NEWS ANALYSIS: Apple surprised by delivering an iPhone 5 without NFC. Analysts suggest that iOS 6's Passbook app will instead be Apple's favored mobile payments solution, for now anyway.
Apple was expected to play catch-up to its Android competitors by
introducing an iPhone 5 with a larger display and support for Long-Term
Evolution (LTE) technology and near-field communication (NFC)-the technology
behind a number of mobile payment solutions. NFC shipped on more than 106
million Android smartphones in 2011, and with the backing of an iPhone,
research firm IHS iSuppli expected that figure to more than double by the
year's end, to 232.5 million, and grow to more than 989 million smartphones by
However, while Apple delivered on the display and LTE, its
Sept. 12 introduction
of the iPhone 5 came and went without a word about
Is Apple still waiting for the technology to catch on? Possibly. Or, in the
Apple tradition, it may have decided that it can design a more elegant solution-and
possibly already has in Passbook, the iOS 6 application Apple introduced at its
June 11 developer conference.
"I don't think Apple needs NFC, and I think it didn't go with NFC
because it's a chicken-and-egg proposition," Ezra Gottheil, a senior
analyst with Technology Business Research, told eWEEK
, referring to the
need for vendors to have in place solutions compatible with NFC, and for enough
consumers to have smartphones with NFC, making the payments solutions
worthwhile for the vendors.
"There potentially are also security problems with NFC-which will
surely be fixed-but Apple doesn't want to bet on something that's not a
winner," Gottheil added.
While Apple introduced (downplayed?) Passbook as a way to keep track of
boarding passes and event tickets, Gottheil says, "It will have
everything-your tickets and your membership cards, but also your credit
Think of it as Apple's answer to Google Wallet.
Passbook "will allow users to employ their iPhone 5 to redeem coupons,
movie tickets, boarding passes and loyalty cards and to conduct other financial
transactions," IHS iSuppli senior analyst Jack Kent wrote in a Sept. 11
"With its capability to tie purchases together, Passbook will be an
effective tool for managing mobile transactions, mobile money services and
mobile commerce," Kent continued. "If Apple combines Passbook with
its new location platform, the company will open both a new revenue stream and
a new competitive front with Google."
As for Apple's decision to forgo NFC on the iPhone 5, "If Apple had
launched the iPhone 5 with NFC, it would still need to work with third parties
to build content and services," Kent told eWEEK
. "It makes
sense for Apple to forgo NFC for the moment and save on the related costs. When
or if the market for NFC services matures and it becomes a necessity for Apple
to implement it, it in all likelihood will do so, but that time has not yet
Downey, an analyst with Semico Research,
points out that Apple owns several
patents related to NFC, so it certainly could have long-term plans for the
technology. Maybe NFC is a candidate for the iPhone 6, or despite reports that
the iPhone 5's aluminum back stunts the phone's ability to transmit the NFC
signal, Apple has figured out a way to still make it work, but its timetable.
Still another option is that Apple could be planning to support payments via
the low-energy version of Bluetooth 4.0 that it has already included in the
iPhone 4S and other iOS devices, Downey suggested in a Sept. 17 blog post.
Either way, "Apple is known for tightly controlling transactions made
via apps on the iPhone already," she wrote. "Payments could be tied
in through iTunes, which already contains a user's credit card information."
Earlier this year, Gartner forecast that mobile transaction volume and
values will average 42 percent annual growth between 2011 and 2016, with $617
billion worth of transactions taking place by 2016. Such figures suggest that
mobile payments isn't an opportunity Apple will leave to its competitors. Given
Apple's preference for operating on its own terms, and an ecosystem that
includes expanded cloud resources, it's likely not Apple that's in wait and
mode, but the rest of us.
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