Virtual reality is not nerdy, and I am quite excited about that. Rafe Blanford, kick us off on virtual reality. What do you think the 2016 trends for virtual reality are going to be?

Rafe: Well I think the first thing to say is it's been around for a long time. I mean, we've had simulators and virtual reality at various scales. I think the important question is why are we talking about this as a trend for 2016? I think there's two reasons for this.

Ben: Do you think 2016 could be the year of mobile?

Ewan: I think it may be.

Rafe: I think every year should be the year of mobile.

Ewan: Is it post-mobile?

Ben: Yeah.

Rafe: I don't think we've quite got that far yet.

Ewan: Well I think we're definitely post handset.

Rafe: Yeah. No, that's interesting.

Ewan: Post operating system.

Ben: I've detracted from your sensible point with my facetious comment. If it has been around for awhile, why is ...

Ewan: It's been rubbish for awhile, let's be clear.

Ben: Okay, well maybe that's it. Why is this year the year?

Rafe: I think there's two things. First, it's cheap. That's really represented by Google Cardboard, which has been coming to the fore for a while now, but was noticeable that last year the New York Times gave away one million Google Cardboard as part of a launch for a VR film.

Ewan: What are Google Cardboards, just in case you've missed that?

Rafe: This is a VR headset that you can effectively make by doing a few cardboard folds, and putting in some glass lenses, and sticking your phone in the back.

Ewan: I was the only one in the public that could do that, by the way.

Rafe: Okay, I'm impressed, Ewan.

Ewan: We went through all the RBS techs, the only person that could do it was me.

Ben: When you say do it, ...

Ewan: Because it comes flat packed, this cardboard little thing.

Ben: Oh, I see. You're claiming origami skills, are you?

Ewan: Yeah.

Ben: Fair enough.

Rafe: You basically hold it to your head, or you can use a rubber band or something like that, and then you look in to it. Essentially, it's a poor man's VR headset, but when you can do this for ... It's a fiver, or something like that. Then you can get plastic versions of Cardboard for around 20 or 30 pounds.

Ben: Plastic versions of cardboard?

Rafe: Yeah, which just doesn't sound right, does it?

Ben: Now before we move on, I just want to challenge you. £5 for the headset, yeah, but you do need to put a smart phone in it. Is VR really cheap, or is it just cheap enough?

Rafe: It's a good point. I would say it's now cheap as an accessory to a smart phone, and making assumption that a lot of people now have smart phones, so they're capable of doing ... When we're talking about ownership levels in some countries approaching 70% or 80%, there's a good bet that some will have a smart phone.

Ben: There's certainly a good bet you'll have a smart phone if you're listening to this, so it's accessible to ...

Rafe: Absolutely.

Ewan: On your smart phone.

Ben: You're probably listening it on your smart phone.

Ewan: Or via your smart phone, via source.

Rafe: I mean, by that same argument, any of these app-led businesses also now have a market, because smart phones have reached that point. I actually think the more important things in making VR, as Ewan hinted at earlier, not crap, is actually the fact you've got consumer level pro VR coming in.

Ewan: From whom?

Rafe: Oculus Rift has been the standard bearer. They're talking about a Q1 launch. You've also got Sony VR going to launch probably towards the end of Q1. You've got HTC Vive.

Ben: I've been reading really positive reviews of the Vive. Anyone's who's used it has said how impressive it is as a system.

Rafe: Yeah, and the reason for that is it's actually room scale VR, in that you can get up and walk around with it on. It's much closer to that Star Trek, Holodeck feel than Oculus Rift, which tends to be sitting down, a more static VR experience.

Ewan: To be pedantic, you can get up and walk around with any of these systems on. It's just whether or not that's a smart thing to do.

Rafe: That's right. The Vive is designed around being able to that. There are some sensors and various inputs through Xbox.

Ewan: What's the Xbox thing? I've forgot. I can't remember. What's the Xbox thing? The adapting it with the Xbox, being away from the TV?

Ben: Kinect.

Ewan: Right, so this is how I'm viewing it. Basically, within a year, I think we will see virtual reality headsets being marketed as one of the things that you can buy to enhance your entertainment experience. Just like you would, you've got Xbox, oh, you wanted to get Xbox Kinect.

Ben: Yeah.

Rafe: I think that's interesting, because actually you can see Samsung doing exactly that with the Gear VR, which has become almost the must have millennial accessory for your smart phone.

Ben: Listen to Rafe Brandford, in touch with what the millennials like.

Rafe: Right. Technically I just about qualify as a millennial, which I discovered, to my horror, the other day.

Ewan: Do you?

Rafe: Yeah. Just 18 before the ...

