Four factors critical to near field communications markets

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17 May 2006 News

Near field communication (NFC) is still in the early stages of commercial development. Four factors have been identified that will be critical to the technology’s successful deployment over the next few years.

According to Erik Michielsen, ABI Research's (www.abiresearch.com) director of RFID and M2M research, they are:

* Handset availability.

* A uniform PAI (application programming interface).

* Interest and initiatives from mobile operators.

* The success of contactless payment trials.

Many of NFC's future applications will work via the mobile handset, but the market has not yet seen enough NFC-capable models, says Michielsen.

"We are a bit surprised that there have not been more phones released to the market," says Michielsen. "One reason is that carriers have been hesitant to move forward with NFC handset requests. We expect that to change: multiple models are under development by Motorola, Samsung, Nokia and others, but handset development does take time."

A second critical factor will be the availability of a uniform API - the 'hooks' that software applications use to communicate with hardware. With many proprietary devices destined for this market, a common API means fewer resources spent on customisation and more on value-added applications and features. 'A uniform API does not yet exist,' he notes, "but there is now a widespread acknowledgement of its importance."

It is vital that NFC trials be launched by operators. At present, Cingular is involved in an NFC trial to understand better how NFC can influence its operating models. Still, CDMA-based vendors with an interest in NFC, in particular Sprint, are unable to run trials due to the absence of CDMA-based NFC handsets. CDMA NFC handsets will promote additional trials which will in turn spur more substantive NFC development among silicon and other component vendors.

Finally, contactless payment systems will show the first quantifiable benefits applicable to NFC payment devices as well. Large trials are under way, and merchant acceptance momentum continues. "Consumer awareness of contactless payments will reach a mass-market level by 2007," says Michiesen. "Contactless shows the same development curve that we can expect to see from NFC as a whole: small pilots two years ago, scalable pilots last year, and now working towards deployments in 2006."

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Four factors critical to near field communications markets

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