For those that haven't heard the news yet, it looks like Near Field Communication (NFC) is going to have a bad 2014. The introduction of Apple's iBeacon may be the beginning of the end of NFC.
For those unfamiliar with iBeacon or NFC there are some significant technical differences between the two technologies. iBeacon is both a standard set of Application Programming Interfaces, or API, introduced by Apple in iOS7 and a data format for Bluetooth Low Energy(BLE) devices. Because iBeacon is built on BLE it means that nearly all Smartphones with BLE radios can support iBeacon.
NFC communicates through magnetic induction between two antennas placed close together. The primary differences between the two technologies are that NFC can communicate between a powered device and an unpowered device such as a credit card, while BLE requires two powered devices. NFC devices must be close, >10cm, BLE devices can communicate across dozens or more feet.
While several popular Android phones have picked up hardware and software support for NFC, including the popular Samsung Galaxy S2, S3 and S4, Apple has been an NFC hold-out for a few phone generations now. I and others have been carefully watching each Apple announcement for a sign that a new device would pick up NFC support. The arrival of iBeacon in iOS7 appears to be Apple's considered response to NFC.
To understand the impact of iBeacon vs. NFC, it helps to look at what the proponents of NFC see as the problem NFC is intending to solve. The NFC forum, founded in 2004 by Nokia, NXP semiconductors, and Sony seems like a good place to find out.
Sony's website mentions transferring music and scanning product advertising tags. NXP's site mentions using your smartphone to lock doors, exchanging contact information between two phone, or to pay for products. These seem like relevant and useful things that people want to do.
A question from a coworker about iBeacon got me started looking at NFC vs. iBeacon. A large number of articles about iBeacon, such as the ones on TechCrunch, have focused on Apple's use of iBeacon in their stores. The beacons can be used to help users find their way to product locations and to communicate information from product displays. These uses somewhat overlap with what NFC is capable of doing. Certainly NFC, working only when device and tag are within inches of each other, can be used to provide product information. The other capabilities of iBeacon, such as in-store navigation, are outside of the capabilities of NFC. The other advantage NFC has is that the tags can operate without power and are very low cost. iBeacon's are likely to be low powered but will require power to operate.
During research about iBeacon I was surprised that many people have seemed to miss the gravity of the impact of iBeacon on NFC but some, like Jonny Evans in his December 6th, 2013 article, "Game over for NFC as Apple's iBeacon hits world's busiest retail store" have started to look at longer term implications of iBeacon. Jonny discusses some of the overlap in tasks, such as smartphone payments that iBeacon can perform and predicts the ends of NFC. I also believe that iBeacon is putting significant pressure on NFC and that this will become evident in 2014.
That Apple is the creator of iBeacon is one reason to bet on its success.
Apple tends to be a careful company. They could have added NFC support to any of their phones, from the first iPhone to the latest 5S and 5C models, in order to match Android and other Smartphones. Watching for NFC's arrival at each Apple event was really watching for the inflection point where NFC would finally enter the mainstream. Strategic discussions with several people at my full-time job had basically concluded with the idea that as a company we would wait to look at NFC until Apple adopted it. There simply wasn't enough use of the technology to warrant looking into it sooner. I suspect many companies were similarly tentative about NFC because Apple was holding out. Now that it appears that Apple is proposing iBeacon as an alternative to NFC, it is likely that my company, and many others, may further de-prioritize the use of NFC. NFC has made some inroads but these are mostly infrastructure related.
A significant amount of focus has been placed on using NFC to perform payments. There are several credit card companies that have credit cards with built-in NFC tags. Companies like Verifone, who make those credit card readers used in retail stores, have started to include NFC support in their credit card readers. Verifone says it will include NFC in all of their new POS terminals. With these terminals, users with credit cards or Smartphones with NFC support, could swipe their devices across the credit card terminal in order to make a purchase. With all of this NFC infrastructure one would imagine that more people would be using NFC. I've never seen anyone use NFC and I'm not the only one that hasn't really seen adoption pick up.
