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Initial projections of the adoption rate of NFC (Near Field Communications) have been scaled back, largely because of Apple’s failure to adopt the technology in its iPhone 5.

UK based analyst group Juniper Research has revised its forecasts for the global NFC market, significantly scaling back its growth estimates for the North American and Western European markets. Juniper says that by 2017 the proportion of NFC-enabled smartphones will be only marginally below previous estimates, but global NFC retail transaction values are now expected to reach US$110 billion in 2017, a large number but significantly below the US$180 billion Juniper previously forecast.

“Apple’s decision to omit an NFC chipset from the iPhone 5 has reduced retailer and brand confidence in the technology,” says report author Dr Windsor Holden. “This has led to reduced POS (Point of Sale) rollouts and fewer NFC campaigns. This in turn will lead to lower NFC visibility amongst consumers and fewer opportunities to make payments, threatening a cycle of ‘NFC indifference’ in the short term.

“While many vendors have introduced NFC-enabled smartphones, Apple’s decision is a significant blow for the technology, particularly given its previous successes in educating the wider public about new mobile services,” said Holden. “Without Apple’s support, it will be even more difficult to persuade consumers – and retailers – to embrace what amounts to a wholly new means of payment.”

Holden says Apple’s failure to adopt NFC would impact most dramatically on markets in North America and Western Europe, where transaction values would exhibit a two year lag on previous forecasts as retailers delay POS investments.

Conversely, retail transactions in NFC’s heartland in Japan and Korea are likely to experience little or no impact from the decision. It also observed that lower than expected adoption of Google Wallet allied to a delayed launch of the ISIS NFC project in the US would also have a negative effect on that market.

“But despite Apple’s decision, NFC trial consumer feedback – e.g. at the London Olympic venues and in Singapore – has been extremely positive, suggesting strong latent interest when services are more widely deployed,” said Holden. Both MasterCard and Visa have certified several NFC service solutions and data centres.”

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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire and editor of sister publication CommsWire. He is also founder and Research Director of Connection Research, a market research and analysis firm specialising in the convergence of sustainable, digital and environmental technologies. He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.

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