When talking Near Field Communications (NFC) – the common name for the emerging technology enabling close range device-to-device interaction – there are two main camps: open NFC and secure NFC. Open NFC refers to the interaction of two NFC-enabled devices, or the use of an NFC device to read an NFC tag (a chip embedded in a poster, card or other print medium) in order to receive content or perform an action of some kind. Secure NFC, on the other hand, is about using your mobile device as a virtual wallet or credit card to pay for things by swiping it over an NFC reader.
Currently NFC is seen as one of the most exciting areas in our industry in terms of revenue generation: Projections show up to 700 million NFC-enabled mobile phones will be sold by 2013*. At Nokia, however, we would argue that the industry’s current focus on secure NFC may be at the expense of realizing the potential of open NFC. As pioneers in NFC technology, and as a founder of the NFC Forum, Nokia believes that open NFC will have a far greater impact on consumer behavior and the NFC ecosystem than secure NFC will. Open NFC has the potential to spur a vast number of business opportunities for developers, retailers, advertisers, electronics manufacturers and others.
An open argument
Let me give you an example. With open NFC technology, you can simply tap your NFC-enabled device against an NFC tag in order to perform such actions as “checking in” at a specific location, gathering loyalty points in a store, or accessing a website without the need to type in a URL. NFC tags can also be used to promote an application in any online app store; for example, instead of having to visit the online store to search for a specific application, you can just tap on a tag and go straight to the app download.
NFC tags, which cost only a few cents, offer huge potential for advertisers, retailers and others to reach, reward and stay in touch with their customers. These tags can be promoted at any location, including a phone retail point, a coffee shop, or even at the local supermarket, with immediate and measurable results. And the best part is that NFC tag reading requires very little existing infrastructure, other than a critical mass of NFC-capable devices out in the market and recognition from marketers of the benefit of such tags.
In addition to reading tags, with open NFC people can easily connect their NFC phone with another one, simply by tapping the two devices together. In this way, you can easily swap content, such as photos, or play dual-player games, without the need for time-consuming pairing through Bluetooth. The best-selling mobile game Angry Birds, for example, has just released an exclusive NFC-enabled game for the Nokia C7. “Angry Birds Free with Magic”** has hidden levels which can be unlocked by touching phones with a friend’s NFC-enabled Nokia C7, or by reading an NFC tag that will take you straight to Nokia’s app store to download more levels.
Open NFC also makes it easier to connect your mobile device with NFC-enabled wireless speakers or headphones, so you can come home from a run with your headphones on, for example, and simply tap your home speakers with your NFC music player for the music to continue uninterrupted into your home. It’s pretty easy to imagine the host of new consumer electronics applications and devices that could develop along these lines.
Secure not sure
Secure NFC, on the other hand, is going to be limited to a smaller number of service providers and will take some time before consumer behavior changes to the extent that many people will be able to and feel safe to use their phone to pay for a train ticket, or something more expensive. In London, Nokia delivered secure NFC on devices to include the provision of the Oyster card for travelling on public transport. But away from major metropolitan hubs, secure NFC will take some time to become a significant part of the average person’s daily activity. And while secure NFC will ultimately expand to encompass payments, hotel door keys, car keys and even identity cards, we believe that only a limited number of service providers will be involved in the value chain.
Opening the way to the future
Nokia is the most experienced mobile device manufacturer in the NFC space, having already launched five commercial NFC devices. But across the industry, key partnerships will need to include payment bodies, banks, mobile operators, system integrators, the developer community, etc. All of these parties have a role to play in making NFC a commercial success.
In the meantime, open NFC will benefit consumers on a much larger scale and get people familiar with using their device for NFC interactions before secure NFC reaches a high level of penetration. As more and more NFC phones come to the market in 2011 and 2012, open NFC will change the way consumers interact with each other and open up a host of opportunities for developers both large and small. We believe that developers will embrace the opportunity offered by open NFC in creating apps for sharing information, reading tags, joining social networks and more. And this open NFC opportunity will be realized long before secure NFC takes off.
Jeremy Belostock is head of Near Field Communication (NFC) for Nokia devices unit.
* Jupiter Research (November 2008)
** Angry Birds Free with Magic will come as an exclusive preinstalled app on the Nokia C7 as part of the Symbian Anna update. It will also be included on Nokia’s future NFC-enabled Symbian devices.