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Interesting news from Google on the acquisition of Motorola Mobility. How will the news impact Google Wallet?

Don’t assume it will mean a massive number of Google/Motorola phones shipped ready for Google Wallet. Instead, in the short term, it accelerates the race between different mobile payment business models and will force both MNOs and Google into some interesting decisions over 2012-13.

In my mind, there are two emerging models for NFC mobile payments –
1) the MNO JV model, epitomized by the UK MNO JV, ISIS, the French MNO JV, etc., in which the MNO controls the secure element, allowing access by payment players, merchants and others to use the hardware on the phone to enable payments; and

2) the Google/Apple Wallet, in which Google or Apple control the secure element (though in my conversations with Google they will not confirm to me that they do so). In the Google/Apple Wallet model, the MNO is certainly a partner, but not the lead partner.

In most markets, MNOs order or specify most of the handsets sold (even when they aren’t sold through direct MNO channels). There are very few NFC mobile payment enabled handsets on the market today because MNOs haven’t quite gotten their arms around their business case for mobile payments, so they aren’t ordering phones.

I’m going to assume that most if not all of Google/Moto’s mobile handset products will eventually become Google phones, which means Google can pre-load applications (including Google Wallet) on the device and continue to set the standard for their vision of the pure Android OS.
But they can only do this carte blanc with unlocked phones. Any phones they want to sell through or for MNOs, they will have to negotiate what applications and hardware go on, and what stays off.
Which brings us back to my point about Google Wallet. Will many MNOs want to play the Google Wallet option? Can the Google Wallet option exist within the MNO JV model? This was already a question before Google/Moto, and I think the answer is yes, given the MNO alignment in most of the world behind Single Wire Protocol on SIM. Google would be shut out if it wasn’t ready to negotiate with MNOs. However, I don’t think the Google/MOTO phones will impact the announced JVs efforts in 2012, simply because the Google/Moto deal doesn’t finalize until year end 2011-early 2012.
For JVs who are struggling to form their business case, Google Wallet cooperation with Google/Moto devices as the lead might become an interesting proposal – if MNOs are willing to cede some control to Google, who must also make it worth the MNO’s time. I think Google/Moto will initially concentrate Google Wallet pushes to individual MNOs in key markets where MNO JVs don’t exist yet, such as Brazil, Germany, Italy and others, prove the concept, and then come back to the MNO JVs if Google Wallet proves successful.
The bottom line is that by the end of 2012, Google will be launching mobile handsets with Google Wallet pre-loaded in markets where they can compromise with MNOs.