Motorola Gives Google Chance to Control More Secure Elements

Google’s planned acquisition of Motorola’s mobile phone business not only gives the Web giant control of a major handset manufacturer, it also offers Google a way to control the secure chips in more NFC phones.

Google needs some measure of control of the secure chips or secure elements for its Google Wallet. The wallet stores both payment applications and offers, such as coupons, on the secure chips. That is the only way Google can enable consumers to pay and redeem coupons with a single tap of their NFC phones–a feature Google considers vital to the success of the wallet–so much so that it has trademarked the term “SingleTap.”

Controlling the chip is no problem for Google with the Nexus S 4G, the first and so far the only phone model onboard for the wallet launch, expected next month in the United States.

Google owns this phone and ordered it with an embedded secure element from the NFC chip maker, NXP Semiconductors. The Nexus S also is sold through independent retail channels or through mobile operator Sprint, which is a partner with Google on the wallet rollout.

But for other Android phones, Google would have to make deals with handset makers or mobile operators to allow it to manage the wallet applications, according to Osama Bedier, Google’s vice president of payments. He also indicated he saw room for just one wallet per phone.

It’s never been clear, however, how Google will secure the level of control it needs in the other NFC handsets. It will have to do deals with handset makers to gain access to the embedded secure elements if, in fact, the phones carry them, so it can manage the wallet applications. More difficult will be to negotiate with mobile operators, which plan their own mobile wallets, mostly using their SIM cards as secure elements.

Google has said it would be willing to work with mobile operators to put the Google Wallet applications onto these SIMs, perhaps renting space on the cards from the telcos. But the Google Wallet would compete with the operators’ own wallets, and telcos might not be so eager to accommodate Google.

With Motorola, which owns about 11% of the U.S. smartphone market with its Android handsets and about 2% of the global phone market, Google has more options. It could order embedded chips for Motorola phones equipped for NFC and then try to keep the master keys to these chips in the various countries where the phones are sold.

That might not be so easy in the United States, where operators control the phone distribution channels and where such operators as Verizon Wireless is part of the Isis joint venture and wants to control all secure elements in the NFC phones it sells.

Google could continue to control the secure chips in the Motorola Android phones it sells through Sprint, which is not part of Isis and is not apparently planning to support the Isis wallet.

In other countries, where mobile operators don’t have such a tight grip on the phone sales channels, if it gets resistance from telcos, Google could, for example, sell the NFC-enabled Motorola phones through consumer electronics stores and promote its wallet as a selling point. The wallet applications would be stored on embedded chips.

Google plans to introduce its wallet in Europe during the first half of 2012 and has also been talking to banks and others in the NFC ecosystem, including operators, in Asia, NFC Times has learned.

In the United States, where its wallet will debut as early as the first week of September, Google is facing big challenges in getting consumers to tap to pay and redeem offers. There is a relatively sparse infrastructure of contactless point-of-sale terminals and security concerns are sure to surface among American consumers, who are not used to paying with their phones.

And there is still only one phone model supporting the Google Wallet, the Nexus S.

Google has not yet said whether new Android phones made by its planned Motorola handset unit will support NFC. But that is a reasonable assumption.

And with Motorola’s Droid series and other Android phones from the handset maker supporting the wallet, Google stands a greater chance of bringing about its much-touted “new era of commerce.”



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