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  1. 1. NFC – Near Field Communications Trevor Crotch-Harvey Director, Business Development [email_address] IDTechEx
  2. 2. IDTechEx is an independent strategic analyst on RFID, printed electronics and smart packaging . We can help you by providing: Global Conferences : USA, Europe and Asia RFID Smart Labels Active RFID Printed Electronics <ul><li>Independent market and technology research reports covering RFID, printed electronics & smart packaging topics </li></ul><ul><li>RFID Analyst journal, & world’s largest RFID case study knowledgebase 2,800 RFID case studies </li></ul><ul><li>Printed Electronics World – free daily newsletter </li></ul>Clients include: Shell Oil Hewlett Packard Rexam Whirlpool Europe Guinness UDV Thin Film Electronics PolyTechnos Cazenove Schiphol Airport… Conferences and Exhibitions Publications/ Research Consultancy
  3. 3. NFC <ul><li>Co-operation started 2002; public announcement by Nokia, Philips & Sony at RFID Smart Labels USA in March 2004 </li></ul><ul><li>First commercial product by Nokia in 2005 </li></ul><ul><li>Current status </li></ul><ul><li>Value chain & players </li></ul><ul><li>Issues - infrastructure, revenue sharing </li></ul><ul><li>IDTechEx assessment & forecasts </li></ul>
  4. 4. Applications Exchange photos (Peer to peer) Pay without cash Get your Receipt Reader mode Read a map from advertising (Smart posters) Pass the gate Card emulation Pairing devices (Peer to peer) Device to device mode Source: Inside Contactless Access Control Physical Access Control RFID
  5. 5. Current Status
  6. 6. DoCoMo/Suica, Japan <ul><li>Based on Sony proprietary FeliCa technology </li></ul><ul><li>21M users end 2006 </li></ul><ul><li>100K payment locations </li></ul><ul><ul><li>Train ,Subway </li></ul></ul><ul><ul><li>Payment </li></ul></ul>DoCoMo Source: Inside Contactless
  7. 7. Caen, France <ul><li>Started in October 2005 with ~200 participants </li></ul><ul><li>Organised by France Telecom, Groupe LaSer, Orange, NXP, Samsung, Vinci Park </li></ul><ul><li>Secure payment in selected retail stores & access control to parking </li></ul>
  8. 8. Hanau, Germany <ul><li>Started in April 2005 with ~160 participants </li></ul><ul><li>Organised by RMV (Rhein-Main Verkehrsverbund), Nokia & NXP </li></ul><ul><li>E-ticketing & loyalty programmes at local restaurants, shops & attraction parks </li></ul>
  9. 9. Update from China <ul><li>Nokia NFC phones on sale in August in SE port city of Xiamen, site of China’s first NFC trial, June 2006 </li></ul><ul><li>Collaborators: Nokia, China Fujian Mobile Communications, Xiamen E-Tong Card, Philips </li></ul><ul><li>Nokia NFC phones also to be available in Guangzhou & Beijing </li></ul><ul><li>New phones come preloaded with transit purse for bus & ferry services, enabling subscribers to tap phones to pay fares & make retail purchases at ~100 merchant locations </li></ul>
  10. 10. Taiwan <ul><li>October 2005, commuters began trialling NFC on Taipei transport </li></ul><ul><ul><li>100 volunteers; mobile phones from BenQ in Taiwan </li></ul></ul><ul><ul><li>Building on existing MIFARE infrastructure </li></ul></ul><ul><ul><li>1st step in Taiwan Proximity Mobile Transaction Service Alliance (PMTSA) programme to develop NFC; includes Acer, BenQ, Chunghwa Telecom, Far EastTone Telecom, Taipei Smart Card Co, Taiwan Cellular Corp, Asia Pacific Broadband Wireless Communications, ViVOTech, MasterCard International, Visa International, Philips </li></ul></ul><ul><ul><li>Govt heavily involved, pushing for creation of PMTSA & driving discussions </li></ul></ul><ul><li>ViVOtech NFC infrastructure software part of joint initiative by MasterCard, Taipei Fubon Bank & Taiwan Mobile </li></ul><ul><ul><li>Results of survey conducted of MasterCard Mobile with PayPass™: >75% of participants preferred using MasterCard PayPass on mobiles than traditional contact-based cards </li></ul></ul><ul><li>Farglory, property developer, announced that residents of 4 new complexes in Taipei will begin using cell phones to open doors - each home provided with 2 BenQ T80 handsets </li></ul>
