NFC-enabled phones have yet to take off, despite phones with the Sony Felica
interface, compatible with NFC, being placed in the hands of over 50 million
Japanese in little more than two years - one of the fastest adoption rates
for electronics ever. So why the delay? Here Dr Peter Harrop shares insight
into the topic summarizing findings from the new IDTechEx report NFC-Enabled
Phones and Contactless Smart Cards 2008-2018 www.IDTechEx.com/nfc.
Near Field Communication (NFC), by which electronic devices communicate if
held within a few centimeters of each other, is underpinned by global ISO
specifications. It has attracted the attention of the largest telcos,
transport companies, banks and others and new trials are frequently
announced all over the world. However, it has yet to take off, despite
phones with the Sony Felica interface, compatible with NFC, being placed in
the hands of 40 million Japanese in little more than two years - one of the
fastest adoption rates for electronics ever. The many trials confirm that we
are all like the Japanese in seeking the convenience that such phones can
offer. So why the delay? Why do more and more trials?
History repeats itself?
With NFC phones, the telcos have nearly all the power and they have often
failed to seek a mutuality of benefit with others in the value chain. That
has meant that very few NFC enabled phones have been made available, banks
are cautious about letting their cards be mimicked by the phones and
transport operators are cautious about the ticketing option being loaded. As
in retail RFID, they can cite technical problems for delay because telcos
prefer NFC to be loaded on the SIM and that standard is not quite ready.
There are also issues such as the capacity of the SIM cards.
Role model of success
It will all be resolved in due course. The wealth of value added services in
prospect for the telcos will see to that but, as with retail RFID, the speed
of progress will depend on how much mutuality of benefit is allowed to
emerge. At least there is a role model of success. The telco NTT DoCoMo is
behind the early success of the Japanese phones now commonly used for shop
purchases and ticketing. It struck realistic deals, including emulating the
Suica stored value card held by 22 million people.
All was not perfect. The railway function was difficult to download and the
railway company JREast initially required purchase through its own card.
Japan is now seeing next generation trials and rollouts such as use of its
new Ubiquitous Product Code on mobile phones for managing supplies and
assets and use of the phones for secure access to buildings. Some of the
foreign trials explore other innovations such as down loading transport
applications in Germany simply by holding the phone near a passive RFID tag,
say on a ticket machine. But many telcos have to practice mutuality of
benefit before real progress is made. That seems likely soon in China and
Korea, for example, and rollout there will be aided by existing huge
infrastructure for contactless cards and tickets. All those barriers and
readers will read the phones.
New IDTechEx forecasts
IDTechEx forecasts that, while the yearly number of mobile phones sold rises
from one to two billion in the next few years, the number of RFID enabled
phones sold will rise from 134 million in 2008 to 860 million in 2018,
mostly all of this is happening in East Asia. East Asians will continue to
show the way, not because of differences in consumer wants but because their
governments and industry make sure the inter-industry haggling stops and
projects that benefit the nation go ahead. For example, IDTechEx sees the
following numbers of RFID enabled phones sold in 2013.
Phones do not kill cards
So, as the NFC proponents get their act together, will the business in
contactless (ie RFID) smart cards and tickets come to a halt? The answer is
no, mainly because the cards and tickets serve many purposes that mobile
phones are unlikely to serve and other people are in the driving seat. For
example, reloading a national ID card or driving license card on your new
phone every year is not worth the hassle if you can, as now, keep the card
version for ten years. Indeed, it may not be permitted by the authorities. A
more detailed comparison below shows how all these media have their own fast
growth path ahead, with minimal competition, beyond financial cards possibly
being impacted by preference to load them on phones in later years. Both
cards and phones are now capable of high speed transactions at up to 424
kb/s but other functional differences drive the largely divergent
Major new report
In its major new report "NFC Mobile Phones and Contactless Smart Cards
2008-2018", IDTechEx explores the many new technologies coming along such as
printed transistor circuits replacing the chip in tickets and later cards,
with up to 90% cost reduction emerging and a huge increase in sales
resulting from that. A large number of contactless card and ticket schemes
and their suppliers across the world are analysed and the lessons of success
and failure are revealed. IDTechEx explains why a $4 billion business in
contactless cards and tickets and their systems will emerge in 2018 and
details the elements of that business. Ten year forecasts are given for all
these devices and systems. We give the applications they are used in; split
by territory; number of units; average unit price; total value of tags;
total value of system (including interrogators, software, networking,
installation) and much more. See www.IDTechEx.com/nfc for full details.