Apple Inc. is taking a pass on mobile payments for now as its new iPhone lacks a near field communication chip. Near field communication is a technology that allows transactions, data exchange, and wireless connections to take place between two devices in close proximity to each other. It is expected by many to become a widely used system for making payments by smartphone in the U.S.
Cupertino, Calif.-based Apple on Oct. 4 announced the iPhone 4S at a press conference inside the company's headquarters. The new phone will include an 8-megapixel camera, a better global positioning system features and a faster processor.
Apple's new CEO, Tim Cook, and other company executives did not mention mobile payments during a nearly two-hour presentation.
Industry observers have noted throughout the year that NFC rollout forecasts would decrease if Apple did not include a payment capability in its new phone.
Earlier this year, NXP Semiconductor CEO Rick Clemmer downgraded the company's forecast for NFC rollouts. [http://www.paymentssource.com/news/nxp-ceo-scales-back-nfc-mobile-shipments-prediction-3007274-1.html]
NXP, which manufactures contactless chips, predicted no more than 40 million NFC-enabled phones would be produced this year. NXP previously said that 70 million to 100 million NFC-equipped devices would ship.
"We believe this shortfall is due to a combination of formulation and agreement on the specific business models to support the ecosystem as well as business challenges some handset [manufacturers] are experiencing in the marketplace," Clemmer said during a conference call to discuss the company's second-quarter earnings.
Terry Xie, director of the international advisory service for Mercator Advisory Group, said in August that Apple's delay in announcing a new phone, most likely without a chip, would impact the NFC-enable mobile market.
In December, Xie wrote a report that predicted 116 million NFC-enabled smartphones would ship in 2011 if Apple's next iPhone contained the technology.
The global NFC handset market would not be as robust without an NFC-enabled iPhone, Xie wrote in the report. Shipments in 2011 would drop 44%, to 66 million, while 2012 shipments would drop to 218 million from 260 million as an NFC-enabled iPhone would ship mid year, he wrote.
Apple increased speculation that it planned to develop an NFC-enabled iPhone with its hiring in August 2010 of former mFoundry executive Benjamin Vigier, who played a key role in developing mobile-payment applications for PayPal Inc. and Starbucks Corp.
The company also has filed patent requests related to NFC technology and an iPhone application that would initiate mobile payments.
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