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Summary:

UPDATED: NFC reader and software maker ViVOtech is selling off its reader business as it restructures and focuses on software. The company, which has raised $96 million to date, may have burned through too much cash waiting for NFC payments to materialize.

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UPDATED: NFC payments, that revolution that hasn’t seemed to materialize as fast as predicted, may have claimed a big victim in point of sale vendor ViVOtech (see disclosure below). The company has reportedly started telling its employees that it is ceasing operations after encountering cash flow problems, according to a report in NFC Times.

UPDATE: ViVOtech provided a statement to us saying that the company is not shutting down but is preparing to sell its reader business as it goes through a restructuring. Take a look:

ViVOtech’s  business fundamentals are strong and orders and contracts are building in both its reader and software businesses. Over the last six months the company has been executing a strategy to divest its reader business to a qualified buyer. This sale has moved slower than anticipated. ViVOtech has not ceased operations but is in the process of restructuring operations and has reduced its team to a smaller group with the goals of maintaining customer relationship and core contract work, and to address our supplier relationships and commitments,  as the company completes plans to divest the reader business and focus on the Software Business. ViVOtech is in dialog with its customers and suppliers on the current situation but will be no making no other public statements.

(Original story follows)If true, it would be a pretty stunning end to a company that has tied its success to the adoption of NFC. The company has reportedly raised up $96 million to date and was looking at an IPO as early as this year. The most recent funding came in March, when it took on more than $20 million. We’ve reached out to ViVOtech for comment.

ViVOTech is reportedly looking at selling its reader business PAX Global Technology, a Chinese POS terminal maker, the NFC Times said. ViVOtech is also looking to unload its software business, which includes mobile wallets services and its trusted service manager unit.

The Santa Clara, CA company was founded in 2001 on the promise of NFC technology changing the way people pay and interact. But the market for NFC has taken a long time to take shape and has only recently started to gain momentum, thanks to payment projects like Google Wallet, which off to a slow start last year, and the upcoming Isis joint venture from AT&T, Verizon and T-Mobile. ViVOtech was a partner in both of those payment ventures.

It appears that ViVOtech burned through too much cash waiting for NFC payments to materialize. The company had said it would be profitable this year. To date, ViVOtech has shipped about 1 million NFC readers and was operating in more than 30 countries. But it faced a lot of competition from VeriFone, which sells contactless terminals to more than 70 percent of the top retailers in the U.S. VeriFone previously used ViVOtech as a supplier but ended the relationship.

A closure by ViVOtech doesn’t mean the NFC payment market is doomed. But it highlights some of the challenges involved. It’s built on the idea of people paying with the tap of their NFC-enabled smartphone. But the ecosystems, support and hardware adoption needed to pull that off has proven very complicated. And for many consumers and merchants, it’s not quite clear why NFC payments are so much more superior to cash and credit cards. ViVOtech was also trying to transition beyond just facilitating payments by moving into offers and loyalty. That’s seems to be a recognition that the transaction itself isn’t so interesting or lucrative. The battleground is really in the value-added services.

NFC may well turn out to be a winner at some point. But it will likely take a long time to find mainstream acceptance, something companies in this market will need to factor in if they want to succeed.

Disclosure: ViVOtech is backed by Alloy Ventures, which is also an investor in the Giga Omni Media network, the parent company of GigaOM. 

  1. Michael Jumper Friday, July 27, 2012

    This is too bad.. I had a really good idea I planned on proposing to ViVOtech as soon as I acquired the money for the provisional patent.

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  2. Michael Jumper Friday, July 27, 2012

    In fact, my plan would put this product into the hands of every single smartphone user and make it as big a name as any out there right now. It would earn his (our) company to make it one of the biggest players in the economy today.

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    1. Wake up. NFC appeared 10 years too early.

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    2. What are you talking about ?????????? Do you really know the business well ??????

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