  11. 11. Philips Arena, Atlanta <ul><li>Collaboration between Chase, Cingular Wireless, Nokia, Philips, Visa USA, & ViVOtech, with Atlanta Spirit, parent co of NBA’s Atlanta Hawks, NHL’s Atlanta Thrashers & Philips Arena </li></ul><ul><ul><li>Trial designed to enable secure, wireless system that simplifies payment & services for arena visitors </li></ul></ul><ul><li>Users purchase items by holding their NFC phones near a secure terminal </li></ul><ul><ul><li>~150 contactless POS readers deployed throughout Philips Arena </li></ul></ul><ul><ul><li>For mobile content downloads, Cingular Wireless is carrier </li></ul></ul><ul><li>Key findings include: </li></ul><ul><ul><li>Participants overwhelmingly embraced technology & expressed that the mobile device & applications significantly improved their arena experience </li></ul></ul><ul><ul><li>Data usage increased during game days; trial participants used their NFC-enabled mobile device more frequently to search for & purchase digital content </li></ul></ul><ul><ul><li>Participants indicated they would like to use their mobile devices for payment at a variety of merchant locations, for any purchase size, & see value in accessing multiple payment accounts on their mobile devices in future </li></ul></ul><ul><ul><li>Participants expressed interest in having multiple applications on a single mobile device, including transit, loyalty and digital content applications </li></ul></ul>
  12. 12. Where Do We Stand in 2007? <ul><li>Working Groups </li></ul><ul><ul><li>NFC Forum </li></ul></ul><ul><ul><li>GSMA working group </li></ul></ul><ul><ul><li>StoLPaN </li></ul></ul><ul><ul><li>French Transport/MNO </li></ul></ul><ul><li>Trials </li></ul><ul><ul><li>Transport </li></ul></ul><ul><ul><li>Payment </li></ul></ul><ul><ul><li>+++ </li></ul></ul><ul><li>Standardisation </li></ul><ul><ul><li>NFC-Forum </li></ul></ul><ul><ul><li>ETSI (SWP & HCI) </li></ul></ul><ul><ul><li>Global Platform </li></ul></ul><ul><li>Awareness </li></ul><ul><ul><li>CES </li></ul></ul><ul><ul><li>3GSM </li></ul></ul><ul><ul><li>WIMA </li></ul></ul><ul><ul><li>SIMPosium </li></ul></ul><ul><ul><li>NFC Summits </li></ul></ul>Moving along, not quite there yet Source: Inside Contactless
  13. 13. Players & Issues
  14. 14. Mobile Payments Stakeholders SIM/Payment Software Developers Chip/ Handset Manufacturer Application Providers Mobile Operator Issuer Trusted Service Manager Consumer Issuing Processor Payment Network Merchant Proprietary Payment Applications Acquiring Processor Acquirer Source: Smart Card Alliance
  15. 15. NFC Forum Members
  16. 16. Chicken & Egg Infra Issue Being Addressed (to some extent) <ul><li>Contactless Payment roll-out </li></ul><ul><ul><li>Not dependent on NFC </li></ul></ul><ul><ul><li>USA 20M cards, 40K Locations, 250K terminals </li></ul></ul><ul><ul><li>Asia, LATAM, Europe, roll-out 2007/8 </li></ul></ul><ul><ul><ul><li>UK, Spain, Poland, Turkey </li></ul></ul></ul><ul><li>Contactless Transport Infrastructure in major cites </li></ul><ul><ul><li>Seoul, Beijing, Paris, London, Singapore, Tokyo, HK, NY, Washington … </li></ul></ul><ul><ul><li>But many proprietary systems </li></ul></ul>Source: Inside Contactless
  17. 17. Where Does NFC Reside? Comparison of economic options for RFID enabled phones Source IDTechEx Phone operator unlikely to be willing to be excluded from value chain. New phone needed for new applications – user unfriendly, restrictive. Provides phone maker with added value. New phone needed for new applications – helps sell phones. Reliable, low cost option Secure chip Few phones have flash cards Plenty of capacity. Phone operator controls it if it is SIM and is motivated to promote service. Uploads of new services are possible. Flash Phone maker does not gain. SIM is a contacted card and therefore relatively unreliable. Capacity may be inadequate. All GSM phones have them. Phone operator controls it and is motivated to promote service. Uploads of new services are possible. SIM BAD GOOD OPTION FOR LOCATION OF CONTACTLESS APPLICATION
  18. 18. GSMA makes it clear transaction service is driving force <ul><li>Customers expect convenient, friendly & secure services </li></ul><ul><li>Service Providers want to maximise use of existing infrastructures </li></ul><ul><li>MNOs want to provide new mobile contactless services that are secure, high quality </li></ul><ul><li>MNOs want to leverage long-standing customer relationships to provide a seamless service to both Customer & Service Provider </li></ul>Source: Inside Contactless
  19. 19. NFC is Changing Contactless Value Chain… <ul><li>NFC removes need to make & distribute cards… </li></ul><ul><li>News, 21 August 2007: Gemalto & NXP Join Forces to Boost Mobile NFC Solutions </li></ul><ul><li>To develop SIM products compatible with existing payment & public transport infrastructures </li></ul><ul><li>Collaboration on SIM-enabled NFC solutions based on Single Wire Protocol (SWP) </li></ul><ul><li>Both companies will together define & develop SIM products for SWP-based solutions to ensure interoperability with MIFARE technology as well as other widely deployed contactless protocols </li></ul><ul><li>Initiative from NXP & Gemalto aims to facilitate definition of standardised SIM-based NFC products </li></ul><ul><li>Also speed up availability of SIM-based NFC phones compliant with telecom operators’ requirements </li></ul>
