Facebook Inc. FB  3.53% is launching a new type of mobile advertising that targets consumers based on the apps they use, pushing the limits of how companies track what people do on their phones.

Apple Inc. AAPL  1.01% often bides its time before diving in to developing tech markets, which explains why it's largely on the sidelines in the mobile-payment wars.

Mobile payment is a new battlefield in the wireless industry, with companies fighting to offer consumers a way to pay for purchases with their smartphones instead of wallets. Mobile-payment transactions are expected to exceed $600 billion world-wide by 2016, according to market-research firm Gartner Inc., up from $172 billion this year.


Google Inc. GOOG -0.60% last year unveiled its Google Wallet service that lets some users hold Android phones in front of small terminals near cash registers to pay tabs. A group of wireless carriers is pursuing a similar service, called Isis.

Microsoft Corp. MSFT -0.91% last month said it will release a new digital-wallet service that stores credit-card information and other mobile-payment information.

But Apple's entry is noticeably less ambitious.

Last month, it unveiled a service called Passbook that pulls together loyalty cards, tickets and coupons. But Passbook, which Apple will release this fall, drew attention for what it doesn't do: It can't link directly to credit or debit cards, so consumers can't use it to replace their wallets.

Holding back in mobile payments was a deliberate strategy, the result of deep discussion last year. Some Apple engineers argued for a more-aggressive approach that would integrate payments more directly.

But Apple executives chose the go-slow approach for now. An Apple spokeswoman declined to comment on the decision-making process.

Apple's head of world-wide marketing, Phil Schiller, in an interview last month, said that digital-wallet mobile-payment services are "all fighting over their piece of the pie, and we aren't doing that."

"Apple is always a comfortable number two," says Piper Jaffray analyst Gene Munster, citing its relatively late entries in the MP3 player, smartphone and tablet markets as examples. "They let their competitors do their market research for them."

The approach leaves competitors and partners, from media companies to retailers, scratching their heads trying to anticipate the moves of the world's most valuable company.

As competition in the smartphone market, in particular, heats up, it could leave Apple vulnerable. Still, the market is nascent enough that Apple can afford to take its time, says Nick Holland, a senior analyst at the Yankee Group. "Right now it is just a gold rush," he says, saying the business models and leaders will be more solid in 18 months.

He and other industry watchers, from analysts to rivals to security professionals, expect Apple to come out swinging eventually once consumers become more comfortable substituting their phones for their wallets.

Apple would appear to have an advantage in the mobile-payment arena. The company has sold more than 200 million iPhones and has some 400 million credit-card accounts registered with its iTunes store.

Last year, Apple engineers and executives considered some aggressive approaches to exploit that advantage when in-house debate over the market began in earnest. Google unveiled its Android payment system around the same time.

A small group began investigating whether the company should create a new service that would embed various payment methods into the iPhone or build a payment network of its own, according to people familiar with the matter.

Apple's head of iPhone software, Scott Forstall, was interested in the idea, say people familiar with the matter, and engineers on his team began to brainstorm a comprehensive "wallet app."

They discussed whether Apple should facilitate payments to merchants directly, one of these people said. The idea didn't go very far, on account of the complexity, including the possibility that the company would need to become a bank.

The Apple team investigated ways to make money from various ideas, such as teaming up with an existing payment middleman and taking a small cut of many transactions rather than layering on an additional fee. Some who worked on the project referred to the idea as "the Superman III" play, in honor of the movie's greedy tech-savvy villain, this person said.

The team started to scale back its ambitions. Apple engineers discussed the possibility of a mobile software app that would give users access to payment cards, along with coupons, in one place and recommend which one should be used for each sale, according to one of these people.

For instance, when a user went to buy clothes at department store Macy's, the software would recommend whether they should use their standard credit card or a Macy's card, if they had one, based on available offers through each.

With Groupon Inc. GRPN  0.47% and Google's daily offers product in their sights, they also considered whether to integrate daily deals as well, this person said.

Meanwhile, Apple's iPhone-hardware division had already been studying technologies for over-the-air payments, including a version of Bluetooth connections that require less energy and near-field communication, known as NFC, according to several people familiar with the investigations.