Ewan: Didn't you go to Oxford?

Rafe: No, I didn't go to Oxford. I went to Cambridge. That's the kind of famous mistake. Yeah, yeah. Very funny, Ewan. Anyway, the point about Gear VR is actually Samsung is starting to make a play of all the things that its smart phone connects to, and they've done it with the wearables. They're starting to do it with smart things that we've been talking about in our Smarter Home competition. VR, I think, is one of the most accessible, because it's going to be about £100 as an add on.

Ben: As a millennial, though.

Rafe: I really regret that.

Ben: It's refreshing to have you in the room though, because finally we can find out what the young people think.

Ewan: Yeah, it really gives you a different perspective, doesn't it?

Ben: It does. It's nice just to be able to see one up close.

Ewan: I feel young when he's in the room.

Ben: I just feel more vibrant.

Ewan: That's right.

Ben: Maybe I've been re-energized by the youth in the room.

Ewan: Indeed.

Ben: I don't doubt all of what you've said, Rafe, about the cost of the devices, and the availability, and the ubiquity, and the maybe even some consumerization, but why are people going to care? I mean, what are you going to use virtual reality for this year that you didn't use it for last year?

Ewan: Yeah, what's the killer app?

Rafe: I think the big problem is still content with VR, and I think it's going to take awhile for that to get sorted out. I think it will be around gaming to start with, and to a certain amount, visual experiences. I'm talking about VR movies. Oculus themself have set up a studio to produce them, but it's going to take a while for that to get anywhere. While it's a trend for 2016, I think it's still going to be pretty niche. As you start thinking about the implications of virtual reality, it has very, very broad applications and I think some of the more interesting ones are outside the obvious entertainment ones. I think that will happen. It's just going to take time, like any new content form.

Ewan: Do you mean in the context of adult entertainment, for example?

Rafe: I wasn't actually thinking of that, but it's interesting that your mind went there. I was thinking about ...

Ewan: Well I've been reading a lot, dear listener, about adult entertainment and virtual reality, because I think that will be the gateway.

Rafe: It's just about the articles, isn't it?

Rafe: No. I thought it was a Fast Company, so I was reading about it. There's an adult entertainment company that are producing 3D virtual reality content.

Ben: Right. Yes, okay.

Rafe: Well I was actually thinking about its applications for things like health.

Ewan: What were you thinking about? Buildings insurance?

Rafe: There is the fit thing. It actually reminds me of what a big thing the Nintendo Wii was when it came out, all about Wii fitness. I wonder if something similar could happen with VR.

Ewan: You've got to be careful, though.

Rafe: You have to be careful. I actually think the more interesting one is in treating therapy where it's actually being used for things like post traumatic stress disorder, because being able to put people in an environment becomes very interesting in that sense. Also, for pain management, and things like that, it allows a level of immersion that previous technologies haven't. You can also then think about the enterprise uses, where potential in businesses, it could lead to process change. What does a meeting look like in VR?

Ewan: What's the right price point, just before we move on? $99?

Rafe: That's a tricky one. I think it's going to have to be the $100, £100 price mark.

Ewan: You're not going want to pay more than that, are you.

Ben: Yes or no answer, Blandford. Are we going to see people wearing VR headsets for entertainment?

Ewan: Walking down the street?

Ben: I was thinking on the Tube, or in public transport?

Rafe: No. I see it as something that happens in the home.

Ewan: I don't think that you can do that, can you? Not in the Tube.

Ben: Well look, I've seen all manner of things on the Tube, but we haven't got time to go in to that now.

Ewan: Yeah, right.

Ben: Okay, next up we're going to talk about atomisation of apps. This one's an interesting one, because I've only just learnt what this means. Rafe, you're going to school us on this. The way that we were talking about it before the show, was going back to the beginning of the season 11. We talked about WeChat and Ewan's trip to China, and we talked about how WeChat was this WhatsApp come Facebook Messenger like service, but you were raving about it being plugged in to every business.

Ewan: Connected to everything. It is the platform now.

Ben: Rafe, you were explaining that, actually, the atomisation here is about using third party platforms as ways to distribute content through, let's say, it could be Facebook, it could be WeChat, it could be YouTube, it could be any new platform, rather than owning your own publishing mechanism. Am I completely ...

Rafe: No.

Ben: I was looking at your face. I was looking for some endorsement there.

Rafe: No think that's absolutely right. This phrase really comes from atomisation of content, which content strategists or content producers would tell you has been happening for the last few years in the web sites, or actually beyond that.

Ewan: What do you mean by that? Yeah, go on.

