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Google's prayer? Apple declines NFC support to iPhone 5

If the reports are true and Apple declines to have the iPhone 5 support Near Field Communication, it will be a major disappointment to the ecosystem. However, it will also give competitors such as Google a leg-up.

Several major British carriers commented off the record that Apple told them that the iPhone 5 would not have an embedded NFC chip due to its concerns that the industry lacks a clear standard. The iPhone manufacturer is rumored to be developing its own NFC standard that will link to iTunes and the 200 million-plus consumers who have registered their credit card information with Apple.

?It may not be true?it could be just hearsay, as Apple is not commenting?but the stories seem to have at least second-hand knowledge that NFC is not going to be in the iPhone 5,? said David Eads, head of product marketing at Kony Solutions, San Francisco. ?That would be surprising, because Apple is so well positioned and they have the funds to make it successful, but it may be better for them to not offer something at this time.

?It might be better for them to continue to guide the market along and not potentially be criticized for being a first-mover,? he said. ?If it chooses not to support NFC, Apple will be at a disadvantage, as this will give Google and other competitors a head-start

?If it is not doing NFC, then its strategy confuses me, although Apple?s style is to not offer something until they can do it right.?

Apple did not respond to an inquiry by press time.

Widespread adoption of mobile payments via NFC is still at least two years away, according to Sybase 365 (see story) and MoreMagic (see story).

NFC gaining momentum?
While NFC will be a game-changer for mobile payments and commerce once it attains mass-market adoption, it also has the potential to transform mobile marketing by enabling interaction with out-of-home advertising such as smart posters and contactless deployment and redemption of mobile coupons.

In addition, in the not-too-distant future most, if not all, loyalty and customer relationship management initiatives will take advantage of NFC.

The entire mobile ecosystem has been ready to go for some time, waiting for a major event to happen to jolt NFC into the mainstream.

With more than 750,000 contactless payments terminals already installed at retailers? point-of-sale in the United States alone, the only missing component has been an NFC-enabled phone in consumers? hands.

Nokia has NFC-enabled mobile phones in-market, Samsung has three, Google has one?the Nexus S?and Research In Motion has NFC-enabled BlackBerry models in development.

Many believe that an NFC-enabled iPhone could push NFC adoption into the mass market.

The technology is ready, so Apple?s reported claims that there is no standard ring hollow for many.

?NFC is one of the most piloted technologies out there, and the user ratings of NFC pilots have been off the charts,? Mr. Eads said. ?The technology is there, although maybe there are missing pieces on Apple?s side with their technology.

?Apple is blaming it on the lack of standards, but it sounds like an excuse of some sort, if it is even real,? he said. ?If it is true, the key is that it gives its competitors a head-start.

?Android has already passed iOS in the number of handsets, and if Google can figure out vertical payments integration, that is not good for Apple.?

There will be more than 50 million NFC-enabled mobile devices available commercially worldwide before the end of the year, according to Inside Contactless (see story).

Apparently none of those will be iPhones.

Apple claims that iTunes has 200 million credit cards on file, which it believes is the largest collection of payment instruments out there.

With more retailers and merchants supporting NFC at the point of sale, as well as financial institutions and developers getting on board, it is a bit of a head-scratcher as to why Apple would decline to join the contactless party.

?Apple?s got all the pieces, so maybe they are giving us a head-fake,? Mr. Eads said. ?[If the iPhone 5 does not have an NFC chip embedded], it may take a little bit of the wind out of the sails of the NFC ecosystem.

?Bankers, retailers and folks in the hardware and software industries?everybody has been working hard on this and developing a strategy because they feel like they have to support NFC if Apple does, so it may take the urgency away [if it does not], but if Google?s Nexus S is successful and RIM enters the fray with NFC, that could keep the momentum from dying out,? he said.

Final Take
Jennie Rae Le Roux of Zenius