Is PayPal Stronger Against Apple Inc. Without eBay Inc?
"The question is, is eBay too late?" Sean Udall, CIO of Quantum Trading Strategies and author of The TechStrat Report, told Benzinga.
"Now with Apple Pay, the total value of PayPal is likely to be reduced from what it would have been had they spun out PayPal just a few months ago."
Rob Enderle, principal analyst at Enderle Group, thinks that PayPal is in a stronger position to compete because it will soon become an independent service.
"It also goes cross-platform, so it's not tied to a piece of hardware, either," Enderle told Benzinga. "It enhances its position against the other payment services."
Tech industry expert and analyst Jeff Kagan thinks Apple Pay has the potential to transform the industry "only because of Apple."
"I've been briefed so many times by so many companies about so many new technologies that sounded like they were going to be the one to really transform the industry or the marketplace, and it just didn't happen," Kagan told Benzinga. "Five, 10 or 20 years from now, it's going to be a core technology that we're going to use going forward. When and who is the question."
Kagan believes that PayPal should now be free to compete on its own without being hidden by another brand name.
"For the last several years, PayPal hasn't been building its brand name," he added. "It's been disappearing. That's not good. Now, as a standalone company, it could transform itself and become important again if they do the right things. Either way, it's not going to hurt them. Separating won't hurt them -- it can only help them."
Apple Pay = FaceTime?
"I am somewhat skeptical of [Apple Pay's] long-term success," Sizemore told Benzinga. "If you look at what Apple does… They have FaceTime, for example, which competes with Skype. Skype is a universal product that can be found on any device -- a PC, a Mac, a smartphone, any tablet. Skype is universal, FaceTime is not."
Sizemore said his Skype/FaceTime comparison is a pretty good analogy for PayPal and Apple Pay.
"With Apple Pay, it's going to be limited to Apple users who are comfortable with it, which is a relatively small, niche market to begin with," he added.
"PayPal is more universal. Any person that starts their own Web business, the first thing they do -- they go get a WordPress site [and an] embed code for the PayPal pay button. They copy, they paste, they're done. That's how easy it is. That's how PayPal has become the de facto payment system for the Web."
Apple Pay may only compete with PayPal in the mobile space, but Sizemore still thinks PayPal is the better business.
"It's universal," he concluded. "It's available in more places. Acceptance is better so far. Apple is a very strong competitor in everything they do, of course, but PayPal is the entrenched competitor here. Apple is going to have a hard time unseating them."
Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.
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