If The iPhone Embraces NFC, Will It Be Too Late To Make A Difference?

Written by Evan Schuman
November 12th, 2009

For years, retail efforts with NFC phones have been far from smashing successes. The technology has limped along from trial to trial, the quintessential answer in search of a problem. The latest rumors out of Cupertino suggest that the next-generation iPhone will ship with NFC pre-installed. If true, will this make a difference to the technology’s acceptance, or is it already too late?

A couple of years ago, Near Field Communication was seen in some influential corners—such as at consumer goods giant Procter & Gamble—as the ultimate victor in the fight between NFC and 2D barcodes. Many saw NFC as the better technology, with 2D barcodes being used as a placeholder until NFC was ready. But in the last couple of years, neither technology has gotten very far in the U.S. Few phone manufacturers included the feature, and even fewer developers tried to design for it.

According to figures from Juniper Research—one of the few remaining analyst firms that even bother to track NFC efforts closely—the NFC market will bring in about $110 billion in sales by 2014, when “one in every six mobile subscribers globally will have an NFC-enabled device.” But that’s certainly not the outlook for the U.S., Juniper said on Monday (Nov. 9). “Currently, adoption is centered in the Far East, with use very limited outside of this region.”

The wildcard here is Apple. The iPhone buzz seems to have a way of reviving technologies that are powerful but haven’t yet connected meaningfully with consumers (such as mobile barcode scanning). If it ships, will Apple consumers use NFC? Forget whether they will or won’t, for the moment. The better question is “Will ISVs think that they will? Will retailers?” For NFC to work, the apps on the mobile devices must be user-friendly and compelling. But that won’t help unless enough retailers and consumer goods manufacturers and others start using NFC to market products and services.

Unless NFC wants to suffer the fate of the underwhelming contactless payment space—Oh, I forgot. It already has—the information-rich uses for NFC must deploy before the phones ship. That gets us into a fascinating decision question. Will the iPhone pre-buzz make those communities (retailers, CG players, ISVs) believe that the market will be huge? If so, they’ll develop for it. That, in turn, will whet the appetites of consumers who will then receive their new iPhones and discover NFC capabilities already there.

That’s why figuring out how many iPhone users will access NFC is irrelevant. As far as the industry is concerned, it’s all about expectations. When it’s an issue of deploying on time or controlling its partners (how are you iPhoners enjoying that AT&T end-of-summer promised tethering?), Apple comes up short. But when it’s an issue of pre-hyping and creating drama where none has any right to exist? Apple’s the master. If it does choose to bundle, Near Field Communication may be more near than ever.


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