Reports from The Independent seem to suggest that the iPhone 5 won't come with NFC built in, rendering it unable to make swipe-based mobile payments (unlike the Nexus S, Google's NFC-capable flagship Android phone). Sides are currently split as to whether this is a good or bad thing, and Apple's reported logic is that they don't want to implement a feature that isn't 100% ready to go on an Apple device in addition to the current lack of industry standards with respect to NFC technology. This rumor comes on the heels of reports that Android devices have overtaken the iPhone in U.S. smartphone market share.
I'm not convinced that this isn't a bad move on Apple's part; however, after thinking about the key issues involved, I am less convinced (just over "slightly") than I was when I first read the news (DEFCON 3). Here is what I've been able to come up with:
• Retailer Readiness
Until retailers are ready to adapt NFC technology, an army of iPhone 5 users with NFC-ready devices won't accomplish much. Although incentives could be placed to encourage retailers to make the switch from traditional credit cards to NFC readers through the form of lower fees and the like, such a switch won't happen overnight. This problem faces the same sort of chicken-and-egg problem that electric cars face--until there are a multitude of electric cars to demand electric filling stations, they won't be placed, and until there are a multitude of car recharge stations, people will be hesitant to buy electric cars. The major difference is that, currently, people will buy an iPhone whether they are NFC-capable or not, so until there is a way for Apple to profit off them, there doesn't seem much reason to spend the money to put the technology in.
• Apple’s readiness
This seems like a moot point because if Apple was ready to put the technology in, they would. However, the possibility exists that Apple is working on its own NFC-reader tech designed to work exclusively with the iPhone. This would be a major boon to Apple and a huge differentiating factor over Android. Additionally, if Apple used its own technology and readers built through iTunes, it could levy heavier fees to other smartphone users (which would most likely be paid by the retailers) while waiving these fees for Apple products. This would provide retailers with incentives to give preference to Apple products.
On the flip side, Apple is taking a risk by delaying this technology a full calendar year. For one, Android already has several phones, including the Samsung Galaxy and the Nexus S, with NFC built-in. Though Japan is considerably more tech-savvy than the US, once the technology was introduced there, it exploded. The States could see a similar phenomenon. Additionally, should such technology become widespread, coupled with the increasingly attractiveness and usability of the Android platform, consumers may start choosing Android-based products over the iPhone for its inclusion of NFC. Again, this is assuming that this technology becomes popular before Apple can roll an NFC-capable product out.
While I won't say that Apple is correct in withdrawing NFC from its next generation of mobile phones, I will say that they are probably safe waiting a year. However, once they do roll out their version of NFC, it had better be good enough to stand above comparison to anything else available on the market. Knowing Apple's penchant for greatness, I don't have much doubt in their capability to deliver that.
If you can think of anything else that I haven't discussed here that might affect this decision, I would love to hear it, either in the comments, through email (twsmith89@gmail.com) or on Twitter (@taylor_w_smith).
--Taylor
oh girl, this boat is sinking
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