Several months ago and prior to the iPhone 5 launch, we provided some insights into the likely adoption rates for the Near Field Communications (NFC) market. At the time we wrote that article one of our underlying assumptions was that the iPhone 5 would be equipped with NFC, and we noted that Apple would help to quicken the pace of NFC adoption by consumers because of it.The optimistic rate of adoption we provided was contrary to what Visa was suggesting at the time we wrote the article.
Well, Apple as we all now know did not include NFC in the iPhone 5 - some of us now speculate that Apple left it out in order to be able to deliver something new with an iPhone 5S upgrade. Or Apple may very well choose to ignore NFC altogether and rely solely on its Passbook application that was introduced with iOS 6 for its mobile payments platform.
Today, Passbook is still quite limited in what it can actually do, but we expect it is a priority for Jonny Ive and company to deliver a next great Passbook in iOS 7 (which will likely show up at Apple's World Wide Developers Conference in June 2013). Apple SVP, Paul Schiller suggested that Passbook would be its mobile payments platform immediately following the iPhone 5 launch, but with Apple being a hardware design company, we are sticking with our belief that NFC will show up in the next iPhone.
Recently, we also covered an interesting little product from Israeli-based OTI, which had announced a new “Contactless Payment and NFC Insert” (COPNI) capability the company has dubbed COPNI Wave. The device provides NFC capability for the iPhone, but whether or not users will want to add such a thing to their otherwise sleek iPhones remains a question.
NFC May Be Slow to Emerge After All
Now, Juniper Research has joined in with Visa's original perspective and through newly released research has published its own revised - and formerly more bullish - forecasts for the global NFC market. In fact, Juniper has significantly scaled back its growth estimates for both the North American and Western European markets.
The new Juniper report finds that by 2017 the proportion of NFC-enabled smartphones will be only marginally below previous estimates - the smartphone vendors will continue to add NFC capabilities and will bring those capabilities down to the lower ends of their smartphone models. Currently, Samsung and Nokia deliver NFC on their higher end devices, but there is that one glaring hardware vendor omission here.
Despite the anticipated steady growth of NFC-enabled smartphones we will see between now and 2017, Juniper has significantly reduced its estimate for actual NFC-based revenue generation. The company now projects that global NFC retail transaction values will likely reach $110 billion by 2017, and though this is still a non-trivial number, it represents a scale back from Juniper's original and far rosier estimate of $180 billion.
What we find particularly interesting is that Juniper had made the same assumption we made when developing its initial projections - that being that Apple would deliver NFC in the iPhone 5. The new report now unequivocally states that Apple’s decision to leave NFC out of the iPhone 5 has "reduced retailer and brand confidence in the technology, leading to reduced POS (Point of Sale) rollouts and less NFC campaigns." Apple clearly carries a lot of NFC weight in Juniper's opinion - much as we ourselves believe. The lack of confidence noted, in turn, will lead to lower NFC visibility among consumers and means as well that there will be many fewer opportunities to make payments, threatening a cycle of “NFC indifference” in the short term.
Though NFC capabilities will proliferate ongoing on smartphones, it won't matter as there will not be enough retailers providing NFC capabilities from their ends to allow transactions to take place. This is in line with what Visa had suggested.
Two Year Lag for North America and Western Europe
Juniper report author Dr. Windsor Holden states that, “While many vendors have introduced NFC-enabled smartphones, Apple’s decision is a significant blow for the technology, particularly given its previous successes in educating the wider public about new mobile services. Without Apple's support, it will be even more difficult to persuade consumers – and much more importantly, retailers – to embrace what amounts to a wholly new means of payment.”
The report also finds that Apple’s move will have its greatest impact on markets in North America and Western Europe. Juniper notes that transaction values will exhibit a two year lag on Juniper's previous forecasts. Again, this is directly due to - as Visa had noted - retailers delaying POS investments from their ends.
Juniper's report also notes - and this should come as absolutely no surprise given the long term use of NFC by both countries - that, conversely from what we'll see in the US and Western Europe, retail transactions in "NFC’s heartland in Japan and Korea" - as Juniper puts it - are likely to experience little or no impact from Apple's iPhone 5 decision.
Despite Apple’s decision, NFC trial consumer feedback from such events as those held at the London Olympic venues during the Olympics (in which Visa was a highly visible player) and in Singapore continue to generate extremely positive feedback, suggesting strong latent interest from consumers when services are more widely deployed from the retail end. It is interesting to note that retailers rely more on what Apple is up to than on the results of NFC field testing. Meanwhile, Juniper also notes that both MasterCard and Visa have certified several NFC service solutions and data centers, including those of Giesecke & Devrient and Gemalto.
The "NFC Mobile Payments - No Contact Needed" whitepaper is available to download from the Juniper website together with further details of the full report and the attendant forecast dataset.
TechZone360 Senior Editor
As international aid agencies and NGOs gear up to help the victims of the 7.8-magnitude earthquake that struck Nepal on Saturday, claiming more than 3…
Perception can become reality, and this is not necessarily good news. This is particularly true during times of major change, which we are currently e…
Comcast may have called off its $45 billion megamerger with Time Warner Cable, but the legacy of what that means for the FCC's policy for online video…
The solar industry has been of particular interest to consumers, businesses, and technology developers over the course of the past decade or so. Solar…
Silver was the primary mineral mined in Nevada when it was admitted to the union in 1864, earning it the slogan of "The Silver State." Times changed, …