Rafe: It's the idea that, traditionally, content has lived within the publisher's control, either in a newspaper or magazine, on their website. But increasingly, we saw it become available on third party platforms. You think of things like YouTube, Instagram, Twitter, but also WordPress. Now we're having medium Facebook instant articles, and that kind of idea idea that you will have an original story, but it will become almost atomised and spread in to many other places. Now, you can talk about it in terms of content production, but I think, in this instance, it's more interesting to talk about the publishing of that content.

Ben: From a regular person's point of view, if you're involved in content production, then this may impinge on your life a bit, but as a regular person who may be more of a consumer of content ...

Ewan: When am I downloading it?

Ben: Well, this is it. How is this different, Rafe, from an online newspaper hiring somebody else's platform as a way to distribute their videos? Let's say The Guardian, for example, in the UK. Guardian Media, they're very unlikely to have their own video platform. They'll hire somebody else, use that to distribute their video content. Why is that them owning the content, and yet them perhaps putting it on YouTube or in Facebook videos, why is that atomisation? More importantly, why, as a consumer, do I care?

Ewan: You don't know, cool. Right, let's move on.

Rafe: I just feel I'm starting to impinge into domains where I need to go and consult a proper content strategist.

Ben: We have eleven seasons, and we have known what we've talked about. We should stick with it.

Rafe: There isn't actually anything that's inherently different about this. It's just about the fact that the way people have consumed content has started to change, in that we consume it in many different forms and in many different platforms. Publishers have had to respond to that in the way they produce and distribute their content. It's really this idea that, like everything that is made up of different molecules and atoms, it can then get spread into many different places. The type of content you produce becomes different. I'm wondering whether we should get in to the atomisation of apps as the trend here.

Ben: Right, well we'll come back to the atomisation of apps in a minute, but Ewan, rumor has it you once wrote a blog, so you were a content producer. You have other people to do it for you these days.

Ewan: Oh no, no. I still do things, but carry on. I'm a content author, thank you.

Ben: You are a content producer, so how would you feel about somebody discovering the bit of video that you shot of a product, let's say? You go to a smart phone launch, you write a blog post, you take a load of Instagram pictures and you make a YouTube video of the unveiling. How would you feel about somebody watching the video, because they find that on YouTube, by searching for it or by recommendation, but they're not seeing the rest of all of your content? Because you've gone to all of this trouble of making pictures, and words, and video, and maybe a podcast about it.

Ewan: It's less of a problem for me, because I don't monetize it. If you're monetizing that, or you're relying on eyeballs, that's a real problem, because that means you've effectively got the content for free. I want you on my website, I want you subscribing, because that's the old model, right?

Ben: What about if I had to go to your website, 100 people would watch the video, but if it goes on to YouTube, 1,000 people discover it?

Ewan: I used to actually use my own video hosting platform, my own, because I didn't want it on YouTube. I wanted to control it, just because it was faster, I had better hosting facilities than YouTube, it was faster than YouTube. Then I thought, "Oh Jesus, a new phone came out, a new this, a new that." I thought, "I don't want to have to keep transcoding the video myself," and sent it to YouTube. I'm quite comfortable with that. But I can see a lot of publishers who still want to control the experience, and bluntly, the sponsorship and the advertising. Who want to, if they've caught you on with the video, you'll then have to see loads of internal promotion, to say, "Hey, please come back to my website." You still see it on YouTube. When you're watching a video: "More videos available. Please click, please click."

Ben: Okay, so this is all somewhat a long preamble to get to the atomisation of apps, Rafe Blandford, so now we broadly understand what the concept of atomisation is, or at least you ...

Ewan: I'm a massive fan of it in the context of Facebook. I really, really see when someone links to an article that is hosted on Facebook.

Ben: That's better for you.

Ewan: Oh, it's amazing, because it's there.

Ben: Fast and elegant.

Ewan: Completely. I don't have to wait for it to load on a very, very slow site that has to load all the idiot banner ads.

Ben: Talking of fast and elegant, Rafe Blandford, explain to us what the atomisation of apps is.

Rafe: I think I want to explain it by giving you an example, and that's Spotify. Originally, it started out you, would get Spotify by downloading the app and experiencing it pretty much within that app. Increasing now, people who listen to Spotify will do it elsewhere. It might be in their car, you had made reference to that earlier in the season. It might be on your Sonos WiFi speakers, or indeed any other set of connected home entertainment system. Actually, you see these partnerships that Spotify is forming with a whole range of both appliances and third parties in order to have Spotify elsewhere. That means, for some people, they'll actually experience Spotify more through those objects then they will through their smart phone.

