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The NFC revolution is running late

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ABI Research has downgraded its forecast for Near Field Communications (NFC) enabled handsets to 450m units (or 30 per cent of all handsets) in 2011.

In May this year, the company had predicted that 500m (or 50 per cent) of handsets would sport NFC.

ABI attributes the slow growth of the technology to the inability of network operators to provide a working business model.

ABI principal analyst Stuart Carlaw said: "Carriers are to some degree stuck in a particular mindset: they believe that they need to recoup the cost of adding NFC to phones through the provision of contactless payment services alone.

"ABI Research believes that this is view is too narrow, and that significant revenues will be generated from services such as ticketing, access control, online mobile banking, service discovery, and connection enablement, all of which build upon the core characteristics of NFC."

The problem is that NFC lacks a killer application - the application which will make operators, or customers, go out and buy the technology.

ABI suggests that MVNOs (Mobile Virtual Network Operators) might launch specialist handsets incorporating NFC as a market differentiator - in the same way that Virgin has just launched its DAB-TV handset - but the requirement for a killer application is just as pressing.

The NFC standard is still lacking some key technical components if it is to be integrated into phone handsets, and with the business model undefined it is hard to see what will drive such an integration.

It is possible that the very breadth of applications that NFC enables could be its undoing as the industry struggles to pigeonhole the technology and identify the business model behind it. ®

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