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53 Per Cent of Phones NFC-enabled by 2015, says Frost

David Murphy

The Near Field Communication (NFC) market has moved from an ‘innovator’ to an ‘early adopter’ phase, and from trial development to the first commercial roll out. The key driver for the market is the wide adoption of the NFC solution in mobile phones, as without massive numbers of NFC-enabled mobile phones in use, the market will not be able to realise its immense potential.

That’s the conclusion of new analysis from Frost & Sullivan, NFC - When Will Be the Real Start? The analyst anticipates that NFC-enabled mobile phones will reach 863m units in 2015. At this time, they mobile phones will represent more than 53 per cent of the overall market.

The analysis notes that in 2015, NFC will clearly be the most-used solution for mobile payment. Frost & Sullivan expects that the total payment value for NFC globally to reach €111.19bn in 2015, while the NFC payment value in the EU is expected to reach €41.87bn. Frost & Sullivan forecasts a five-year compound annual growth rate (CAGR) of 118 per cent between 2010 and 2015.

“There are two possible business models for the NFC market; the first one is based on a memory rental model, where the NFC application will rent the memory space used by its application, and the second is a pure rental model coupled with extra cost-per-use, where the application will pay a cost-per-year with a given number of actions,” explains Frost & Sullivan global program director Jean-Noël Georges. “When this number of actions on the application such as update, patch, read and write is reached, extra costs are charged to the application provider.” Frost & Sullivan anticipates that the pure rental model will probably be the most widely used.

The analysis notes that, for almost a decade, the NFC solution has been facing political and commercial problems. Most industries involved in NFC trials did not want to share the substantial revenues generated by the solution. Illustrating this point was the commercial discussion between banks and network operators, neither of whom wanted to share revenues. At the beginning, each wanted to force the other to adopt their business model. At the end, they were forced to admit that cooperation was the best compromise.

The NFC market also has the potential to create revenues for the entire NFC ecosystem, the analyst says. Handset manufacturers, trusted service management system providers and marketing and commercial NFC service providers all stand to benefit.

“Many marketing companies are already involved in the NFC ecosystem,” says Georges. “This is a good signal because, in the past, marketing companies were involved in new technology roll-outs only when the transition occurred from purely trials to first commercial deployments.”

NFC - When Will Be the Real Start? is a part of the Market Insights - Smart Cards subscription, which also includes research on other smart card-related issues and technologies.
For more information about the study, email Joanna Lewandowska