Great Expectations, but Are They Realistic? NFC in 2012


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Late 2011 and the early part of 2012 brought a lot of hype and exaggerated expectations to the NFC ecosystem, some of which we identified and discussed in a previous QuickCast. With our launch of the 2012 Voice of the Customer NFC series coming soon, we thought it would be useful to provide a retrospective analysis of what’s happened so far in 2012 and reset expectations in regards to the second half of this year and beyond. During this QuickCast, John Shuster reviews some of the major trends impacting the NFC ecosystem so far this year, focusing in on smart marketing and mobile wallets and giving some forecasts and expectations for the rest of 2012.

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  • VDC Research Group (VDC) provides exceptionally detailed direct-contact primary market research and consulting services to many of the world's largest technology suppliers, innovative start-ups and leading investors.
  • The firm is organized around six practices, each with its own focused area of coverage, but all committed to the firm’s core philosophy.
  • Limited infrastructure and device availabilitySlow adoptionDifficult to justify/Lack of education Low supply-side revenuesFacilitated adoption in APAC and EMEA due to existing infrastructure, higher user comfort levels and government initiatives.Majority of revenues from horizontal applications like payment, ticketing, marketing and access controlIncreased enterprise investment in NFC solutions for internal (i.e., non customer-facing) applications, including physical security/access control, logical/network security/access control, workforce monitoring/management and tracking/tracing applications.The emergence of alternative (i.e., non-smartphone) NFC device form factors during 2012 and beyond will further broaden NFC’s appeal as well as the potential use cases it can serve—both for enterprise and consumer end users.Governmental investment in NFC initiatives in certain country markets (e.g., Korea, France) will help drive regional contactless infrastructure deployment, application development and adoption.NFC application opportunities/use cases range from the very simple (P2P, pairing, information access) to the more complex (contactless payment, e-commerce). VDC expects most near-term activity will be related to applications that are relatively simple to deploy, do not require the cooperation of multiple stakeholders/decision makers and are deployed within the confines of a “closed loop” environment. Certainly, contactless payment and other commerce applications represent a tremendous opportunity for NFC; however, in most regions, VDC expects that these applications will remain challenged by barriers related to stakeholder cooperation and the availability of contactless infrastructure.
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  • Great Expectations, but Are They Realistic? NFC in 2012

    1. 1. AutoID & Transaction Automation Practice QuickCast Great Expectations, but are They Realistic? NFC in 2012 May 2012 By: John Shuster – Analyst © 2012 VDC Research QuickCast AutoID & Transaction
    2. 2. Recording Available A full audio recording is available for download at: © 2012 VDC Research QuickCast AutoID & Transaction
    3. 3. About Us Market Intelligence for Technology Vendors & Investors  Direct-Contact Primary Market Research  Deeply Segmented Data  Expert Insights  Validated Results Custom Consulting Services for Your Most Critical Business Decisions  Research-Based Consulting  Transparent Tools & Methodology o Highly Customized Survey Guides & Output Templates o Sophisticated Market Estimate & Forecast Models o Detailed, Flexible Stakeholder Maps & Profiles o Industry Development Scenarios o Market Opportunity Fit Screening, Rating & Ranking © 2012 VDC Research QuickCast AutoID & Transaction
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    5. 5. Ways to Work With UsOur market research is the basis for the many other ways that VDC can help you to grow your business. Our clients rely on us to provide actionableinsights that support their most important strategic initiatives including: corporate development projects, opportunity assessments and leadgeneration programs. © 2012 VDC Research QuickCast AutoID & Transaction Automation
    6. 6. Today’s Speaker John Shuster Analyst John is an analyst in the firm’s Auto ID practice and covers the markets for NFC, emerging RF solutions and Customer Engagement/Retail Automation Technologies. Prior to working as an Auto ID analyst, John worked in VDC’s Mobile and Wireless practice. John has also worked as an Associate at Stax, Inc., a Boston-based strategy consulting firm, focusing on investment diligence and market opportunity assessment engagements. During his post-graduate studies, John completed a year-long corporate residency program at BV Investment Partners (formerly Boston Ventures), a middle- market private equity firm, where he was responsible for supporting operations in the finance and accounting department. John is a graduate of Dickinson College (BA, English) and Northeastern University (MBA, finance).For complimentary insights and marketing data: © 2012 VDC Research QuickCast AutoID & Transaction Automation
    7. 7. Today’s Agenda NFC Ecosystem: 2012 So Far Smart Marketing Gains Traction Mobile Wallet Wars Looking Forward: 2H 2012 & Beyond © 2012 VDC Research QuickCast AutoID & Transaction
    8. 8. Reality Sets In…All good things take time—including the emergence of NFC2012 YTD has Brought Progress Throughout the NFC Ecosystem  New NFC smartphones available worldwide  Other form factors emerging…slowly  M.commerce/payment applications receiving investment  Ticketing, info-tainment gaining momentumBut, Not to the Degree Expected by Many  Media hype/evangelism positioned market to fall short of expectations  Contactless payment remains a longer-term opportunity in most regions  General awareness/understanding remains lowThere is no NFC “On” Switch…Building this Ecosystem is a Gradual Process © 2012 VDC Research QuickCast AutoID & Transaction Automation
    9. 9. Smart Marketing Gains TractionSmartphones represent the hub of most NFC marketing initiatives…but other devices will emerge Printed Media Targeted Marketing/BI:  Smart Posters  Mobile Loyalty  Magazine Ads  Location-Based  Product Packaging Others: Information Access:  Authentication  Mobile Couponing  Channel Integration  “Check-In” (e.g., Foursquare, Shopkick) © 2012 VDC Research QuickCast AutoID & Transaction Automation
    10. 10. Mobile Wallet WarsExpect consolidation, business failures to thin the herd Broad Availability Scaled Acceptance Initial Launch/Pilot Testing Merchant/Card Partner Recruitment Application Development Initial Investment Competition Rapidly Building As Mobile Wallets Proliferate  Many different types of players involved  Google Wallet, ISIS,, Target, MasterCard, O2…  Who wins? © 2012 VDC Research QuickCast AutoID & Transaction Automation
    11. 11. What Lies Ahead…Measured progress in many areas of the ecosystem; massive leaps forward unlikely…Resetting Expectations for 2H 2012 and Beyond…  Smartphone shipments should meet expectations  In or out, Apple will impact the entire ecosystem  Secure applications—expected pilots will be a barometer  Non-secure applications—more experimentation, limited scalingKey Markets/Applications to Watch  Info-tainment—gaming, pairing/content streaming  Automotive—personalization, pairingAdjacent Factors that Could Impact the Ecosystem  EMV migration—USA only © 2012 VDC Research QuickCast AutoID & Transaction Automation
    12. 12. Thank You for Attending this VDC QuickCast Mike Collette – VP, Sales & Enterprise Accounts | 508.653.9000 x112 Michael Liard – Director, AutoID John Shuster – Analyst Richa Gupta – AnalystFor complimentary insights and marketing data: © 2012 VDC Research QuickCast AutoID & Transaction Automation