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RFID add-on brings NFC to iPhone; will Apple embed RFID in the G4?

11/16/09 | John R. Johnson | email

Is Apple ready to embed RFID technology into the next version of the iPhone? Nobody knows for sure, except the insiders at Apple, but near field communications is converging quickly with the mobile phone sector. Yesterday’s announcement of an NFC and RFID reader/writer to provide two way communication and RFID contactless payment capability for iPhones stirred the pot once again as to when Apple will insert RFID into its wildly popular devices.

Most industry analysts believe that Apple will hold off until after the release of its next generation G4 iPhone in June, and focus instead on more popular consumer offerings like mobile TV and streaming video. Analysts say that consumers are still not hot enough on NFC, and the technology needs more time for consumer education to take hold. However, the technology is coming fast. A study produced by Juniper Research last week predicts that NFC will be found in one of every six mobile phones by 2014.

There is an option for iPhone users who wish to use their devices for contactless payments and other uses like asset tracking. Wireless Dynamics’ iCarte™, which attaches to the bottom of the iPhone, will be commercially available in February. The units will sell for a maximum price of $70.

Wireless Dynamics says iCarte™ is the only Apple-certified NFC add-on currently on the market. It will initially be sold through cell phone carriers and by bank card issuers like Visa and MasterCard. In the future, it may be available at retail outlets like Best Buy and at Apple stores. Given that Apple soon expects to have about 100 million iPhones on the market, just a 3 or 4 percent market share could represent nearly a quarter billion in revenue for the tiny 20-employee firm located in Calgary, Alberta.

The iCarte™ effectively turns iPhone into an NFC device as well as an RFID reader and writer. It contains an embedded smart-chip that can be configured as debit, credit, pre-paid and loyalty cards, more or less turning iPhone into an electronic wallet for users who want to utilize their iPhone for fast and secure contactless payments, transit payments, loyalty rewards, checking balances, top-up pre-paid credit, and discovering new services from smart posters or kiosks and exchanging information with other NFC phones.

“We’ve talked with a few banks and we’re working with them to get this launched so people can put mobile banking or their Visa or MasterCard on iCarte,” says Carter Chalmers, director of global sales and marketing for Wireless Dynamics. “That is something we are working on very closely, and it will be a big driving force to get this out to consumers. Once consumers start realizing the benefits and the value of this, it will really drive the industry and there are endless application possibilities.”

Chalmers points to the future possibility of using the iPhone to interact with smart keys for newer model Mercedes and BMWs, which utilize RFID in smart keys. Drivers could likely gather all kinds of information from their cars on their iPhone, such as gas levels and maintenance information, as well as controlling audio and temperature controls.

In addition to some very cool consumer apps -- and a host of undeveloped apps that will hit once NFC gains stronger popularity with consumers -- businesses can benefit from an NFC-enabled iPhone for asset tracking, document tracking, security and access control. According to Chalmers, iCarte™ supports multiple RFID protocol read and write functions. RFID tag information can be read and written by the iCarte™ and communicated in real-time to enterprise databases through the iPhone's Wi-Fi or 3G connections.

Although Wireless Dynamics claims to be the only vendor with an NFC add-on solution for the iPhone, competition is expected follow quickly. As an industry leader in the contactless bank card sector, semiconductor provider INSIDE could be expected to introduce a similar product as soon as the first quarter of 2010. An iCarte-like accessory would be a likely market for INSIDE, as it has been behind more than 80 percent of the contactless bank cards issued in the U.S. and Canada since 2005, and has delivered about 150 million chips for Visa, MasterCard, and Discover branded cards.

As for Apple’s decision when to embed RFID into iPhone, Mike Liard, RFID practice director at ABI Research, says it might be too early from a consumer perspective.

“Getting the technology into the phone is one thing – using it and enabling it is another,” he says. “It represents progress from the mobile device category side and for consumer facing applications using RFID technologies, but there is still a long road ahead as far as getting consumers to understand what NFC is and using the technology for various applications.”

According to the Juniper Research report, NFC adoption is currently centered on the Far East, with very limited use outside of that region. Howard Wilcox, who authored the report, predicts that payments and retail transactions such as coupons will combine to not only transform cell phones into payment tools, but also a retail tool in addition to its many current functions.

"Our research found that both the business model and the rollout of POS (Point of Sale) NFC readers at merchant locations are issues that need solving – depending on the country,” he says. “As these are overcome, NFC is poised to enter an operational build up phase culminating in mass service rollouts across many countries, typically in metro areas driven by transport ticketing."

Further findings from the research say that NFC/Felica payments are already established in Japan, but that highest growth will occur in North America and Western Europe by 2014. In addition, the report says that NFC global gross transaction value will exceed $110 billion by 2014.

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