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NFC Tag Market Transition |
NEWS |
The Near-Field Communication (NFC) tag market is once again becoming a key topic of discussion following last year’s move by Apple to enable iPhones running iOS 11 to read NFC tags for the first time. The move came at a critical juncture in the NFC tag market as 2017 witnessed a further decline in the gaming segment due to weak sales and product discontinuations. For example, Disney Skylanders has not unveiled any new products since 2016, while LEGO Dimensions was discontinued in October 2017 due to its disappointing performance. The year 2018 is expected to see a further decline in the NFC tag gaming segment as these discontinuations continue to hit the market, though there is hope looking forward that new product announcements will be able to revitalize the gaming segment and achieve a semblance of its 2015 success. Furthermore, new growth opportunities are expected in the connected products market over the next few years. Tag vendors are all hoping that this will finally allow NFC tags to flourish and reach their true market potential, though there are a number of challenges ahead for the tag ecosystem in the near future.
NFC Tag Market Opportunity |
IMPACT |
ABI Research’s latest NFC Tag forecasts highlight the global opportunity across a number of market segments including gaming, Bluetooth pairing, connected products, brand protection, and emerging Internet of Things (IoT) applications among others. In addition, they are based on the following assumptions:
What Does the Future Hold for NFC Tags? |
RECOMMENDATIONS |
Despite recent dips in the NFC tags market, mainly attributed to a considerable fall in the gaming segment, vendors are confident that there is still tremendous opportunity for NFC tags. In particular, the industry expects the connected product category to grow rapidly over the next couple of years as the first larger scale deployments of NFC tags help to pave the way for others to follow, and trials and pilots begin to scale up to larger deployments. While this represents only a small portion of the market today, some vendors hope that the connected product category will soon dwarf the current size of the NFC tag market as a whole, based on key partnerships with leading brand names. The primary use case here is for consumer interaction and to drive additional value for the customer after having purchased a product.
There is also likely to be considerable opportunity for anti-counterfeiting measures and brand protection. NFC tags can be used to guarantee the authenticity of various high-cost products including protein powder, alcohol, tobacco, and luxury items, in addition to digital seals or anti-tampering in medical and pharmaceutical applications. In the longer run, we will also see tags increasingly shipping with sensor functionality to help monitor variables such as temperature and pressure.
Another common use case for NFC tag technology is the seamless pairing of Bluetooth and other connected devices, including wireless headphones, wireless speakers, and automotive infotainment systems. This functionality has been around for several years, driven by other smartphone vendors like Sony, which has also made standalone customizable NFC tags for use between smartphones and different devices. Certain Bluetooth chipsets already available from vendors such as Nordic Semiconductor include an on-chip NFC tag incorporated into the System on a Chip (SoC) for these, as well as other applications. In the longer run, secure provisioning of many headless IoT devices such as smart bulbs, motion sensors, and door locks among many others that come without displays or buttons, may be a key opportunity for NFC tags.
While there has been limited immediate impact from Apple’s opening up of tag reading on its iPhones, it has the added benefit of removing one key obstacle from vendors previously considering the technology but that were hesitant about losing out on iOS customers.
As the previous forecasts highlight, ABI Research believes that some of these markets will take some time to scale up and translate into real end market products. However, ABI Research offers a number of recommendations for tag vendors to help take advantage of these new opportunities, including:
Ultimately, ABI Research expects steady growth for the NFC tag market, though there may be some fluctuations depending on the success of certain larger scale deployments of connected products over the next few years.