Apple IDs the next-generation iPhone

Evidence is growing that Apple plans to embed NFC into the next iPhone, but can Steve Jobs sell the technology that no one else seems to want?

For the last few months there have been rumours that Cupertino has been showing renewed interest in Near Field Communications. This is backed by an Apple patent from two years ago, which covers a "Touch Screen RFID Tag Reader" and recent comments from an NFC group that Apple has been testing an RFID-equipped prototype. But Nokia has been pushing NFC for years, so why could Apple succeed where Nokia has failed, and more importantly, why might it choose not to?

Near Field Communications (NFC) is a two-way standard for low-power-short-range radio communication. NFC builds on the one-way-induction-powered Radio Frequency Identification (RFID) standard by mandating that NFC devices have an induction-powered tag (which will operate even if the phone loses power) and an RFID reader which can be used to interact with other tags. So an NFC device can be an RFID tag, and an RFID reader, or even both at the same time.

Nokia owns much of the NFC technology and has been pushing it relentlessly against operator indifference and customer apathy. It has squeezed NFC technology into handsets and has run some trials, including bribing Londoners to use the technology instead of an Oyster card for buses and tubes - but operators have no incentive to pay for, or promote, NFC. Network operators aren't interested in retail opportunities or mass-transit, but Apple is.

Apple's patent was awarded in July, but filed two years ago. It covers the integration of an RFID tag and its associated antenna, into touch-screen devices, including (explicitly) a mobile telephone and a digital audio player. The patent talks about possible applications in a very NFC way: "The handheld device can be used at different times as both an RFID reader and an RFID tag... two devices can be used in close proximity to exchange information such as contact information."

Then we have comments, reported by Near Field Communications World, from the chap who runs the NFC Group on LinkedIn. He claims to have reliable information that "Apple has built some prototypes of the next gen iPhone with an RFID reader built [in]... its not full NFC but its a start for real service discovery."

Putting NFC into an iPhone would give Apple a distinct feature advantage: Symbian^3 will have APIs for NFC built in, but ^3 devices are a long way off, despite optimistic presentations at the recent Symbian Exposition. It was that dry, technical, explanation from Lee Williams which prompted speculation about how Steve Jobs might announce the capability: "Bang! My groceries paid for! Bang! My train ticket paid for! Bang! My car unlocked!"

NFC certainly lends itself to the theatrics so beloved by Mr. Jobs, and would integrate with iTunes very nicely. It's easy to imagine an Oyster Card application, downloaded from the iTunes store, which could be loaded with credit though the iTunes in-application payment system. It would also provide another opportunity for iPhone owners to whip out their toy and wave it around for all to see.

NFC has struggled to break down a transaction like that - who would own the payment system, who would secure the NFC module against attack, and who would ensure the secure distribution of applications? Apple solves everything by taking responsibility, and profit, for it all - it could make NFC happen.

And if it did then the technology would surely take hold very quickly. Nokia and Samsung have already designed-in the technology, while Tyfone has the microSD chip with NFC, an antenna, and even a secure execution module, built in - for devices that have an externally-facing microSD socket. If Apple could make the technology cool, then the rest of the industry would be quick to follow. Except that Apple won't, 'cos backing NFC would be risky and Apple doesn't take risks.

There was risk in launching the iPhone: the decisions not to have native applications and not to rely on operator subsidies could have been fatal if Apple hadn't swiftly reappraised both of them. But the iPhone's risk was its innovative business model. Technically it was firmer ground with an array of tried-and-tested technologies put together in a particularly attractive way.

There's nothing that Apple has done with the iPhone that hasn't been done before - Apple just does it better. But embedding NFC into a handset would be a real step into the unknown. Nokia claims to have launched several NFC-enabled handsets, but in reality the technology is still at the trials stage and may never get any further unless something radical happens. An NFC-equipped iPhone could be that radical and could be a genuine revolution, if Cupertino has the nerve for it. ®