Ben: When I use the Spotify app through my smart phone, I've got access to the Spotify content catalog, of course, but I've also got their user experience, their recommendation engine, their curation, a bunch of other stuff. To me, they are the app, and the curation, and the content. When I experience it through my Sonos, for example, very crudely, I'm probably really only experiencing their content. Is there a risk there that Spotify is giving up some of the value, some of the stuff they sell, or some of the reason to use their service, is going away because of that?

Rafe: I think there is a danger of that. Ewan talked about how he wanted to control his content, but you then trade that off by willingness to have people listen to it more, becoming more locked in, that's sort of becomes ...

Ewan: Join it as a subscriber. That's a value that I ascribe to my Spotify subscription.

Ben: If Spotify sells you a giant pile of records in the sky, they're worth, I don't know, £5 a month to you. If they sell you the best curated radio stations where you just press go and you get music you always like, they're worth £10 a month to you. This is the Apple music model perhaps, right, where they've curated it. Is there not an argument that some app providers won't want to be atomised? They want to sell you the whole experience so they can monetize all the parts of it, and then when they spot a gap they can go there.

Ewan: Isn't it about attention?

Rafe: It is. Actually, I think it's about the interaction points. People don't choose to follow the model that the company lays down necessarily. That's what we've learned with content and the atomisation of content. That's why traditional publishers have been so disrupted, and that was rather translated through the web. I've chosen Spotify deliberately as an example, where actually it works because it plays into their business model. Basically, they're interested in you listening to more of their service, because that's actually the way you're more likely to be retained as a subscriber. I think for some, it does mean a readjustment to the business model. There are a couple things like this. We've also been discovering in our smart homes how actually it's not about the app on the phone very often, it's about making that smart or automated or delegated decision for you. But we're starting to experience those apps in the home environment, essentially.

Ewan: Is Uber being atomised or atomising itself? I see it in different apps.

Rafe: Yeah. I then wanted to translate it back in to something where it hasn't gone so far, because I think Spotify is the ultimate example of this in the experiencing it in other spaces. Uber, and in general this idea of STK, or extensions for apps in Apple parlance, means they can effectively be embedded inside other apps. You will experience them then, as Ewan's alluded to there, the ability to order a new preferring site, say a restaurant or a pub app. We've started to also see that tie in with things like airlines, when people are arriving at a new destination.

Ben: Route planning apps. Citymapper, which is our favorite London travel planner.

Ewan: It's like Uber, isn't it?

Ben: Yeah.

Ewan: But not GetTaxi?

Ben: No.

Ewan: There's your difference. They've chosen one.

Ben: Or rather, Uber were first to market, and therefore have more visibility.

Ewan: Yeah.

Rafe: That becomes interesting, because that way of acquiring customers, and starting whole new flow, gets interesting. But it's not just about those apps. We can also think about wearables, and how effectively the Apple watch has mini apps in it that are extensions. Apple has very particularly gone after extensions of those. We're also seeing Google Now on tap, and that's another example of where you're experience an app without ever going into it, potentially. We've seen it already with push notifications, and particularly rich push notifications. I think we're going to see a lot more of this. If I was going to describe it in one way, I'd actually say it's about seeing apps on the different surfaces. Those sufaces can be within the phone itself, i.e., another app, or at the system level, or can be in another object all together, like a WiFi speaker in their fridge, or something like that. That's what I mean by the atomisation of an app. The majority of the time you interact with an apps brand might not be in the traditional sense of a smart phone app. I think we're going to see a lot more of that in 2016.

Ben: Okay. Time to move on. Now, a really quick one, because we're short of time. We're going to talk about payments. To say 2016 is going to be the year of mobile payments seems ...

Rafe: A bit ovious.

Ben: Both obvious, and possibly somewhat late, given last year Apple Pay launched. There was lots of talk of mobile payments in general because of that. Although, obviously, lots of people had been doing it mobile payments long before Apple Pay came along. Rafe Blandford, real off a few things that are going to happen in 2016 that make you think it's going to be mobile payments.

Rafe: I just have to look in to the crystal ball and say, yes, it's going to be the evolution of Apple Pay. I think the obvious thing to expect there is peer to peer payments.

Ben: It's interesting that, oftentimes, peer to peer is one of the first things people do, because it's relatively easy to do, isn't it?

Rafe: Yeah.

Ben: Whereas this time around, they've gone for the hard stuff first, but actually, you pay more retailers than you pay people.