NFC technology lets users tap their phones at terminals near a cash register to pay. Google Wallet uses this technology, and Microsoft's service plans to as well.

Apple employees patented some NFC ideas but worried about whether the technology was secure enough, and whether they could squeeze in the required chip and a new antenna without severely impacting the iPhone's battery life. Executives were also leery of the slow adoption of NFC among retailers, whom industry analysts predict won't adopt it in any meaningful way for three or four more years.

When the payments plan came to an executive review in early 2012, several Apple senior executives balked, says a person briefed on the meeting.

Apple's chief financial officer, Peter Oppenheimer, questioned whether there was newer secure technology that employed the Internet rather than use NFC, this person said.

Apple's Mr. Schiller was worried that if Apple facilitated credit-card payments directly consumers might blame Apple for a bad experience with a merchant.

The executives ultimately opted for the more scaled-down version of Passbook, which engineers still referred to as the "wallet app."

After Mr. Forstall showed off the service at Apple's developer conference last month, analysts immediately predicted Apple would add more payment functionality eventually. "What they essentially have is everything you would store in a physical wallet apart from the cards," says Mr. Holland of the Yankee Group. "I imagine Apple will layer physical world payments as a future capability."

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Samsung Electronics Co. (005930), the largest phone maker, will release a tablet that features Microsoft Corp. (MSFT)’s Windows RT software when the operating system debuts, people with knowledge of the matter said.

Samsung has made a handheld computer built on Windows RT, the first version of Windows that works on ARM Holdings Plc (ARM) technology, said the people, who asked not to be identified because the plans haven’t been made public. Windows RT devices will be released in October, one person said.

Samsung Electronics will release a tablet that features Microsoft's Windows RT software when the operating system debuts, people with knowledge of the matter said. Photographer: SeongJoon Cho/Bloomberg

The decision to support Windows RT follows Samsung’s earlier announcement that it will back another version of Windows. It’s a boon to Microsoft’s effort to use multiple versions of its flagship Windows operating system to challenge Apple Inc. (AAPL) in tablets. Microsoft suffered a setback last week when Hewlett-Packard Co. (HPQ), the world’s largest computer maker, said it won’t back Windows RT from the get-go.

Hewlett-Packard plans to introduce a tablet with Windows 8, the version of the software that works only on so-called x86 chips, made by Intel Corp. and Advanced Micro Devices Inc. (AMD)

Windows RT is the first mainstream computer operating system from Microsoft to be built for a touch-screen device and work on the energy-sipping chips typically used in smartphones. Most traditional desktop computers are powered by x86 processors.

Samsung’s Windows RT tablet will feature Qualcomm Inc. (QCOM)’s Snapdragon processor, the people said. Windows RT has created an opportunity for phone-chip makers Qualcomm, Texas Instruments Inc. (TXN) and Nvidia Corp. (NVDA) to compete against Intel and AMD for orders in the computer industry.

Microsoft’s Shift

Microsoft announced plans last month to release its own tablet device, the Surface, in a strategy shift that has the potential to rankle device makers that widely use its software.

Apple led the tablet market at the end of the first quarter, with 11.8 million units shipped, or a 58 percent share, according researcher IHS ISuppli Inc. Samsung was second, with 11 percent, followed by Inc., which had 5.8 percent.

The iPad is based on ARM technology, as are most tablets on sale today. Intel has struggled to make inroads with consumers purchasing mobile devices with its chips, as ARM-based tablets have had better battery life. ARM machines running the new version of Windows will only be able to use new applications written for Windows 8 and Windows RT, while the x86 machines can run a much wide range of older Windows apps.

Mark Martin, a spokesman for Redmond, Washington-based Microsoft, declined to comment, as did Andy Phillips, a spokesman for Cambridge, England-based ARM. Nam Ki Yung, a Seoul-based spokesman for Samsung, and Emily Kilpatrick, a spokeswoman for San Diego-based Qualcomm, also declined to comment.

Samsung dropped 2 percent to 1,161,000 won yesterday at the Seoul close. Microsoft fell 1.7 percent to $30.19 at the New York close.

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Mobile apps are changing the way brands connect with consumers and have the potential to boost a company's bottom line.