Major NFC roll-out…next year!

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2012 was going to be the year that the new era of NFC-based mobile commerce had finally arrived – with Google Wallet rolling out widely, mobile operators in the US and Europe making significant inroads with their own mobile wallets and big Asian m-commerce players generally commercializing NFC, as well.

But as 2011 closed, a different picture emerged, one that indicates this long-awaited era of tapping phones to pay and conducting a range of other m-commerce services will likely have to wait for another year.

To be sure, there is progress on all fronts, with just about all major handset makers and mobile platform providers adopting the technology and beginning to release phones, and the first NFC commercial launches by telcos, along with Google, already taking place.

Analysts and other observers say that nearly 40 million NFC phones, perhaps more, were shipped in 2011 and predict around 100 million in 2012.

There were more than 90 NFC devices in the pipeline using chips from NXP Semiconductors alone, the major NFC chip maker said at the end of the third quarter of 2011. Most of the devices are smartphones, but the total includes around 10 tablets. Most of the devices should hit the market by the end of 2012, and one estimate placed the number of models available on the US market at 70 by yea’s end.

Of course, not all devices are created equal, and if Apple finally adopts NFC for its next iPhone, due out in 2012, it would boost handset numbers and cause other device makers to accelerate their NFC plans. But any embrace of NFC by Apple won’t necessarily mean more devices that can do NFC payment.

Tag-reading and peer-to-peer applications are vital to the success of NFC, and these will expand with the rollout of more phones. Tapping phones on smart posters to download coupons or bus schedules, and exchanging business cards and video clips with such enhanced NFC P2P features as Android Beam will grow in 2012.

But it’s payment and related services that attracts the big investment. Without it, such big-money backers of NFC as Google and the Isis joint venture formed by three major US mobile carriers would not be spending the tens of millions of dollars to roll out NFC.

The same is true of mobile operators in Europe and Asia, which are pinning hopes on NFC to open up a new source of revenue in their saturated mobile markets. That’s why the telcos in Europe and in most other places are insisting that their SIM cards carry the revenue-earning applications, such as payment. This would enable the operators to charge banks and other service providers to run their applications on the NFC phones the carriers sell.

Still, it was never going to be easy to usher in a new era of mobile commerce, despite yearly predictions that next year would be the year that NFC changes the way we pay, present tickets for public transit and conduct a range of other mobile-commerce transactions.

Even as NFC technology enters its 10th year since its announcement in 2002 by co-creators NXP, then called Philips Semiconductors, and Sony, there are many obstacles that remain to be overcome – not least of which is convincing consumers the new way to pay is secure and convenient. But before that happens, the new infrastructure has to be put in place, and that is proving to be more difficult than imagined.