Near field communications (NFC) has been an aspiring hopeful for some time now. Most attention has focused on the technology’s possibilities as the next-generation enabler of mobile payments, allowing users to simply swipe their phones across point of sale (POS) systems, as opposed to lugging out that cumbersome wallet to retrieve the plastic card therein.
NFC generated considerable buzz at this year’s CTIA Wireless conference in Orlando, Fla., with executives finally able to start talking real-world applications, as opposed to theoretical solutions still taking shape on the drawing board. Programs like ISIS, as well as the fact that nearly every major OEM has NFC either on their roadmap or already to market, helps add credence to the argument that sophisticated contactless transactions are on the verge of becoming commonplace.
Lauding as a major catalyst for NFC adoption the major carriers’ decision to bring MasterCard and Visa on board the ISIS joint venture, research company IHS iSuppli said it expects global shipments of handsets embedded with the technology to reach 550 million units by 2015. That’s a lot of NFC-capable handsets; whether they’ll all be immediately put to use for the payment of goods is another matter.
Lead with Non-Payment Applications
While the wholesale realization of the mobile wallet through NFC is undoubtedly the golden egg, it’s those non-payment related applications that will condition consumers to understand and trust the technology.
Rhomobile, which produces an end-to-end application development suite, recently added functionality that will allow developers using its framework to make use of NFC in their applications. In fact, the company just showcased at Google I/O how Rovio is using its framework to integrate NFC in the next iteration of its popular Angry Birds game, Angry Birds Magic.
Adam Blum, CEO of Rhomobile, describes NFC as a more sophisticated technology, more seamless, than say, Wi-Fi or Bluetooth, which he says can be “clunky” at times.
“NFC is just very transparent and easy to use and takes it to a different level,” Blum says.
Blum thinks NFC is the first step towards realizing the “Internet of things,” where users will use devices to discover the world around them, rather than going to a centralized repository that can often result in time-consuming searches.
“NFC is incredibly valuable for creating applications where you’re trying to manage objects, such as inventory or tracking scenarios,” Blum says. “It’s going to enable a whole new category of applications.”
Blum isn’t shy about how he feels NFC will change the industry, as well as people’s lives. “In terms of the transformational power, I really think NFC could be one of the biggest transformational technologies since the advent of the smartphone,” Blum says.
Yet Another Way to Advertise
The advertising world is always quick to capitalize on new technologies with broad reach. Dan Trigub, vice president of business development for Blue Bite, a mobile marketing firm, sees no end to the possible uses for NFC in his business.
Trigub describes a world saturated with digital content, where the consumer can pretty much be reached through some form of display at all points during their day (cab, elevator, gym, coffee shop). He says that when combined with what he calls “digital out-of-home” screens, consumers can actually be instructed on how to use their smartphone’s new technology.
Blue Bite is already working on campaigns like this. Imagine you’re standing in line at a coffee shop and a screen mounted next to the register offers you a coupon. An arrow points to the corner of the screen with the instruction to “Touch Phone Here.” That’s the beauty of NFC, Trigub says – it’s just that easy.
“We’re strong believers that NFC has the potential to be a silver bullet,” he says, adding that the technology is also a great solution for content delivery.
What’s most effective about NFC in advertising is the extent to which it is immediate and effortless. In conjunction with out-of-home screens, NFC will allow advertisers to reach their target audience while also asking for a simple call to action in the moment.
“Business travelers can be reached while they’re on a business trip. A company like Nike can reach a runner while they’re on a treadmill,” Trigub says, adding that the power of NFC is driven home when you consider that said runner will someday be able to tap his phone to purchase that pair of Nikes without breaking stride.
Mobile Payments
While non-payment NFC applications certainly will be first out of the gate, ultimately it will be massive, coordinated banking and mobile money rollouts, like the ISIS joint venture is currently undertaking, that will drive economies of scale.
While it initially looked like Verizon Wireless, AT&T and T-Mobile USA, the three major players in the ISIS joint venture, were going to go it alone, the carriers have been applauded for recently announcing that they would be bringing MasterCard and Visa in the mix.
Dr. Jagdish Rebello, director and principal analyst for communications and consumer electronics with iSuppli, commented in a recent report that by partnering with Visa and Mastercard, the wireless carriers made the right move. “The carriers hope to leverage the dominant position enjoyed by Visa and MasterCard in credit card payments to ensure a seamless consumer experience when customers use their mobile phones to make payments,” Jagdish wrote, adding that such a move will drive shipments globally.
Back in April, ISIS announced that it would launch an NFC trial in Salt Lake City, Utah, in early 2012, but on May 4, the group said it was scaling back its trials of NFC, delaying these programs to the summer of 2012.
It’s trials like the ones in Salt Lake City that will give carriers an idea of the uphill climb involved in truly educating consumers about NFC. Tina Teng, senior analyst of wireless communications for IHS iSuppli, says that to the extent that consumers are already educated about NFC, they associate NFC with mobile payment.
“However, consumers aren’t exposed enough to fully comprehend what NFC applications are capable of,” Teng says. “NFC can be an enabler to a whole world of other applications that are not in the market yet. What players in the value chain need to do is to demonstrate NFC applications starting from what matters to consumers’ day-to-day life as a beginning.”
While Teng is optimistic about NFC, she says there are still some major challenges ahead, including the high cost of implementation. “The device has to have the reading capability at least. The objects being read need to have NFC tags. The hardware requirement will increase the cost to device OEMs, which will also translate to higher device ASP,” she says, adding that updating POS will be a monumental and expensive task.
So there’s definitely a road ahead for NFC, and while we may not see the fabled mobile wallet come to fruition for another year or so, companies like Rhomobile and Blue Bite look poised to teach consumers the ropes in fun and interesting ways.