Rafe: Absolutely, and I think the other thing we'll see is Apple Pay in the web browser, or particularly in Safari. That might then start translating in to the desktop as well. You use your phone as a payment mechanism for something that you're doing on your desktop, for example. There's all the expansion of that. Apple will roll out more partnerships, it will go into more markets. Of course, Apple is only at 20% of the global market. Android Pay is coming along. Samsung Pay is coming along. Quite how that all shakes out is yet to be seen, but that is actually the mass market in some ways. I think it's really interesting to take a look at those and wonder, is Google Wallet going to expand out of the US, for example? How is that all going to work, because that gets us scared. It hasn't happened before.

Ben: How will Google Wallet and Android Pay relate to each other? You've got these ends of the Google ecosystem that's mirrored in other places as well, isn't there, in terms of the conflicts between Chrome OS and Android, and various other pieces where Google has its fingers in lots of different pies.

Rafe: It does feel like Google has quite a lot of work to do to make that a more cohesive offering. It's made more complicated by the fact that you've got something like Samsung Pay. Samsung, everyone will just say they should go away, but they're not going to.

Ben: Can I be one of those people then?

Rafe: Yes.

Ben: I just assumed, because when we talked through this topic in advance, I just assumed when we wrote Samsung Pay on the agenda, what we were going to say was "Aha, Samsung put a huge amount of effort into building Samsung Pay, and now they've been completely made irrelevant by Android Pay. It sucks to be you." But you both said no.

Ewan: No, absolutely not.

Ben: Why am I wrong?

Ewan: They're going out further with it. They are really working hard. Well, I would presume that Samsung were looking at Apple and going, "Well, they're doing it, so we probably need to do it."

Ben: We joke about this all the time. When you buy a Samsung phone, you get all the Samsung services and all the Android services. Oftentimes, you get two of everything, because you get the Samsung variant and the Android variant. Why would people with a Samsung phone ... Admittedly in the markets we're in, they're the dominant Android handset provider. Why would people pick Samsung Pay rather than Android Pay? Isn't Android more of a brand they recognize and trust?

Ewan: It's about more of what the consumer thinks. I'm struggling with this one.

Ben: Is it because Samsung makes my fridge or my telly, whereas Google has my email and my ... In terms of my respect for the respective brands.

Ewan: Well this is the trouble for Samsung as a manufacturer, and it's something that I talked about ages ago on the podcast. I think these big companies need to get us to subscribe to them, and not messing around trying to sell me individual products.

Ben: What's the real answer, Rafe Blandford? Why does Samsung Pay matter?

Rafe: I think you have to remember that Samsung is of an equal scale to Apple when it comes to the number of handsets being sold. That's going to ...

Ewan: What about user perception?

Rafe: I think user perception continues to be a problem for Samsung, but I don't think we should write them off. The reason I say that scale is important, because ultimately, that's what will attract some of the financial institutions. Now they will have to prove that they can make that happen, but Samsung have done some pretty savvy things in terms of, in the States at least, they also support payments from magnetic stripe machines, which still represents a very significant part of the infrastructure in the States, versus chip and pin in Europe. They're basically going to be able to use Samsung Pay in more places than they can use Apple Pay or Android Pay.

Ben: Chip and PIN is coming. It's many, many years later than you would have thought, but chip and PIN is coming to the States.

Rafe: It is, but it's going to take a long time for that to be fully rolled out. I think, frankly, you can sometimes look down a little bit too much on Samsung.

Ben: I don't think you can look down too much on Samsung.

Ewan: No I don't think you can, when you think about what the poor consumer has to go through.

Ben: The reason I was dubious was not the scale, because you're right. The point is that all the Samsung handsets that matter are Android. Any argument you make for scale about Samsung Pay surely has to be made for Android. Because sooner or later, with the exception of those phones that might be in the market that do have one but not the other, within one or two cycles, everything that is viable as a Samsung Pay device is also an Android Pay device. They're actually distributing their own competition alongside their own product, presumably.

Rafe: We'll have to see how it shakes out, in terms of is Android Pay and Samsung Pay on the same handset? I suspect they won't be. I think you'll just be offered Samsung Pay.

Ben: Do you think Google Pay won't be accessible through the Play store, or anything like that?

Rafe: I think it wouldn't have necessarily the same experience, in terms of the integration, perhaps with the fingerprints. I mean, this remains to be seen. We're speculating about what's coming down the road. I think, actually, this is one of the big problems for Google and Android in general, that it doesn't offer that same kind of vertical integration that Apple can, because it controls all parts of the sack.

Ewan: Let me ram that one home. Have you used a Samsung recently?

Rafe: I have, yes.

Ewan: Have you logged into it as a consumer would?

Rafe: Yes, I have.

Ewan: Okay. You haven't done that, Ben?

Ben: No, I haven't, actually.

Ewan: Right. Therefore, Rafe, have you got a Samsung account?

Rafe: I do, yes.

