Posts Tagged ‘NFC’

Masabists: NFC Roundup 2009

// October 25th, 2009 // Comments Off // Mobile

This post was originally featured on the Masabists blog.

After many trials, NFC has been on the cusp of launching in Europe for some time now. It is regularly brought up in conjunction with mobile ticketing, which has been one of the key use cases always quoted for the Felica NFC system available in Japan for some years now.

The potential is huge, and at Masabi we greatly look forward to the day we can start using it for transport ticketing – but where do we stand, in late October 2009?

UK Operator Support

O2 last did an NFC trial in 2008, and almost exactly a year ago they stated at a Mobile Monday NFC event that it had gone so well they were looking to run another trial at some point in the future. We haven’t had that trial yet.

A mobile phone feature requires operator subsidy to gain traction, because no manufacturer will foot the bill for the electronics on their own. Therefore, the number of NFC-enabled handsets currently available from each UK operator tells us a lot about where NFC lies along the feature adoption curve:

  • O2 – 0
  • Vodafone – 0
  • Orange – 0
  • T-Mobile – 0
  • Three – 0

Carphone Warehouse, the UK’s biggest indepedent high street retailer, also currently sell no NFC-enabled handsets.

NFC-Capable Handsets

GSM handsets with NFC launched by handset manufacturers:

NFC Predictions

Which year will NFC take off?

How big will the market be?

  • “by 2012, some 292 million handsets — just over 20 percent of the global mobile handset market — will ship with built in NFC” (ABI Research, Apr 2007)
  • Mobile phone based contactless payments will facilitate over $36 billion of worldwide consumer spending by 2011.” (Strategy Analytics, Oct 2006)

It’s easy to be cynical about 20% of handsets having NFC in 2012, as we start to roll into 2010 without any NFC handsets on sale – but once NFC handsets start shipping, how quickly could they be adopted?

Phone Feature Adoption Curve

In 2000 Sharp launched the world’s first camera phone, which was a bit of a novelty. By the end of 2003, 25-35% of handsets had some sort of camera on them. By 2007, M:Metrics stated that 75% of UK handsets and 51% of US handsets had cameras – 7 years after the first launch.

Arguably, cameras are a more obvious feature for a mobile handset than NFC.

The first handset commercially available outside Japan with integrated NFC was the Nokia 6131NFC, launched in 2007. At the end of 2009 we still have no operator subsidised NFC handsets, which suggests there is little chance of matching the camera adoption rate, with 25-35% at the end of next year.

From this quick comparison, we can assume that we are either still sitting before the start of the NFC adoption curve, or the NFC adoption curve is very much flatter than that of phone cameras – more like mobile TV, say.

Conclusion

When it comes, NFC has some great potential in niche markets like mobile ticketing. At Masabi, we’re greatly looking forward to it. But right now, as a company principally interested in mass-market technology, we’re not holding our breaths.

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Masabists: NFC – One Day It’ll Be Great

// October 15th, 2008 // Comments Off // Mobile

Note: this post was originally written for the Masabists blog, and featured on Carnival of the Mobilists #146.

Currently there are two potential candidate technologies for scanning an electronic ticket held on a mobile phone – 2D barcodes (visual scanning) and NFC (wireless scanning). From Masabi’s point of view they are interchangeable – just connection technologies for our ticketing services, which can support either – but MoMo London’s NFC event this week provided some very interesting confirmation that barcodes will be ruling the roost for some time.

The event had a great mix of speakers, covering the full breadth of the technology from potential use cases right through to a speaker from O2 covering their recently concluded London-based trial. Telefonica/O2 have been the most agressive European operator backers of the technology, and their trial stats were very positive on the surface, but they didn’t stand up to much scrutiny.

The headline 80+% approval ratings all came from Londoners who had been given free handsets that they could use as Oyster cards (for travel on the Tube), with free credit to get them started – I’d certainly be very happy with that! The majority of the UK population – and the majority of the European and world populations – haven’t been obliged to use a widespread NFC-based network every day for several years, so it is unlikely that these interest levels could be replicated elsewhere.

The most telling thing about Claire from O2′s talk, though, was that the trial was so successful that O2 now had enough data for… directing another trial, at some point in the future. Moreover she stated that O2 had decided they were not interested in taking any revenue share from NFC payments, whilst acknowledging that they as the operator would bear the brunt of user support costs for on-phone NFC payments. Does that setup make O2 likely to spend money rolling out a service which will then cost them more money to run, with no revenue upside?

Just to confirm this pessimistic view, Claire declared that O2 would only consider a commercial launch in partnership with all operators, offering a wide range of NFC-enabled devices. However consider:

  • Currently only Nokia have an NFC handset on the market (a niche mid-range feature phone);
  • That handset isn’t widely available through operators on contract;
  • No other major manufacturer has announced an upcoming NFC handset;
  • Handset manufacturers will only increase the cost of a device by putting NFC into it if the operators ask them to – clearly, they aren’t.

Claire’s tone of voice seemed… cautious when she suggested that analysts reckoned it might get big in 2012. Even if we ignore the impact of potential world recession on the technology industry, that seems optimistic:

  • New handsets take time to design and new features require new skills to integrate into hardware and firmware;
  • There is a clear lag between handsets first arriving in the shops and those same handsets becoming widespread, as users usually only upgrade at the end of a contract;
  • Handset upgrade cycles are slowing down as operators try and encourage customers onto 18 and 24 month contracts, instead of the more usual 12 (Orange recently offered me a massive discount for just such a move when I upgraded to Nokia’s flagship N96, which contains every feature under the sun – except NFC).

Going mainstream in 2012 suggests a lot of new NFC handsets will be commissioned, designed, manufactured and shipped out in volume by the start of 2011, just over two years from now… possible, but unlikely.

So is NFC living on perpetual limited-scale-trial life support? That may be the case for on-handset NFC, but James from Mastercard hinted at the real future of the technology – already hundreds of thousands of normal credit and debit cards have shipped out NFC-enabled, even if their owners don’t have any idea what that means.

It is not a huge leap of the imagination to see NFC as being “cheap enough” to just implement in next generation card processing terminals, so the natural upgrade cycle of those terminals leads to a widespread “stealth” deployment of NFC processing capability – without requiring retailers to actually pay out for a massive infrastructure upgrade so soon after Chip and PIN was introduced. Once the technology is out there, it may start to be understood and used, and once it starts to be used the added advantages of NFC on handsets may be compelling enough – and cheap enough – for a mass market roll out.

Until then, we’ll stick to a two pronged approach: 2D barcodes for our mainstream ticketing solutions, and limited scale NFC deployments where the handsets and infrastructure are available.

YourRail ticket sales app YourRail ticket sales app

National Express East Coast ticketing app National Express East Coast ticketing app

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