Apple iPhone 5: Wot no NFC?


Apple fails to deliver on NFC in its newest handset; is it making a mistake?

Apple's announcement of iPhone 5 last night finally unveiled the much anticipated device, but to the disappointment of many who believed it would include near field communications (NFC). The omission of NFC is the biggest surprise on the handset, which is yet another tweaked release rather than a revolutionary effort, according to industry pundits.

Tudor Aw, KPMG's European head of technology, said that Apple has in a way been looked to for the inclusion of NFC in order to kick start the market, which is now in its first steps towards mass market realisation: 'The iPhone 5 has continued Apple's recent trend of iterative developments of the phone rather than introducing revolutionary new features. Most of the evolutionary new features such as faster speeds, better camera, bigger screen and new docking cable were widely anticipated and will be welcomed by customers. But it is the lack of a NFC chip to enable mobile payments that is perhaps the biggest surprise and disappointment.'

'Mobile payments have long been touted as the 'next big thing' but to date, has simply not happened in any significant way. It had been hoped that Apple would turn its famous ability to deliver new technology through great user experience to kick start the widespread adoption of mobile payments by consumers. The interesting question is whether this omission will mean further delay in mobile payments taking off or if it presents an opportunity for its competitors to take a lead in this field,' Aw noted.

However, James Richards, vice president of mobile at digital banking solutions company, Intelligent Environments, said that contrary to speculation, the lack of NFC is not a surprise: 'The reality is that we're still two to three years away from mass adoption of mobile payments, and with so many companies jostling for attention in this space it's likely Apple will wait another 12 months before including NFC in iPhone technology. The roll out of an NFC offering for such a massive institution is a huge step, and needs to be integrated with existing offerings effectively.'

'Of course, Apple is already making a stance in the world of mobile wallets. The Passbook capability in iOS6 is clearly a useful wallet container for storing tickets, coupons, and offers, and it's highly possible that for the time being this is where Apple's payments investment will be concentrated,' Richards continued. 'With 400 million iTunes account holders, Apple has access to a massive audience to use for payments services, but the challenge will be taking this beyond a closed loop mechanism to a truly useful, customer centric tool. If Apple can solve this puzzle with the levels of innovation we have come to expect from it, it's entirely feasible to see how consumers can use their iTunes account to pay for everyday goods and services beyond today's media purchases; this would be a true game changer for consumer payments.'

It seems that Apple's take on technology is to release it when it absolutely has to, rather than to set a trend; iPhone 5 now includes 4G LTE support, which is now expected of high end smartphones today. NFC seems to still be an optional addition, however. David McQueen, principal analyst at Informa Telecoms & Media, said that the iPhone 5 release has provided a much needed physical update of the device, despite the screen not being the largest in the smartphone market and it still lacks NFC and wireless charging.

'From a connectivity angle, the iPhone 5 needs LTE connectivity as it becomes more fundamental for all new flagship devices,' McQueen stated. 'With Apple's strong existing relationships with a number of major carriers, the new iPhone model promises great potential sales for the fourth quarter holiday shopping season, even in the face of new LTE-capable devices from Samsung, HTC, Nokia and Motorola also being launched in that period.'

Commenting on the tie in between iPhone 5's support of LTE and this week's announcement from Everything Everywhere of the launch of EE, its 4G premium network and the first of its kind to launch in the UK, Matthew Howett, practice leader of Ovum's regulatory telecoms team, said: 'By supporting LTE using the frequencies that EE is deploying its 4G network over, EE will effectively have an initial  monopoly on sales of the iPhone 5 since customers will only fully benefit from its capabilities  if they take it though EE. The question will of course be how many non-EE customers will make the switch. For Vodafone and O2, who have spoken out against EE's early 4G launch, this could well be what they were waiting for before launching a legal challenge to Ofcom's decision. The impact the challenge has on EE's launch will crucially depend on whether a court would approve a suspension of service. If so, the reputation to what is only a one day old brand could prove fatal.' Concluding, McQueen said: '2012 has already been a strong year for Apple, having sold over 60 million iPhones in the first half of the year. Sales dropped by over nine million units from from the first quarter this year to the second, largely attributed to consumers waiting for the release of the iPhone 5. With the launch of the latest device from Cupertino penned in for the 21 September just days before the end of the quarter, it is likely that the full impact of iPhone sales will not register until the next quarter, the fourth, which is the most important in the calendar. The iPhone 4S, which will remain in market but at a significantly reduced price, will help boost sales, and Informa Telecoms & Media expects total iPhone sales to reach close on a company record 50 million in the fourth quarter this year.

'However, Apple won't have it all its own way to the end of the year as it faces continued pressure from Samsung and now Nokia with its new range of Lumia devices running on the Windows Phone 8. In combination, the strength of these devices and platforms will combine to give the most competitive and intriguing smartphone quarter for a number of years,' McQueen said.


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