Ben: Oh, now I do have a Samsung account, because I tried to buy some smart things.

Ewan: That is completely different from a Samsung account.

Ben: No, actually the problem was they are the same account. To buy through the Samsung store, it is a Samsung account. Because I clicked the wrong button, and it said, "Here's your Samsung apps. You don't have any." I said, "I don't even have an Android device. Leave me alone."

Ewan: Okay. Then why I'm sitting here saying, "No, that's different," is because I appear to have two different Samsung accounts.

Ben: Oh, almost certainly. I mean, the process of logging in took 20 minutes and 19 passwords, so it's entirely possible.

Ewan: Right. Maybe this is wrong, but I appear to have a Samsung SmartThings account, and I have a Samsung account that I logged so I could get a 50 GB Dropbox account. If I'm confused, what is the user feeling, the end consumer? Then are they going to put their bank details on it? Are they going to attach their bank to it? This is a real concern I've got.

Rafe: When we talk about trends, these things are going to become visible in 2016, is what you were saying, Rafe Blandford.

Rafe: Yeah. I think it's more that Apple Pay launched and was available. We will see the same thing happen in the Android world, in a more meaningful way to that which it's launched so far. I actually think all of these mobile payment still have a problem in the stats show that Apple Pay use has actually dropped off a little bit in the last month or two, going I think it's from something like 0.35% of eligible transactions to about 0.25%. There is still this problem. It actually comes back to something we've said before. The most interesting thing for these smart phone based payment systems is actually making payments super simple and easy in apps and websites, rather than as replacements for your credit and debit cards.

Ewan: When you're in Starbucks, do you know how to get Apple Pay up quickly?

Rafe: I don't, but please tell me.

Ewan: You have to double tap the home button, right? That brings the phone straight into ...

Ben: But of course, I don't do that, because that doesn't tie into Starbucks loyalty platform to collect your free coffees. The addendum, I'd say, to what Rafe was taking about, yes, Apple Pay has to be in the browser, Apple Pay has to be integrated into all the apps, but it also has to offer an opportunity to tie into loyalty platforms as well.

Ewan: Did you know double tap?

Ben: Yes.

Ewan: Right, because consumers don't know this. When I tell people, they go, "Oh, right. I didn't know. I've got Apple Pay. It's quite a faff to get it out." It's quicker to bring their card out. They're standing in the queue, they've got their phone in their hand, and what they actually do is swap hands, so they get their phone in their right hand, they then put their hand in to get their wallet and bring out their card.

Rafe: Even the same applies to Apple Watch.

Ewan: They are enabled with Apple Pay. They can easily do it, it's just easier in their mind to do the card at the moment.

Ben: I think, certainly in the UK ... You and I went and bought coffees after the last recording. Actually, you had some water from WHSmiths on the station platform. I tried to use Apple Pay, and it failed. It turns out, actually, that the card reader on the machine was faulty, because then my contact list card failed as well. If you're going through a railway station, or if you're a busy till, and you're there with your phone, "Oh look, I'm just using Apple Pay," and it fails, you're embarrassed, because it's needless complexity. If it doesn't work with the dumb piece of plastic, the person behind the till, and the people behind you, who all hate you now for slowing down, they say, "Oh, that piece of hardware must be faulty." Because everybody does contact list now, it's the norm, and you're not showing off. If you're doing it with your phone, you're showing off, and therefore it's you're fault if it breaks. Anyway, we said we would cover that one quickly. We've gone on. Messaging as a platform. Rafe Blandford, we started to talk about WeChat, and things like that, in atomisation of apps. Why have we gone back to talk about messaging as platform, and this idea that messaging now becomes the basis by which you interact with things, and businesses, and artificial intelligences?

Ewan: While Blandford's thinking, can I just take a moment to say, "Ha ha, boo ya. Up yours, operator?"

Ben: There's always time for that.

Ewan: Right, because four/five years ago, we were recording. Yeah, I was still going to operator symposiums, where people were trying to convince me that next generation SMS wasn't the way ahead, and that consumers would still continue to blindly pay 10 pence per 140 characters for enhanced ... What do they call it? RTS.

Ben: RCS.

Ewan: RCS, yeah. I just had to look at these people going, "No, really? Really?" Can we just now say, "Ha, ha. Done."

Ben: There's something about this strange mix of being an operator and finding this unique point in the market where you can milk people 10p for 160 characters, just because there's this desire that's not fulfilled any other way. That makes you hugely optimistic that that situation is going to go on for ever, and ever, and ever. Things will never change around you, and that consumers will not work out a better way to do it when the technology catches up.

