A new report from Juniper Research finds that Apple’s choice not to include near field communication (NFC) in the iPhone 5 has contributed to a slowdown in the technology’s projected growth.
Juniper has revised its mobile NFC market forecast downward to $110 billion by 2017, compared with an earlier estimate of $180 billion.
“Apple’s current reluctance to embrace NFC is likely to have a knock-on effect amongst retailers, who will perceive it as a lack of confidence in the technology,” Juniper says.
The report highlights that consumer awareness of NFC remains relatively low despite efforts by mobile network operators. Apple’s decision is identified as a key reason for that limited awareness: when a major device maker does not adopt a standard, other companies and retailers may delay investment and promotion.
Juniper explains that the consequence is a reduced number of industry participants focusing on NFC, which leads to fewer marketing campaigns and lower visibility for the technology among consumers.
“While enthusiasm for NFC payments is growing, Apple’s decision not to include an NFC chipset within the iPhone 5 has heightened the perception among some brands and retailers that the time is not yet right for them to invest in NFC campaigns and infrastructure respectively,” Juniper wrote in its whitepaper.
Juniper describes this dynamic as a “vicious cycle of NFC rejection”: the absence of NFC in iOS devices discourages retailers from installing NFC-enabled point-of-sale terminals, which in turn reduces NFC marketing and visibility and ultimately hampers consumer uptake.
Despite the downward revision in market projections, NFC retains important advantages. The technology offers a clean, unobtrusive user experience and can deliver more precise proximity detection than GPS when locating a user for location-aware services.
In July, Juniper’s earlier research suggested a potential watershed moment for NFC and supported the previous $180 billion projection. At the time, research author Dr. Windsor Holden described the period as “critical” for NFC payments, a characterization that appears to have been validated by subsequent market developments.
Separately, fresh research from eDigitalResearch released today indicates that consumer awareness of contactless payments is improving. The proportion of consumers who say they have seen a contactless mobile payment point has doubled over the last six months to 33%. Awareness of owning an NFC-enabled device has also risen to 8%, double the figure reported in May.
These trends show that while headline forecasts have been scaled back, awareness and adoption of contactless and NFC-capable devices are increasing, suggesting continued momentum for the technology even as adoption paths and timelines shift.
Where do you see the NFC ecosystem heading in 2013?