The early success of the Internet was built on the premise that customers could cut themselves better deals on everything from hotel rooms to PCs by eliminating the middleman -- also known as "disintermediation." But Verizon wants to ensure it's smack-dab in the middle of the Internet's mobile evolution by positioning itself as the primary intermediary for the sale of mobile applications and other online transactions.
Today, the broadband services vendor announced faster upload and download speeds for its FiOS service, but the most important part of the announcement is that it's giving away a mobile device as part of the deal. Customers signing up for Verizon's bundled service will get their choice of either a free Flip-branded Cisco camcorder or an HP netbook for $99 after a mail-in rebate.
It's my guess that most customers will opt for the netbook -- especially if they already have video built into their cell or smartphone -- and those are the very people with whom Verizon wants to build a relationship. Indeed, wireless and netbooks go hand in hand, and Verizon spokesman Cliff Lee told me that Verizon is "interested in providing WiFi service to our broadband customers." The company isn't announcing anything on this score today but plans to do so soon, "definitely this year."
Another Verizon spokesman, Bill Kula, told me the netbook offer "will make it terribly irresistible for customers to sign up for broadband service."
The successes of Research in Motion's Blackberry and Apple's iPhone, and the mobile application stores in particular, have proven that
people on the go are willing to spend on music, games and virtual goods, like a $2 costume for a character in a video game. Now the race is on to develop new payment systems -- and to get several percentage points in fees from each transaction.No surprise then that mobile payment systems vendors like Obopay, Boku and Zung -- as well as eBay subsidiary PayPal -- are attracting significant investment and are already beginning to proliferate, and that Verizon is looking to introduce itself as the mobile payment facilitator of choice. It's in a great position to do so. It already has an established transactional relationship with customers and a billing mechanism in place, and it can solve a problem as old as the Internet itself (irony intended), which is that no one wants to pull out their credit card for a two dollar purchase.
While AT&T is busy flubbing its chance with more iPhone activation blunders (executives at Verizon Wireless must be torn between wishing they'd had their chance at a bite at this apple, and delicious feelings of schadenfreude at watching AT&T destroy its brand image), Verizon is preparing for the day when mobile devices become the new point-of-sale device for applications, virtual goods and even real-world merchandise.