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Dec 12, 2015

Bits | The Business of Technology - December 12, 2015 I Farhad and Mike's Week in Tech

The New York Times
Saturday, December 12, 2015
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Farhad and Mike's Week in Tech: Tempering Walmart's Digital Ambitions | Each Saturday, Farhad Manjoo and Mike Isaac, technology reporters at The New York Times, review the week’s news, offering analysis and maybe a joke or two about the most important developments in the tech industry.
Mike: Aloha, Farhad! Another day in paradise. And I mean that literally. It’s mid-December and 65 degrees in New York. I’m actually wearing aloha shirts to work.
Farhad: There’s a huge storm here in San Francisco. It was hailing last night. Oh, my god, I can’t believe we’ve sunk to talking about the weather. This might be the most boring newsletter yet.
Mike: I can segue to weather tech. Dark Sky is a great weather app.
O.K., on with the show. The weeks leading up into the holidays have been surprisingly eventful.
Yahoo was going to spin off its multibillion-dollar stake in Alibaba, then decided it would probably make more economic sense to just spin itself off. Marissa Mayer, Yahoo’s chief executive, announced the enormous shift in company strategy on Wednesday morning, then proceeded to go into labor and deliver identical twins.
In news unrelated to struggling companies or childbirth, Atlassian, an enterprise collaboration software company, had a successful initial public offering this week — a sentence that made me fall asleep just typing it.
Farhad: You are really going out of your way to bore our readers this week. I commend you.
Mike: It’s also worth noting that Airbnb keeps claiming that it is trying to be more transparent with its data on how people use its service, saying it wants to work with cities and regulators. Apparently, Airbnb’s definition of transparency is the obfuscation of its data to make it fit its more pleasant, populist narrative. Color me wholly unsurprised.
Oh, I should mention that Gizmodo and Wired seem to have found another culprit who could be the pseudonymous inventor, or inventors, of Bitcoin known as Satoshi Nakamoto. To me, the biggest surprise here is that people still care about Bitcoin.
Farhad: Yes, the effort to unmask the creator of Bitcoin gave me flashbacks to 2013. But now that the articles in Wired and Gizmodo already seem to be falling apart, I’m a bit more interested. By which I mean, I am not totally asleep.
Mike: I do want to talk a bit about digital currency. This week, Walmart announced that it was also jumping into the fray of digital wallets and would offer its customers a way to pay for stuff at its stores using Walmart’s own app. It’s called Walmart Pay — a wildly creative title — and is basically an extension of Walmart’s already successful mobile app.
It is based on QR-code technology, which is pretty similar to bar code scanning in retail stores. When customers get to the Walmart checkout line, they open the app and present a digital code to the cashier. That code is connected with a payment method — a credit card or Walmart gift card, for example — and is used to pay for their stuff.
Now, I have a lot of thoughts on the complications of this, but I would like to let you go first, mostly so I can knock down all of your terrible arguments.
Farhad: I’ve got to say, I don’t really get this move. Sure, I understand why Walmart wants to be in the payments game. It has been leading the fight against credit card companies over “swipe fees” — the fraction of each purchase that Walmart pays Visa and MasterCard when customers use credit cards. The app helps in that fight. By linking directly to your bank account, Walmart could bypass credit card processors when you shop there.
But that is only if a lot of people use it. And does anybody think that will happen? I am very skeptical. I’m one of the most tech-obsessed nerds around, but I barely ever use Apple Pay when I’m out shopping. Sure, it may be a bit faster to pull out my phone than my credit card, but the difference is so slight that I don’t really see the point. And Walmart’s QR-code idea sounds like a bigger headache still. Why would anyone use that over a plain old credit card?
Mike: So you’re scratching at a problem that Apple and Google are still trying to solve. That is to say, some people think it’s a solution in search of a problem. We have spent decades swiping cards with little problem, so it will take decades more to change that behavior.
Do I think a QR code will be the way to change it? No way. It’s clunky. You have to persuade people to take out their phones, open the app, scan it and so on. Apple can barely convince people to wave their smartphone over a payment terminal. And for about five years now, Google has not convinced anyone to do anything.
A slightly wonky aside: Walmart was leading the charge on MCX, another QR-code-based payments app created by merchants who wanted to bypass credit card networks and increase their profit margin. Walmart effectively ditching MCX, and all of its other large merchant partners, to work on its own code-based system is basically calling the whole thing a huge embarrassing failure. And to be fair to Walmart, it definitely was.
Here’s the bull case: Walmart has some 22 million people using its app already. I think that’s even more than Starbucks’s app, which is hugely successful. So if you can funnel all of those people who already use the Walmart app to search for coupons and buy things via their phones into opening that app at the register, bully for them!
Still, that’s a big if. And, as I have said before, QR codes are so lame. But who knows? I certainly won’t count them out quite yet.
Farhad: Do you know what would be truly useful? Imagine if the app didn’t just help you pay at checkout, but also let you scan all your goods as you took them off the shelf — allowing you to complete your purchase from anywhere in the store, and bypass the checkout lines entirely. Sure, there are some security issues with this idea, but there are ways around them. I know because one of Walmart’s tech executives showed me a pilot-test of this idea in a Silicon Valley store a few years ago. But it doesn’t sound as if we are anywhere close to seeing it in any stores.
Mike: That is actually a rad idea. Sort of Apple-ish.
Farhad: In the meantime, long live QR codes. Have fun in the sun, Mike!
Mike: Gracias! May your days be less cloudy and more bright.

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