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Who's Holding Up NFC?

4:40 PM -- Smartphones equipped with Near-Field Communications (NFC) will reach only 17.5 million consumers by the end of 2011, according to Pyramid Research 's latest projections.

This is slightly better than the 11.5 million Pyramid forecast in April, but it's still a cautious number compared to some. (See Here Come the NFC Phones and NFC to Push $50B Over-the-Air by 2014.)

Projected sell-through of NFC-enabled smartphones, 2011-2015

The low numbers aren't for lack of handset-maker interest -- Samsung Corp. and BlackBerry have delayed or scaled back their plans for NFC phones, but all the OEMs have committed to it. Pyramid analyst Stela Bokun says the reason is simply that no one is ordering NFC phones. Wireless operators talk up the tech, but they are not sure how they will make money from it. (See Isis Adds Four Credit Cards to Its Mobile Wallet, Google Taps Sprint for Tap-to-Pay and Operators Vie for SIM-Based NFC Control.)

"Operators cannot launch the services unless they have attractive devices to support them, but they can’t order the devices from OEMs because their return on investment from launching the services is uncertain," Bokun writes in a Pyramid Points note published Monday.

That's because there are still too many competing interests involved with NFC, including the operators, major credit card companies, banks, merchants and handset makers. When everyone wants a cut of the return, there's less return to go around.

Consumer interest (superseding their security concerns) in using cell phones for payments hasn't been proved yet, either, making it an expensive gamble.

Of course, if they don’t find a way around this catch-22, there's always the froggy mating calls!

— Sarah Reedy, Senior Reporter, Light Reading Mobile

shygye75 12/5/2012 | 4:56:39 PM
re: Who's Holding Up NFC?

Given the fruit-fly life span of mobile handsets, this probably isn't a huge deal. Once the services get sorted out, the ecosystem can move to NFC relatively quickly.

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