“The One Product That Makes Apple A Trillion-Dollar Company Overnight”: iPay

Jason Calacanis–internet entrepreneur and founder of Mahalo.com–puts forward an interesting premise in his latest article,  where Apple can grow exponentially by tapping into just one market: payments.

His theory is that Apple, by serving as a middleman between customers and online services (like airline or hotel bookers), could make it so that you would never need to sign up for any account besides theirs ever again. Imagine booking a hotel or flight simply by logging into the App Store, not having to type in your credit card information or sign up for any extraneous accounts. The value in this is substantial when you consider the direction we’re headed in with mobile computing.

Purchasing anything on your cellphone can be a real pain; you have to enter your address, credit card information, sign up for an account you might never use. It can be real time consuming, and that’s not even considering how much slower it can be if you have poor network coverage. But, if Apple taps into this market, booking a flight could take no time at all, and Apple is in a great position to do this.

As Jason points out, “Who [else] has 100M credit cards?” Apple is making life easier with its App store; it has “trained us to solve problems with apps…You have problems? We have solutions.” Jason calls this Apple’s Neuro-linguistic programming (NLP). I think we would all be willing to give into Apple’s ways if it makes things like booking a flight over the phone easier.

Jason continues, “Apple will sell $5B in apps this year and make $1.5B from their 30% stake. Almost pure profit, as the App Store can’t cost more than $100M to operate…PayPal had over $4B in revenue last year. They processed over $33B in payments in Q4 alone. Mobile payments are PayPal’s huge growth area: 5x growth from 2010 to 2011.” It makes you think, if Apple tried, could it beat Paypal at their own game?

Take all this lightly, because the actuality of this happening has a lot against it. It would be interesting to see how Apple could get a myriad of companies to part with 10% of their business. However, many of these companies already pay out commission to others, so why not to Apple?

“If iPhones did just 10% of the revenue of movie tickets sold in the U.S. via this method, it would be $1.2B of the $10.17B spent in 2011 on tickets…The biggest hurdle in buying movie tickets on your phone is trying to type the characters it takes to enter your name, expiration date, security code, credit card number and zip code.”

The complexity of this proposition–the seemingly infinite variables, like having to effectively collaborate with so many other companies–is enough to discourage hope. Still, as a commenter on the website launch.co points out, “I can’t wait for the day I can leave my wallet at home. This product from Apple gets me one step closer.”

Source: Jason Calacanis via Launch.co

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