Ewan: For me, certainly, I never ever use SMS, apart from when I'm receiving notifications from companies that haven't quite upgraded to the app world.

Ben: The only time I send SMSes now are to Mrs Smith's Blackberry.

Rafe: Yes.

Ben: People that have non-iOS devices, even green messages, because it's a corporate device, it doesn't have WhatsApp on it. Even other people I know with Blackberries, I'd send WhatsApps in preference to SMSes.

Rafe: Yeah. This actually very nicely describes why it's important.

Ben: Because you and I think it's important.

Rafe: Obviously, and the stat here is that WhatsApp hits 30 billion messages, versus 20 billion for SMS.

Ewan: Eat that, operator.

Rafe: Exactly. You're right to say this is actually, in one sense, an extension of the atomisation of apps, because it's apps existing on messaging apps. That's where messaging as a platform comes from. We talked about WeChat earlier in this episode, and Ewan talked about his experience with WeChat in China in Episode 1. It's this idea that the messaging platforms have become so all pervasive that over the top services are sitting right at the top of the app store charts. Nearly everyone has them. They then become quite a good vehicle for services and apps, or rather a part of an app to presented to the consumer.

Ben: Do you know what the precursor to this was? I was just thinking about this before we started recording. Do you remember all of those web apps, back in the early days, that had Google Talk interfaces?

Rafe: Absolutely.

Ben: That's the analogy. There was a task management product called, Task dot L-Y, and it's shut down now, unfortunately. But I loved it, because you could set/retrieve reminders and tasks, and you you could interrogate it ...

Ewan: Yeah, it was really good, wasn't it.

Ben: Over Google Talk. I loved it, because Google Talk was there running in the background, it was dead quick. It meant I could use it on my mobile, before they actually built a native mobile app. This is the precursor, because everything is there in that same coms window.

Rafe: Yeah. That actually coms window has context and it has history. It actually provides you with a very conversational kind of interface. That's where WeChat has been doing a lot of things. They've also been doing it by adding, effectively, mini HTML5 apps or websites to get at some of these services. I think what we'll see is it happening much more in the chat window itself. Facebook has started talking about this. They talked about it at their developer conference this year. The idea that you'll have these interactive bubbles, that will effectively be special types of messages, that will come back either in a response to a message that you send, or it might be an AI message. Facebook started talking about M, and showing off some of that. They said they're going to start in the retail commerce and airline space. For example, you will get a message from your airline with your trip itinerary. You will then, on that same message thread, then get information about gate changes, or delays, or when you're meant to check-in. Some of the time, that will link either to the mobile web or the app in order to let you facilitate some of that additional service. But the key point here is that the messaging app, which everybody uses, and is a central part of their lives, becomes a hub for a lot of these other services. The thing to think about here is, there is a big problem in getting people to install apps. All the stats show that people install maybe 30 apps, and only use about 10 intensively now. Obviously, there will be outliers to that. But for companies going, "How do I get to be one of those 30," or, "Should I have an expectation of being one of those 30," being inside the messenger window is going to be, I think, an easier barrier to entry. I think people will be a lot more accepting of having certain types of services consumed that way. I think it becomes a really interesting way for consumers to be present on the phone, without necessarily having got over that app hurdle.

Ewan: Let me take you into the real world now, because you've been talking there, I think, in ...

Rafe: Conceptual terms.

Ewan: Conceptual terms.

Ben: Rafe's got his strategy hat on.

Rafe: Indeed. Let me just talk about British Telecom, BT. I've been quite attracted their cellular offerings, because I'm already a BT customer. It's five quid a month for next to nothing for everything. I've been thinking about getting some more SIMs. If I want to talk to British Telecom, it's a nightmare. It's a nightmare for me, a nightmare for you. How would you do it, Rafe? How would you ask British Telecom to send you a five quid SIM, right now, and do it in 10 seconds?

Rafe: Right now, I guess you'd do it via email.

Rafe: To whom? To what?

Rafe: Exactly.

Rafe: This is the issue, right? Where this is going to get really, really exciting is when you just have BT on your Facebook Messenger, and your interaction with them is quite simply to say, "Hi there, can you send me a five quid SIM? Thanks. Bye." There'll be some qualification. That's why you need some good AI. The will be the opportunity for BT contact centers to actually pick that message up, look at the context, have some suggested messages from the AI, and then process that, send it over to me saying, "Is this what you're thinking? By the way, how's your BT TV going?" Before you know it, you've got a conversation going with me.

Rafe: There's two ways this is already happening, isn't there.

Ewan: This is a given.

Rafe: The beginnings of this.

Ewan: The rubbish one is social media. Talk through that.

