Apple Says No To NFC, At Least For Now

Published October 04, 2011, 3:09 p.m. EDT

Updated October 04, 2011, 2:09 p.m. EDT

2 Min Read

Apple Inc. is taking a pass on mobile payments for now as its new iPhone lacks a Near Field Communication chip.

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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 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 (see story).

NXP, which manufactures contactless chips, predicted no more than 40 million NFC-enabled phones would be produced this year, Clemmer said. 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, told PaymentsSource in August 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 (see story).

The company also has filed patent requests related to NFC technology and an iPhone application that would initiate mobile payments.

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