Why Apple could help kick-start NFC next year

The market for NFC (near field communication) enabled phones is still quite small, but it’s expected to blossom next year as Apple and Microsoft could join the party, launching NFC-equipped iPhones and Windows Phone 7 devices. That’s according to a report out from Digitimes, which said those two platforms will join Android, Symbian, BlackBerry and Bada with NFC support next year.

Digitimes said according to talks with Taiwanese smartphone makers, the number of NFC-equipped smartphones will grow from less than 10 percent now to more than 50 percent within three years. Sources, however, told Digitimes the industry still needs to work through a number of issues, including standardizing specifications, the ecosystem and commercial operations.

The NFC wave grows

It’s not that surprising that Microsoft and Apple want to jump on board with NFC next year. Andy Lees, president of Windows Phone, said at the AsiaD conference last month that consumers can expect to see NFC WP7 phones in the next year. And earlier this year, reports telegraphed Apple’s decision to forgo NFC in the latest iPhone but indicated the tech would likely be included in 2012.

If this all comes to pass as expected, the future of NFC will really start to come together. But it’s not just about getting all the platforms aligned behind NFC, it’s about really showing what the technology can do. I think that Apple is especially well positioned to do that.

Right now, consumer awareness isn’t really there, because NFC chips are shipping only on a handful of devices, and the things you can do with NFC are very limited. But if Apple and Microsoft can not only include NFC in their upcoming phones, but also create some compelling applications that use it, it could really accelerate NFC’s adoption and turn it into an essential radio tech, like Bluetooth or Wi-Fi.

Apple as NFC catalyst

I think Apple in particular could come up with some great applications for NFC, which is a very versatile way to transfer data quickly over short distances. It can be used to let people check-in to a location or obtain a coupon from a poster or sign. It can help deliver personalized marketing offers to users. This is something Apple could leverage in its Apple Stores, which can be a powerful showcase for NFC Google or other rivals can’t match. By letting people tap their phone to check-in when they arrive at a store or to see what’s new or what the wait is like for a Genius Bar appointment, it can be a simple way for people to understand how to use NFC.

Checking-in for Genius Bar reservations is available now through a Concierge feature on the Apple Store app, but that works over Wi-Fi, which can mean more steps than simple device-to-device NFC interaction. And tapping a phone could pull up more information for everyday visitors, perhaps showing them special offers on apps for in-store shoppers. Apple is already simplifying its retail experience with its Apple Store app with in-store pick-up and self-checkout and NFC could provide a good complement. Other digital wallet providers will need to work with merchants to integrate their payment and offer systems at the point of sale, but Apple will be able to configure everything end-to-end to best highlight the new technology.

Apple’s digital wallet

Apple can obviously use NFC to pursue its own digital wallet. It has already applied for patents that could lead to an end-to-end system that would include mobile marketing, mobile payments and mobile retailing. Apple could build an NFC mobile payments system that ties into users’ credit card accounts on file with iTunes. Apple users are already very comfortable running transactions through iTunes, which has more credit accounts than any other retailer. An Apple digital wallet could be another formidable challenger against other NFC payments systems such as Google Wallet, the carrier-led Isis joint venture and Visa’s V.me digital wallet, which will eventually incorporate NFC.

But NFC doesn’t have to be used for mobile wallet applications in order to spur greater adoption. As I’ve pointed out, there’s more to NFC than payments, and this coming year probably won’t see things settle down in mobile payments enough for NFC to really take off in that regard.

But we can still see some interesting apps like BlackBerry’s Tag and Android’s Beam, which allow data sharing between NFC-enabled devices. Those apps provide Bump-like features, enabling users to share things like contacts, apps, web pages, multimedia content, YouTube videos, maps and other information simply by touching two phones together. I’d be interested to see how Apple can make sharing of content and data even more seamless and natural.

An Apple NFC iPhone patent

Kick-starting a range of NFC apps

Also, as the first platform for many developers, Apple could help encourage a lot of support for NFC-based apps. If developers can get access to the chip, it would spawn a lot of interesting ideas utilizing NFC. It wouldn’t just be payment applications, but all sorts of innovating takes on contactless interaction.

As I pointed out with Social Passport, a startup in New York, it’s possible to enable a lot of social actions through NFC that make things like checking-in, tweeting or following someone almost effortless, without even waking up a phone. And PayPal is showing how NFC can be used for person-to-person payments. There’s also a big opportunity in using NFC for physical access to buildings, something RIM is working on with HID.

Championing of emerging technology

I’m not sure what Apple will pursue first, but regardless, the company could do a lot in terms of putting NFC in the hands of more active users. All of these other NFC initiatives can also help raise awareness of NFC, but no one seems to help champion and popularize emerging technologies like Apple. It has done it with video chat with FaceTime; it has taken over the MP3 market with the iPod; and it has breathed life into voice-recognition with Siri. Apple has a way of making wonky technology very usable and elegant. It’s not clear Apple wants to take up that role right away, but that’s exactly what NFC needs to gain traction.