The purported functions supported by Apple Inc.’s often-rumored iPhone 5 could greatly impact the NFC-enabled smartphone market over the next two years, suggests a report released Dec. 15 by Mercator Advisory Group.
Apple increased speculation that it plans to develop an NFC-enabled iPhone with its hiring in August of former mFoundry executive Benjamin Vigier, who played a key role in developing mobile payment applications for PayPal Inc. and Starbucks Corp. (
Should the next iPhone support NFC functionality, Mercator predicts 116 million NFC-enabled smartphones will ship in 2011. That figure would more than double to 260 million shipments in 2012, rising to more than 510 million in 2015.
The global NFC handset market would not be as robust without an NFC-enabled iPhone, writes report author Terry Xie. Shipments in 2011 would drop 44%, to 66 million, while 2012 shipments would drop to 218 million as an NFC-enabled iPhone 6 would ship mid year, he predicts.
Either way, Xie expects NFC-enabled handsets to reach critical mass in 2012 and possibly sooner in some markets. Some 218 million shipments should represent enough incentive for wireless operators and financial institutions to get more involved with NFC, he writes.
Industry observers generally believe 2011 will be a break out year for NFC, but Xie expects consumer use likely will lag behind market penetration of the devices.
“Most consumers probably won’t see NFC’s value until 2012, when related services and infrastructures are in place together with ample applications,” he writes.
Apple has filed patents for what is essentially an iTunes wallet mobile application. ITunes is Apple’s proprietary digital music player application. Consumers may buy music from the iTunes store without having to enter credit or debit card information after setting up an account.
Apple most likely will incorporate the iTunes model into an NFC iPhone application, observers speculate. Consumers could use the iTunes wallet to pay for goods at the point of sale.
Google Inc., which developed the Android mobile-phone operating system, also could help provide NFC-related services and apps.
The Mountain View, Calif.-based company recently purchased a Canadian startup called Zetawire Inc., which has filed a patent application for a mobile payment system (
NFC will have to be about more than payments for mobile operators, Xie notes in his report. The operators will find it difficult to rely solely on payment-related revenues to break even from NFC investments, he says, suggesting they will need to turn to merchant rewards programs, public transit and alternative payments, among other schemes, that should be important cogs in NFC business models.
China, France, South Korea, the United Kingdom and the United States all are poised to become breakout markets, Xie writes.
France-based telecommunication company Orange announced Dec. 16 it plans to introduce SIM cards that will enable mobile payments, and it wants to make its smart phones compatible with contactless payment systems.
The SIM cards would use NFC technology, and handset owners would replace their mobile phone’s card. Orange plans to roll out 500,000 compatible phones to its customers in the second half of 2011.
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