NFC (Near Field Communications) might indeed be on its way within iPhone 5, the latest Apple [AAPL] rumor claims, but will the company get it right this time, or will it repeat the standards-based drama of the iPad 3 LTE debacle?
[ABOVE: One of the many NFC-related Apple patent filings, c/o Patently Apple.]
Cracking the code
There's been lots written about Apple's adventures in NFC. This isn't the first time we've been told to expect NFC support within a future iPhone, but merely because the developer beta iOS 6-exploring sleuths at 9to5Mac have uncovered references to it within the code doesn't definitively mean Apple will deliver it.
Or does it?
Writing last year, Forbes' Elizabeth Woyke told us: "From what I hear, it is possible the iPhone 5 will include NFC. An entrepreneur who is working on a top-secret NFC product told me today that he believes the iPhone 5 will have NFC and cited a friend who works at Apple as a reliable source for the information."
Reading through previous reports there's a huge body of evidence to support these claims.
Some risks
So what is NFC? In brief, it's a short range communications standard that aims to securely transmit information to a contactless payment terminal.
There's some problems within implementation. NFC is a set of standards, and the standards sub-set used to support it in some countries and by some operators is different in different places. This has delayed wide-scale adoption of the technology, meaning previous attempts to make it pervasive made so far (Google Wallet, for example) have failed.
Those with interest in the space have been working quite hard to grapple with this problem. Visa, for example, has put together its own reference points for international NFC support.
Should Apple choose to offer NFC within iPhone 5 the company will -- I hope -- ensure international support from the get-go. Indeed, I urge Apple to do just that -- there's no point flagging up use of your iPhone as a wallet to the device's international market if the feature only works in the US.
That's the kind of marketing which has cost the company millions in fines for lack of support for 4G/LTE networks outside of North America in the case of the iPad 3.
The hidden antenna
A June 2009 Apple patent revealed it has developed a method for building an NFC (Near Field Communictions) antenna into a touch screen. The 'touch screen RFID tag reader' patent application explains that:
"The antenna can be placed in the touch sensor panel, such that the touch sensor panel can now additionally function as an RFID transponder. No separate space-consuming RFID antenna is necessary."
The next iPhone OS iOS 6 includes a feature called Passbook. This is designed to be an intelligent folder within your phone which will carry your gig tickets, airline tickets, boarding passes and shopping coupons. While NFC support has not been announced, many think this feature will eventually emerge as Apple's answer to Google Wallet.
"We've developed templates to make it really easy for all you developers to build these great passes and tickets and it integrates right in with the lock screen. So, when you get to the movie theatre, your ticket automatically pops up on the lock screen. Slide across here, scan it in, go in," said Apple's iOS chief, Scott Forstall, introducing Passbook.
Passbook puts Apple head-to-head against Google (and in future, Windows 8), as the search engine company is expected to announce Google Wallet 2.0 at Google I/O this week. The company recently acquired a company called TxVia, which offers pre-paid accounts which will be tied to Google Wallet in order to enable more users to actually conduct mobile payments.
iTunes as a virtual bank
Apple has a similar model to follow: iTunes. Apple could link its NFC payments approval process up with a user's iTunes account. Users would then be able to set a payment limit ($25, for example) and use their device to pay for goods and services.
It is possible the future plan to link iPhone 5 NFC payments up with iTunes is why Apple mentioned its existing 400 million credit card-using iTunes accounts at WWDC this year. The advantage of using iTunes as a payment processing account would be to protect a user's actual credit card information from theft and enabling users to set payment levels they felt comfortable with.
It is also worth noting Apple's move in 2011 to quietly begin trials in which iPhones are used as wallets inside its retail stores (image above).
Another patent of note: April saw an Apple patent for a gifting service which seems based on NFC. The company has filed numerous patents which could easily relate to the creation of an NFC-based iPhone ecosystem.
It's worth noting that Apple hired Benjamin Vigier as its Apple's Mobile Commerce Manager. This man has huge experience in the NFC field, including stints at Starbucks and PayPal.
Speaking at the 2012 Air Transport IT Summit, SITA CTO, Jim Peters, observed: "Opinion is that Apple is going to incorporate NFC into Passbook. Apple just thinks about how they can make it really easy for the user, and then they figure out how to monetize it. They don't think about how to monetize it and then tell the user what they can have. It doesn't work like that."
The technology goes far beyond payments. The disruptive technology has potential impacts across other sectors, too, air travel, for example: "Boarding passes are going to be the next step with this technology," said SITA's Peters.
Visa, Mastercard, Apple and the NFC roll-out
MasterCard's Ed McLaughlin has also hinted at Apple's plan to turn your iPhone into a wallet. "I don't know of a handset manufacturer that isn't in the process of making sure their stuff is PayPass ready," he said.
When asked whether that included Apple, he replied: "Um, there are… like I say, [I don't know of] any handset maker out there. Now, when we have discussions with our partners, and they ask us not to disclose them, we don't."
The prize is huge. NFC mobile payments will exceed US$180 billion worldwide in 2017, according to a May 2012 report by Juniper Research.
"NFC technology is transforming mobile phones into payment devices that will change the way people live, work and play," said Niki Manby, head of emerging products, Asia Pacific, Central Europe, Middle East and Africa, Visa. "NFC payments have enormous potential and we are committed to providing the convenience of this technology in a secure manner to our customers."
With or without NFC, Apple is expected to introduce its next-generation iPhone in Fall, scooping profitable leadership of the industry.
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