At this point, NFC has the infrastructure advantage. Support is built into POS terminals at many stores and in use for things like parking meter systems. The trouble is that none of these have appeared to have caught on. Relatively few people have NFC enabled credit cards, and even fewer are using them. This means that a Bluetooth based system, supported by nearly all Smartphones including Apple's and Android, has a unique opportunity to move into the role that NFC was originally intended.
iBeacon, and Bluetooth based systems like it, are in an excellent position because ideal NFC use case of an unpowered credit card and powered POS terminal is mostly irrelevant because many people also carry Smarphones. Smartphones have more than enough energy to support Bluetooth based technologies. Bluetooth becomes the natural choice once the requirement is for two powered devices to communicate.
iBeacon and Bluetooth related technologies still have a way to go before the door will be completely closed on NFC. Verifone has a whitepaper by Eric Vlugt about Bluetooth low energy and iBeacon that concludes that:
In terms of infrastructure NFC is far ahead of Bluetooth related technologies. It is highly likely that POS terminals would have to be upgraded to include a Bluetooth radio to support Bluetooth (iBeacon-like) payments. While NFC deployment is far along its adoption is still low. Apple has a track record of leading with technologies by making their usage simple and seamless.
I'd like to make the prediction that in 2014, Bluetooth based technologies like iBeacon will start to involve Smartphone based payment systems, pushing NFC aside. NFC was an interesting technology but it missed the window of opportunity to build usage with unpowered devices like credit cards that would have forced its adoption in Smart devices.
I also predict that iBeacon's will take hold in stores and other venues where accurate indoor location information is useful. These are the areas where iBeacon, and similar Bluetooth based technologies, are valuable and have capabilities where NFC can't compete. NFC may live on for several years because of the investment by companies making NFC devices, microchips, and software. Apple's decision to pass over the technology means there won't be any significant increase in NFC adoption and eventually Bluetooth Low Energy will take its place.
For those unfamiliar with iBeacon or NFC there are some significant technical differences between the two technologies. iBeacon is both a standard set of Application Programming Interfaces, or API, introduced by Apple in iOS7 and a data format for Bluetooth Low Energy(BLE) devices. Because iBeacon is built on BLE it means that nearly all Smartphones with BLE radios can support iBeacon.
NFC communicates through magnetic induction between two antennas placed close together. The primary differences between the two technologies are that NFC can communicate between a powered device and an unpowered device such as a credit card, while BLE requires two powered devices. NFC devices must be close, >10cm, BLE devices can communicate across dozens or more feet.
While several popular Android phones have picked up hardware and software support for NFC, including the popular Samsung Galaxy S2, S3 and S4, Apple has been an NFC hold-out for a few phone generations now. I and others have been carefully watching each Apple announcement for a sign that a new device would pick up NFC support. The arrival of iBeacon in iOS7 appears to be Apple's considered response to NFC.
To understand the impact of iBeacon vs. NFC, it helps to look at what the proponents of NFC see as the problem NFC is intending to solve. The NFC forum, founded in 2004 by Nokia, NXP semiconductors, and Sony seems like a good place to find out.
Sony's website mentions transferring music and scanning product advertising tags. NXP's site mentions using your smartphone to lock doors, exchanging contact information between two phone, or to pay for products. These seem like relevant and useful things that people want to do.
A question from a coworker about iBeacon got me started looking at NFC vs. iBeacon. A large number of articles about iBeacon, such as the ones on TechCrunch, have focused on Apple's use of iBeacon in their stores. The beacons can be used to help users find their way to product locations and to communicate information from product displays. These uses somewhat overlap with what NFC is capable of doing. Certainly NFC, working only when device and tag are within inches of each other, can be used to provide product information. The other capabilities of iBeacon, such as in-store navigation, are outside of the capabilities of NFC. The other advantage NFC has is that the tags can operate without power and are very low cost. iBeacon's are likely to be low powered but will require power to operate.
During research about iBeacon I was surprised that many people have seemed to miss the gravity of the impact of iBeacon on NFC but some, like Jonny Evans in his December 6th, 2013 article, "Game over for NFC as Apple's iBeacon hits world's busiest retail store" have started to look at longer term implications of iBeacon. Jonny discusses some of the overlap in tasks, such as smartphone payments that iBeacon can perform and predicts the ends of NFC. I also believe that iBeacon is putting significant pressure on NFC and that this will become evident in 2014.
