Andrew Davis
Aug 22, 2013

Why NFC will thrive whether or not the next iPhone supports it

If Apple's upcoming smartphone includes support for NFC (near-field communications), it'll be great. If it doesn't, it scarcely makes a difference.

Andrew Davis
Andrew Davis

Just a few weeks out from a new iPhone release, and we’re seeing and hearing thousands of discussions about Apple and whether it will include NFC (near-field communications) capabilities in the iPhone 6.

We thought it timely to give our position on what the impending release means for NFC and how this may impact NFC from an industry perspective.

Let us start by saying the chatter generated around Apple including / not including NFC is fantastic for everyone involved within the NFC ecosystem. Regardless of whether the chatter is negative or positive, it is helping drive broader awareness of NFC and some of the use cases where NFC can make a significant and positive impact to society. The most obvious of these is around payments, but also other emerging NFC services like that my company provides.

Should Apple include NFC in its new model, it would be fantastic news for the entire NFC ecosystem, and we hope Apple does include NFC. 

However some people hold the opinion that if Apple doesn’t include NFC, it will spell the demise and eventual death of NFC as a technology. Quite simply we think this is plain wrong.

If you currently share the opinion that Apple not including NFC will signal the death of the technology, then you have come under the spell which many have referred to as Apple's “reality distortion field”. 

Let’s start with some facts. Every device manufacturer other than Apple continues to install NFC in new smartphones. Remember that Apple accounts for around 15 to 20 per cent of smartphones globally, while the handset vendors that include NFC, like Samsung, HTC and Motorola to name a few, make up the remaining 80 to 85 per cent of the global market, according to Gartner's latest figures.

The importance here is that Apple is a minority player (this isn’t a typo, Apple is a minority player) on the global stage when it comes to user base, so it’s quite naïve to think that just because Apple doesn’t have NFC-enabled devices that this will in some way impact the huge installed base already equipped with NFC smartphones, which grows every day. According to the latest ABI figures the number of NFC-enabled devices globally stands at 300 million with 500 million forecast for 2014. If anything it should reinforce how Apple continues to fall behind the innovation curve at the expense of Samsung and others in the smartphone arena.

It is also important for people to understand the use of NFC-based services isn’t a question of coming soon, it’s already here. And we’re not talking about small trials or pilots (even though they’re happening too in parts of the world); we’re talking about significant rollouts, which have seen hundreds of millions invested in deployments that allow businesses and consumers to benefit from NFC every day.

One particular example worth mentioning is Isis in the US—a mobile wallet venture between T-Mobile, AT&T and Verizon. Following a pilot earlier this year, Isis has announced that this year it will roll out nationally, allowing people to begin paying for stuff using their phones at more than 1 million NFC-enabled point-of-sale terminals.

Major institutions, brands and retailers are involved in the Isis deployment, which highlights that the 'big end of town' industry players aren’t overly concerned with the iPhone. They recognise that the majority wins, and they will gravitate toward a majority user base. If Apple decides to use an alternative method of supporting payments, then the big players will offer the ability to use that method, as long as it doesn't compromise the majority-based method.

However what the big end of town won’t do is bend the methods to suit a user base that is in the minority, especially when the big end of town includes telcos, financial institutions, retailers, manufacturers of point-of-sale equipment, handset vendors and trusted service managers.

When it comes to payment-related services, there is a diverse range of stakeholders involved,  many of whom aren’t wedded to Apple and some of whom will enjoy the opportunity to push a payment method that limits Apple’s scope to influence consumers.

So whilst you should be very excited about the upcoming release of the new iPhone and the possibility of NFC being included (like we are at Tapit), please don’t quickly jump to the conclusion that Apple is controlling the destiny of NFC. NFC is a reality that lies beyond the reach of Apple's distortion field.

Andrew Davis is COO and co-founder of Tapit.

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