Rafe: But that's why I think this could have legs, because when things go wrong, people go to social media to have a conversation.

Ewan: The number one problem with all social media is what?

Ben: It's in public.

Ewan: Always in public, and I don't know who you are.

Rafe: Yeah.

Ewan: I am not authenticated.

Rafe: For me, these are like desire lines. You see, people do what they want to do under pressure. What they want to do is to ask, in their own language, and describe their problem and ask for help. They want to talk to the business. Social media has started off collecting complaints, because that's the time that people feel most pressured. But actually, social media's not the right place, really, for that to happen, apart from when you're perhaps protesting, when you're beginning to campaign, or do something more than actually just ask for service. This Messenger style piece will be perfect, because you could then pass that information, and as you say, they would already know who you are. The other one actually is, look at the secrets of notifications that you get from Amazon, or an online retailer, during a transaction. "We've received your order, we've boxed it, we've shipped it, we've dispatched it. Here's the details of the courier. The courier's arriving tomorrow. Would you like us to deliver it on a different day? Oh, we've rescheduled your delivery." Those notifications have now become almost oppressive, because for every transaction there's 10 or 15 messages that narrate its journey.

Ewan: A lot of them you can't reply. There's some you can. A lot of them are coming from probably different numbers. It creates a mess in my inbox. That's coming from Amazon, it should be communication from Amazon, for example. If you want to see how this is working right now, and it's causing a huge amount of frustration for the companies behind this, look onto any bank social media site. Take the time to actually look and see what the bank is actually doing/replying. You'll see lots and lots of replies like, "Hi, thanks very much. Please could you contact us. Please could you phone us. Please can you fill in this form." Because it's someone saying, "Hi, I've got a problem," and it's the bank having to replying, automatically almost. They've get a human, they're going bang, bang, send this template, send this template. Because they can't do anything. They don't know who you are. Once they've validated you, and you can do that through platforms such as WeChat, or Facebook, or Google, because these guys have a much better methodology of verifying you, and a way higher success rate of making sure that when you're talking to Ewan, that is Ewan. If you think about your Google account being more secure, typically, than your bank account in some cases.

Rafe: Facebook, and all these companies, will typically have your phone number, which is the first point of ...

Ewan: Right. All that needs to happen is you have to authenticate yourself once, or maybe on a regular basis, just to make sure all the security and people feel good. Once you've done that, any question, any issue you've got, it's going to be effortless for these companies to solve it. When you add in artificial intelligence, that's where it gets really, really cool. It's not about human to human at all, it's about human to AI. We're seeing it already happening, where these big companies that have to deal with the consumers, and they have to keep the consumers happy on social media, are beginning to say, "Do you know what? We need one single platform." "What is it?" "Facebook." "Cool." "We need the glue. What's the glue that connects us together?" The answer is a company called Nexmo, N-e-x-m-o. They're doing some amazing work with the likes of flight KLM, and other airlines, and so on.

Rafe: It's underlying Facebook, and which is probably the AI people will have heard about in the context of this messaging as a platform. It does change things. I think calling out for 2016, I think we're going to see the early signs of it.

Ewan: Beginnings of it, yeah.

Rafe: I think it's like any of these new trends, actually, you don't know ultimately where it will lead. But there's enough clues around things like live chat already exists on things like travel websites, and retail websites, and around service providers, to make me think it's a format that people would be immediately familiar with. The asynchronous nature of it makes it very compelling. As Ewan says, that identity, and strong identity, and of course, there is a network effect at work here. If you look at the list of most installed apps, number one is Facebook, number two is generally Facebook Messenger. We're talking about the Western market here now. There'll be other markets which look a little bit different. WeChat has been the herald for this in China, but I think there's a lot more to come. For me, actually, messaging as a platform is probably the most exciting trend for 2016.

Ben: Grand. Well we have gone very long, so we need to stop there, but lots more conversation. I have to say, I'm deeply dubious about some of that stuff. I think the sins of the scripted call centers of past could leak into AI. It would be just as frustrating to talk to an AI as it would be to a call center agent with a script who can't help you.

Rafe: Best path is human, then, you know ...

Ben: We will come back to that one. Anyways, it has been a pleasure, as always, to talk to you. We should say a few thank yous. Editorial assistance provided by Emma Krauss, and this week's episode, it is by Mark from We will be back next week. We are going to have an update on our Smartest Home competition. We'll come back to that at the end of the season and let you know. Thank you very much for all your comments and feedback. I hope you had a lovely Christmas. Thank you to everyone who reached out to us over Christmas and got in touch on the social medias. We are @361 on Twitter, 361podcast on Facebook, and we are We will be back next week. Bye bye.