INDEX

Is Trying to Find That “Killer App” Slowing NFC Enablement?

Nov. 28, 2011, 5:50 a.m.
Phil Sealy, Principal Analyst

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NFC technology is gaining momentum with new NFC applications being developed and demonstrated on a regular basis. Despite successful developments, NFC enablement remains limited. MNOs find themselves uncertain on what services to offer whilst trying to find that “killer app” rather than enabling NFC to see what applications and services prove market winners.

It is no secret that NFC will be more than just a payment application and will certainly serve other markets including logical and physical access control, transport, retail and couponing to name but a few.

To date there remains some issues that need addressing before NFC applications hit the market in mass volumes and mass usage begins:

NFC handset availably remains limited, although this will change in the coming years with new handsets coming to market

MNOs still need to identify a clear revenue stream from NFC offerings (which services will generate revenues and how should MNOs charge for them)

Education is required, not only on NFC, but on contactless technology in general (how will contactless or NFC capabilities benefit a user, how the technology is used and the safety mechanisms involved to ensure identity and credential safety)

There still remains some uncertainty about the location and ownership of the secure element

Even with these on-going issues, programmers continue the development of different applications, showcasing what NFC can achieve. Of course, providing added business cases and uses is a good thing, allowing NFC to become an enabler for multiple applications creating a market where NFC could mean different things to different people. But is it possible that the increase in use cases and applications being developed adding further confusion to MNOs?

I have said before that the NFC market needs an MNO to take a chance, a leap of faith and provide enabled NFC to the masses. Even if it is offering a solution where revenues are not instantly created, say through the offering of peer to peer application. From here, natural and organic growth would prevail and that “killer app” could be discovered. After all stakeholders believe in NFC and believe it will be a successful technology, so what have they really got to lose?

Success will ultimately depend on the volume of NFC usage and consumers understanding of the technology. Confusion with users could ultimately result in limited uptake, thus slowing the market down further and let’s be honest; NFC is not a new technology and has certainly made slow progress in terms of commercial offerings. So why not get that simple tap and go experience out there in mass volume and collect feedback from the users themselves.

ABI Research does believe in NFC and ultimately its success, but the speed and popularity of adoption will greatly depend on the marketing and deployment methods undertaken by MNOs.