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Apple plotting point-of-sale putsch?

iPhone, iPads in NFC rumor

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The next round of Apple iPhones and iPads will include near-field communications tech, says one industry watcher, a move that would give further legitimacy to that point-of-sale payment system.

"Apple could be the game-changer," Richard Doherty, director of the consulting firm Envisioneering Group, told Bloomberg on Tuesday, citing engineers who are working on hardware for the project.

Game-changer, possibly, but Apple would hardly the be the first player in the NFC game. Google's ex-CEO and now talk-TV wannabe Eric Schmidt demoed the NFC capabilities of a smartphone last November, the handset that was subsequently dubbed the "pure Google" Nexus S when it debuted at the end of 2010.

Nokia's C7 also has an NFC chip, and the Finns have said that an enabling software upgrade will be made available sometime this year.

The problem stalling wide acceptance NFC is one that has bedeviled many an enabling technology: who is going to control what part of the payment chain?

Japanese handset toters, for example, have enjoyed the convenience of using their FeliCa-equipped phones to pay for such services as mass transit since the middle of the last decade. The "wallet phone" implementation of the rather rudimentary FeliCa system, however, is controlled end-to-end by Japanese Telecom giant NTT DoCoMo.

Outside of Japan, however – in the US and UK, for example – multiple stakeholders from handset makers to credit-card companies to telecoms to point-of-sale and point-of-service providers are all jockeying to ensure that NFC implementations don't shut them out from what Bloomberg reports is a $6.2 trillion consumer market in the US alone.

At stake are transaction fees – and although such fees make up only a small percentage of consumer purchases, a small percentage of $6.2 trillion can add up to a massive ka-ching.

Taylor Hamilton, an analyst at IBISWorld, told Bloomberg that Apple might use the fact that since it already has on file the credit card data of millions of iTunes, its NFC-equipped devices could be point-of-sale alternatives to credit-card companies such as Visa and MasterCard.

The Envisioneering Group's Doherty told Bloomberg that Apple has already developed a point-of-sale terminal that it could deliver to small businesses "such as hairdressers and mom-and-pop stores." He also said that Apple is considering either "heavily subsidizing the terminal, or even giving it away."

Free stuff that might boost sales – always a good hook for encouraging the use of new technologies.

NFC-equipped iPhones and iPad could also be used to precisely target Apple's iAds when of those devices use them to purchase items – or even when users gain information about products by pointing their devices at NFC-equipped posters and point-of-sale displays. Point at a Katy Perry poster; get a one-minute sample of "Firework" and an offer for discounted tickets to her "California Dreams" tour.

And as any honest Googlian will tell you, targeted advertising is what it's all about when you want to double or triple your ad rates.

Apple's massive iTunes infrastructure and user list gives it a leg up on its competition – and the company's new $1bn data center in North Carolina doesn't hurt, either.

One might even call those advantages "game-changing".

There's at least one fly in Apple's NFC ointment, however: Nokia's NFC patent application. Although the patent hasn't (yet?) been granted, and although there are many ways to skin the not-yet-domesticated NFC cat, one can be sure that when NFC tech breaks through, patent lawyers will be combing through documents to leverage any legal advantages they might uncover. ®

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