Telecoms management consultancy The Human Chain has published its latest white paper which reviews the business case for new NFC form factors and challenges the industry to address the barriers to market.
In its hard-hitting report, it examines whether the technologies can gain market share and how they could potentially impact development of integrated NFC handsets.
"We.ve all heard the technology suppliers talk up NFC technology, but there are still significant questions that the industry needs to address if it is to take off in the way that some analysts predict," says Tim Jefferson, managing director of The Human Chain and author of the white paper, Alternative NFC form factors - Will they gain market share?
Deployment of NFC technology via what has been considered the most viable device - an integrated NFC-enabled handset - has stalled while ecosystem players wait for somebody else to make the first move and put their money where their mouth is. But many in the industry are now looking at alternative form factors which - although lacking the same over-the-air (OTA) functionality as integrated handset solutions - could provide contactless functionality sooner, potentially at a lower price point and also using different business models.
The white paper examines how the two main alternatives - NFC stickers and NFC Micro SD (uSD) cards - work and considers the business implications of deploying them. "Stickers can save start-up costs and be quicker to market compared with other form factors," says Jefferson. "They also benefit from well-known production and distribution channels and existing business models and routes to the market."
It also takes a look at the challenges of the sticker approach. "Mobile Network Operators (MNOs) and carriers wouldn.t have any control of unpowered stickers, so their role in such a technology should be considered," explains Jefferson.
The report reveals that there are other issues to be considered with powered contactless stickers, which use batteries and connect to the mobile phone using Bluetooth technology. "The technology is great in theory, because it provides an easy way to add feature-rich NFC functionality to the mass of installed mobile handsets worldwide," says Jefferson. "But size and battery life could be a problem - and you shouldn.t forget the user experience. Sometimes people find pairing Bluetooth technology with a handset simple, but at other times it can be very difficult and they can stop trying out of frustration. Furthermore, there is no existing production capability or established distribution chain for these types of devices."
The White Paper goes on to explore the challenge of identifying new channels to market, which often requires significant marketing and promotional investment to drive sales of powered stickers.
Its examination of NFC uSD cards - which can have either an integrated or a separate external antenna - highlights the advantages and disadvantages of this form factor. "Integrated uSD cards are an obvious winner as they have a similar read/write range to integrated NFC handsets and could work in a plug-and-play mode, opening up the world.s smartphone market to NFC and offering the potential to lead NFC deployment while the wait for integrated handsets continues," explains Jefferson. "But even here, there are questions. Will they work as well as existing contactless A1 form factor cards? And how will they work with smart posters? Furthermore, new players are entering the market and their business models may not be acceptable to MNOs."
The report also looks at the opportunity that NFC provides to deploy innovative form factors - including watches, tags and tokens - that promise to create the ?wow. factor for consumers. But according to Jefferson, their benefits may be limited. He says: "The question is whether these can ever be more than niche products for certain targeted sectors. While they can be good at creating consumer awareness of the technology, it is difficult to see that any of these will go mass market in a realistic time frame."
The White Paper can be downloaded from www.thehumanchain.com.
About The Human Chain
The Human Chain is a UK-based management consultancy that specialises in mobile and wireless telecommunications in Europe and North America. Its expertise is in helping clients exploit mobile and wireless technology to deliver real business benefits. It works with Mobile Network Operators/carriers, service providers and technology providers including systems integrators, infrastructure vendors, UICC SIM and terminal manufacturers as well as end user companies including major brands in banking, retail, transport, hospitality and logistics sectors.