That Apple is the creator of iBeacon is one reason to bet on its success.
Apple tends to be a careful company. They could have added NFC support to any of their phones, from the first iPhone to the latest 5S and 5C models, in order to match Android and other Smartphones. Watching for NFC's arrival at each Apple event was really watching for the inflection point where NFC would finally enter the mainstream. Strategic discussions with several people at my full-time job had basically concluded with the idea that as a company we would wait to look at NFC until Apple adopted it. There simply wasn't enough use of the technology to warrant looking into it sooner. I suspect many companies were similarly tentative about NFC because Apple was holding out. Now that it appears that Apple is proposing iBeacon as an alternative to NFC, it is likely that my company, and many others, may further de-prioritize the use of NFC. NFC has made some inroads but these are mostly infrastructure related.
A significant amount of focus has been placed on using NFC to perform payments. There are several credit card companies that have credit cards with built-in NFC tags. Companies like Verifone, who make those credit card readers used in retail stores, have started to include NFC support in their credit card readers. Verifone says it will include NFC in all of their new POS terminals. With these terminals, users with credit cards or Smartphones with NFC support, could swipe their devices across the credit card terminal in order to make a purchase. With all of this NFC infrastructure one would imagine that more people would be using NFC. I've never seen anyone use NFC and I'm not the only one that hasn't really seen adoption pick up.
At this point, NFC has the infrastructure advantage. Support is built into POS terminals at many stores and in use for things like parking meter systems. The trouble is that none of these have appeared to have caught on. Relatively few people have NFC enabled credit cards, and even fewer are using them. This means that a Bluetooth based system, supported by nearly all Smartphones including Apple's and Android, has a unique opportunity to move into the role that NFC was originally intended.
iBeacon, and Bluetooth based systems like it, are in an excellent position because ideal NFC use case of an unpowered credit card and powered POS terminal is mostly irrelevant because many people also carry Smarphones. Smartphones have more than enough energy to support Bluetooth based technologies. Bluetooth becomes the natural choice once the requirement is for two powered devices to communicate.
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| POS terminal that supports NFC (the top part) |
iBeacon and Bluetooth related technologies still have a way to go before the door will be completely closed on NFC. Verifone has a whitepaper by Eric Vlugt about Bluetooth low energy and iBeacon that concludes that:
The applications for BLE will include payments but BLE by itself it should not be viewed as a direct alternative to existing cards, NFC, EMV, or other mobile wallet schemes. BLE can be the enabler for a number of new ways to interact and pay in the store but it is unlikely to instantly replace any existing technology.Erik Vlugt also has a blog posting that presents some of the whitepaper's information in a slightly different form. Considering the energy and effort that Verifone has put into NFC related offerings I'm not surprised that they would try to head off comparisons between NFC and BLE/iBeacon. This may be business and marketing posturing because of the newness and uncertainty of iBeacon. If iBeacon and BLE related Smartdevice purchases start to take off it is likely that Verifone will respond by adopting the technology in their POS terminals.
In terms of infrastructure NFC is far ahead of Bluetooth related technologies. It is highly likely that POS terminals would have to be upgraded to include a Bluetooth radio to support Bluetooth (iBeacon-like) payments. While NFC deployment is far along its adoption is still low. Apple has a track record of leading with technologies by making their usage simple and seamless.
I'd like to make the prediction that in 2014, Bluetooth based technologies like iBeacon will start to involve Smartphone based payment systems, pushing NFC aside. NFC was an interesting technology but it missed the window of opportunity to build usage with unpowered devices like credit cards that would have forced its adoption in Smart devices.
I also predict that iBeacon's will take hold in stores and other venues where accurate indoor location information is useful. These are the areas where iBeacon, and similar Bluetooth based technologies, are valuable and have capabilities where NFC can't compete. NFC may live on for several years because of the investment by companies making NFC devices, microchips, and software. Apple's decision to pass over the technology means there won't be any significant increase in NFC adoption and eventually Bluetooth Low Energy will take its place.
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