NFC isn’t really six years away, says ABI

A controversial press release from ABI Research this week seemed to indicate the company believes it will be six years before NFC can offer viable large-scale mobile payment solutions. A little further investigation, though, finds the analysts still expect to see the first major orders at the end of next year…

ABI RESEARCH: Expects NFC to be adopted in "significant numbers" next year
ABI RESEARCH: Expects NFC to be adopted in 'significant numbers' next year

“Once, NFC (Near Field Communication) was the leading contender among technologies that could enable mobile payments.” says an ABI Research press release announcing its new report ‘Mobile Commerce and Payments’. “But NFC has developed more slowly than anticipated, and will not offer viable large-scale mobile payment solutions for at least six years.”

“In the mean time”, the release continues, “three existing technologies — SMS, mobile internet and downloadable mobile applications — have the potential to deliver what NFC (so far) cannot.”

“While discussed for years, mobile payments have been slow to grow significantly,” the company’s website adds. “ABI Research believes this is due to systemic issues with NFC and because of a lack of focus on practical consumer use cases. In what instances would mobile payments make sense, compared to the ways in which consumers pay today?”

That’s a picture that’s very much at odds with most industry observers’ point of view, and with ABI’s view in the past. The press release has been reprinted on a number of websites but here at Near Field Communications World we were surprised enough by ABI’s sudden change of heart to contact the company to get a bit more background information.

The firm still expects to see NFC being adopted in “significant numbers towards the end of next year,” ABI principal analyst Jonathan Collins told NFCW. “What we actually see is that there have been issues around the business model and the technology standardization.” But, he added, “we are nearer to deployment than before.”

In the press release for Near Field Communication (NFC) — Interim Technologies and Devices, and NFC Mobile Handsets, a second new ABI report that takes a much more positive view, Collins’ point of view is explained further:

What has been lacking is a short-term, realistic view of the potential for NFC in small and targeted rollouts, either by customer segment, bundled application, or regional capabilities,” says ABI Research principal analyst Jonathan Collins. “NFC’s benefits are obvious if the technology is ubiquitous; but it will not reach that level of acceptance without a rethinking of the way to engender NFC demand in a piecemeal fashion.”

When NFC first emerged as a technology for mobile handsets in 2003, the ability to address extremely broad end-user markets with a simple end user interface — namely mobile handsets and payments, as well as multiple other technologies and interactions — was immediately recognized as a significant potential. But despite many trials involving many companies from multiple industries, only one NFC handset is commercially available.

“A new wave of companies and products has emerged, eager to harness the potential of NFC in a range of applications and services that are often quite niche, but that can use NFC today to create value and drive efficiencies,” comments Collins.

This staggered start is reflected in the current hardware market for NFC chipsets, with a large percentage of NFC ICs not going into mobile handsets but into other devices.

NFC peripherals and NFC additions to consumer devices are emerging alongside contactless stickers and other interim technologies that will help bridge the gap between NFC’s usefulness and the lack of broad availability of NFC handsets; while large-scale operator rollouts remain subject to additional trials and the further development of business relationships enabling support for NFC payment and ticketing services.

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