  20. 20. Another View on the Power Play <ul><li>MNO’s may be gaining upper hand in debate over where to put payment on NFC mobiles, but one Turkish bank said it plans to resist </li></ul><ul><li>Garanti Bank, which launched Europe’s largest contactless payment card trial last year, in July began offering customers smaller version they can stick on back of mobiles; tap phones to make low-value purchases with PayPass–without need for NFC handsets </li></ul><ul><li>“ It’s a power struggle between telcos and banks, and I think the best way forward is to have even strength rather than one dominating the other” </li></ul><ul><li>Drawback: applications stored on contactless chips in stickers cannot communicate with phone or mobile network </li></ul><ul><li>Bank signed up 2-3,000 customers by SMS following TV commercial featuring sticker </li></ul><ul><li>Bank wants to tap Turkey’s pool of 45m+ mobile subscribers, who may be willing to cover part of cost for stickers; these new consumers could also attract more merchants </li></ul>
  21. 21. Changing Roles of Players - 1 <ul><li>RATP </li></ul><ul><ul><li>Involved in Paris NFC pilot with Bouygues Telecom </li></ul></ul><ul><ul><li>Changing role of players in Transport </li></ul></ul><ul><ul><li>No longer wishes to dictate ticketing medium </li></ul></ul><ul><ul><li>Core business is providing good transport </li></ul></ul><ul><ul><li>PC’s, Mobile phones, Internet are ubiquitous </li></ul></ul><ul><ul><li>Formerly 4 separate universes: PC, mobile, internet, cards converging </li></ul></ul><ul><ul><li>Organisations like RATP could become application owners </li></ul></ul><ul><ul><li>Don’t care on what physical medium travel rights are stored </li></ul></ul><ul><ul><li>Implies new commercial relationships between service providers, MNO’s & system integrators </li></ul></ul>
  22. 22. Changing Roles of Players - 2 <ul><li>Transport for London </li></ul><ul><ul><li>Piloting information system centres around Blackfriars Underground station </li></ul></ul><ul><ul><li>Offer maps, directions & travel advice transmitted to mobile phones </li></ul></ul><ul><ul><li>NFC technology embedded in 19 'touchpoint' posters around station </li></ul></ul><ul><ul><li>Will pinpoint location of passenger & transmit detailed & up-to-date information about journey </li></ul></ul><ul><ul><li>Project named VORTIX (Visualization of Real-time Transport Interchange); collaboration between TfL, Imperial College London & Kizoom </li></ul></ul><ul><ul><li>Project developed by NXP Semiconductors & Sony </li></ul></ul><ul><ul><li>Oyster payment function already taking form of an application on contactless Barclaycard; NFC would be short step </li></ul></ul>
  23. 23. Other Issues/Points to Note <ul><li>NFC can be success without RFID </li></ul><ul><li>Limited by available places to use; but – contactless payment infrastructure rollout not dependent on NFC </li></ul><ul><li>Consumer expectations are for convenience & ease of use, even when battery off </li></ul><ul><li>Control of Secure Element </li></ul><ul><ul><li>Phone chipset/financial institutions vs SIM/MNO’s </li></ul></ul><ul><ul><li>Who pays fees to whom & what will they be to encourage deployment? </li></ul></ul><ul><ul><li>When will this be decided so pilots can become rollouts? </li></ul></ul>
  24. 24. <ul><li>NFC has strong momentum, backed by large players with deep pockets </li></ul><ul><li>Strong eventual growth forecast, starting in Japan/East Asia </li></ul><ul><li>More pilots happening </li></ul><ul><ul><li>Marseille, Bordeaux, Hong Kong, Australia, Korea, Amsterdam, Malaysia, USA (Visa/Wells Fargo, MasterCard/Mobile Candy Dish Chicago, Discover/Motorola, Tap & Go TM New York/Texas) </li></ul></ul><ul><li>Consumer response </li></ul><ul><ul><li>Must be easy, simple, ubiquitous </li></ul></ul><ul><ul><li>Say one thing, do another? Adoption rate yet to be proved – mobile phones/SMS/security </li></ul></ul><ul><ul><li>NFC enabled phones have to be as good as other phones </li></ul></ul><ul><ul><li>Will more personal attacks result? </li></ul></ul><ul><li>New commercial relationships between players to be developed & agreed </li></ul><ul><li>Technical implementations </li></ul><ul><ul><li>Need to reflect new commercial relationships </li></ul></ul><ul><ul><li>Must be seamless & secure </li></ul></ul>IDTechEx Assessment
  25. 25. Take Up of NFC by Region Numbers of NFC phones by region 2007-2017 in millions… Source IDTechEx
  26. 26. For further information read: <ul><li>Contactless Cards & Near Field Communication </li></ul><ul><li>RFID Knowledgebase </li></ul><ul><ul><li>>2900 case studies listed & growing every month. Covering >3000 companies, learn from successes & failures of others. </li></ul></ul><ul><li>RFID Analyst </li></ul><ul><li>Printed Electronics World </li></ul><ul><ul><li>Daily electronic newsletter on rapidly growing Printed Electronics industry; free – just register! </li></ul></ul><ul><li> Tel: + 44 (0) 1223 813703 </li></ul>