Apple will make NFC mass market with iPhone 5

There has been endless speculation on both the launch date (mid year, end of year?) and features of the next generation iPhone (bigger screen?, better camera?, Sony's involvement?, better resolution?, no home button?, different design?).  But one thing that appears to be pretty certain (well, 80% likely according to Mashable yesterday and Forbes last month) and that's the fact that iPhone 5 will be equipped with NFC technology.

NFC (near-field-communication) is a set of short-range wireless technologies that will allow mobile/handheld devices to communicate over very short distances (ie a couple of centimetres).  This has a great variety of uses - most importantly - allowing the mobile phone to be used as a payment card. Users simply swipe their mobile device over a special reader in-store (in much the same way as an Oyster card or some recent credit/debit card contactless payment systems).  Ultimately, the mobile phone will become a new 'digital wallet' alleviating the need to carry multiple payment or loyalty cards.

NFC is already baked-in to the new version of the Android operating system, Gingerbread, and last December Google launched the world's first NFC enabled phone, the Nexus S.  But despite the fact that NFC is already here it will be Apple's entrance into NFC technology that will make it mainstream.

Why?

Because Apple understands how to sell the benefit of technology not simply its features.  The launch of the iPod is the perfect example of this.  Of course other MP3 players existed beforehand - but iPod effectively made digital music downloads something that people could understand and, most importantly, see the benefit in doing.  And they combined the technology with the fantastic delivery channel that is iTunes.


And so with NFC, where one of the original barriers to its adoption was the lack of a clear technical standard for NFC itself.  However, recently a number of US network providers (Verizon, T-Mobile and AT&T) have signed-up to the Isis NFC standard.  This means that as Isis becomes the industry standard the largest barrier remains encouraging payment issuers & retailers to adopt NFC.

This is the kind of deals that brands such as Samsung and Visa are doing.  They announced at the end of March that they will provide NFC payment services for the 2012 Olympics.

And this no doubt will be the focus of Apple's key partnership conversations over the next few months.


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