Seven years after the arrival of the first Android phone with Near Field Communications (NFC), Apple is finally allowing developers access to the short-range wireless technology in its own devices.
Ever since NFC arrived on the iPhone 6 in 2014, it has been restricted to the contactless Apple Pay system. But at the Worldwide Developers Conference last week, Apple quietly announced that with the arrival of iOS 11 this fall, apps will be able to use an iPhone’s NFC chip to read tags, pair with accessories, and exchange data with other NFC devices.
It’s been a long wait, says Craig Tadlock, founder and CEO of Seattle-based GoToTags, a startup dedicated to NFC and other internet of things (IoT) technologies. “I’ve talked with over 100 consumer companies, investors and partners over the last six years and the conversation always ended with ‘Let me know when this works on the iPhone,’” he told GeekWire.
NFC has not been hanging around for Apple to wake up to its benefits. The technology has found small but growing niches, such as in high-end retail, where its small, radio-frequency tags serve as anti-counterfeiting measures for expensive products. NFC’s battery-free tags have also all but replaced barcodes in the security industry, allowing guards to scan their progress around buildings. But it has yet to break through with consumers, apart from in mobile payments.
“NFC has been hiding in plain sight,” says Tadlock. “Most consumers, even those with Android devices, don’t realize that their phones can become this magic wand to search and interact with the physical world.”
That is probably due to the consumer NFC experience so far being less than magical. NFC tags are much rarer in everyday life than QR codes, or even augmented reality apps that can recognise objects in the real world.
Phil Sealy, an IoT analyst for ABI Research, says one reason for this scarcity is that Apple has been shy of the technology: “A lot of brands have opted out of investing in NFC because it would only reach those clients operating Android devices. Apple has made a business out of sitting back, observing a market and then striking once it feels the market is ready. Now it has opened up NFC in applications it’s unlikely to monetize itself, particularly in the internet of things.”
Tadlock believes there is a huge pent-up demand just waiting for Apple. “As soon as iOS 11 comes out, five or six apps on your iPhone will immediately start using NFC,” he says. Tadlock predicts that “NFC adoption is about to go through the roof.”
Ticketing companies, for example, are already considering shifting away from ‘print at home’ tickets, that can be faked, to paper tickets with NFC built-in – or fully digital NFC tickets held in an app. Companies like GoToTags ultimately envision shops full of NFC tags that allow shoppers to view specifications, search for accessories or check the environmental credentials of a product in a flash.
“Google and Amazon have disintermediated the product manufacturer,” says Tadlock. “But if a tag is put directly on a product, manufacturers can now have a direct relationship with consumers at the time of purchase and usage. This is a capability and data set that has not existed before.”
The idea is that consumers’ shopping experience will improve, retailers will get an effective authentication system, and manufacturers will finally know for sure who is buying their products.
GoToTags is now ramping up for a busy time over the summer. “Between the time Apple releases iOS 11 to the public and Christmas, my back of a napkin estimate is that something like 500 million new devices are going to get added to our total addressable market. That fundamentally changes the landscape of our business,” he says. “We’re going to be hiring a lot more engineers, and expanding our business development and sales.”
The company raised $300,000 in 2015 and is now considering a Series A funding round, probably with one or two strategic partners. But not everyone is so bullish on NFC’s future beyond mobile wallets. Patrick Moorhead, principal analyst at Moor Insights and Strategy says, “Apple embraced NFC for payments, but that’s about it. I don’t see the industry embracing NFC any more now that Apple has, given the 1.3 billion Android devices that already are installed.”
Another obstacle is that NFC tags are more expensive than printed barcodes. Even at high volumes, it currently costs as much as 12 cents to tag each item. That price should dip below 10 cents within the next couple of years, predicts Tadlock. “It’s getting cheaper every year,” he says, “But you’re never going to see NFC tags deployed on a bag of chips.”