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Lack of NFC Tech Slightly Deflates iPhone 5's Balloon

Lack of NFC Tech Slightly Deflates iPhone 5's Balloon

It doesn't take long for the excitement over a new iPhone launch to disperse, leaving a vague sense of unfulfilled expectations in its place. In the case of the iPhone 5, one of the larger disappointments is the lack of NFC technology. Never mind that few retailers are equipped to accommodate it, and the vast majority of consumers don't even know what it is.

By Erika Morphy MacNewsWorld ECT News Network
09/13/12 9:30 AM PT

The iPhone 5 is a lean, mean consumer-oriented shopping machine. It has improved camera functions, audio and processing power -- perfect for showrooming in a brick-and-mortar environment, not to mention for m-commerce. Then there is the larger screen and improved video quality.

The ability of marketers to provide more compelling video content makes the device "significantly more useful in terms of the ways people use mobiles for shopping, whether offline or online," said Kim Finnerty, VP, consumer and shopper insights at HMI's Ryan Partnership.

Shoppers will be able to make better-informed decisions, she told MacNewsWorld.

Where Is the NFC?

With all of these retail-friendly features combined in one sleek and sexy device, why oh why didn't Apple complete the cycle? That is, why didn't it provide functionality for the user to actually pay for the goods in question through Near Field Communication (NFC) technology?

Apple has introduced Passbook, which collects and stores such items as coupons and boarding passes. Passbook is the first step toward Apple becoming a payment platform, and considering its market saturation, this is a big deal for retail, entertainment, and service industries that process in-person transactions, noted Charles Merritt, a partner with Boost Partners.

Still, NFC should have been included, he said.

"Why on earth they would leave out technology that would allow them to take a sizable chunk of market share out of the payment processing game is beyond me," Merritt told MacNewsWorld.

Its lack will put a damper on the growing mobile payments industry, Daryl Colwell, VP of business development at MediaWhiz, told MacNewsWorld.

"Brands and advertisers were buoyed a few weeks ago by news of Starbucks' US$25 million investment in Square, a mobile payments platform that allows merchants to take credit cards via their smartphones," he said.

"The mobile wallet got another boost recently when several major brands banded together to create the Merchant Customer Exchange," Colwell pointed out.

"Marketers are champing at the bit, wanting to test new ways of interacting with shoppers, and they believe NFC is promising," Finnerty said. "Google is testing with select retailers. I do believe this is a miss [and] disappointment for the new phone."

The 1 Percent of the Tech World

Such complaints appear to be coming from the so-called 1 percent of the tech community, however -- that is, the tiny minority constituency that is looking forward to mobile payments and mobile wallet technology.

"The announcement of a new iPhone without NFC capabilities is unlikely to dissuade anyone from purchasing it," Colwell acknowledged. "But it does hinder growth of the nascent mobile payments space, which needs more major smartphone makers to develop easy-to-use technology that delivers a real value to merchants and consumers, such as Google has done with its Google Wallet."

Apple Is Not Cutting Edge

Apple has never been one to implement cutting-edge technology in its devices, Craig Palli, VP of business development at Fiksu, told MacNewsWorld.

"It doesn't seek to be a first mover with any new technology but rather immigrates it optimally at the right time," he explained.

LTE is a good example, continued Palli. "Certainly it was available last year, but Apple's response to complaints that it was not included was that it wouldn't be able to deploy it properly. Now it rolls out an LTE device with the strong belief that global infrastructure can support it, and it has decent battery life."

The lack of an NFC chip won't significantly hinder the shopping experience, according to John Haro, CTO at Vibes.

"Yes, definitely people are using their phones for showrooming, and they will be using the iPhone 5 in such a manner," he said, "but people just aren't accustomed to paying for purchases with their devices yet."

Even the vaunted Starbucks initiative doesn't require NFC, noted Haro. "I don't see how lack of NFC puts Apple at a disadvantage -- at least not this year."

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