Smartphone NFC: if one size won’t fit all, don’t wear it.
OK, regular readers will know I’m not buying the hype around SmartPhone NFC. This is for a number of reasons and none of which are about it being new.
I’ve talked about security, why quick isn’t a good reason, but that’s not everything. The real show-stopper to me is market reach. NFC just won’t fit the market.
Every other payment system before NFC reached its market cheaply and quickly. Now I’m going to show just how far NFC will fall short. Time to wake up…
Don’t take my word – check the figures!
To make my point, I’ve taken the published figures for global Smartphone sales and applied a simple analysis. What you see is what you get.
The rationale here must be for something to work it has to have majority take-up. That means NFC must be within reach of all, at a low cost. Let’s take a look.
ComScore has published Smartphone sales share as UK, 40.8%, US, 32.2%. That means on average, Smartphones hold 37.5% of the two biggest markets.
OK, so we have 37.5% for Smartphones. NFC chips launched in 2010. By 2015, projected sales of NFC phones will reach 28% of total Smartphone sales.
Now to extrapolate that. Let’s say Smartphones grow to 40% of every phone sold. That means less than 10% of all phones will have NFC capability.
Even with widespread adoption, not everyone will want to use NFC specifically. They will have bought phones that just happened to have NFC built in.
Let’s be generous and say 80% of all NFC-capable phones become NFC users. That means only 8% of mobile users are likely to adopt NFC by 2015.
OK- time to put NFC out of its misery. 25% of early adopters try and then give up. What we have now is a marketing joke. Only 6% will stay with NFC!
Credit and debit cards compared with NFC
NFC fans could point to cards and argue they became universal within 15 years. They did – but only because the banks gave them away for free.
Cards had a ready market – credit was booming and cards cost pennies to make. NFC phones cost over Â£400 or need a two year contract at Â£35 monthly.
With consumer credit tight, the banks reigning in costs and no incentive to spend, can you really see NFC breaking out of those projections?
NFC only offers payment speed. You still need to queue to pick and pack items. Where’s the logic in designing a new infrastructure for 6% market share?
And what about replacements?
If you lose or have a card stolen, the banks make sure its replaced very quickly. Can we expect to see a Â£400 NFC phone replaced in the same way?
That’s very unlikely. If they do, that cost would need to be recovered elsewhere. That would mean higher costs passed to you, the consumer, again.
I’ve not invented all this. I’ve used the market’s own figures. Do the math yourself. NFC won’t fit. Its a square peg being hammered into a round hole.
Why launch a payment programme that will only benefit 6% of users? Its crazy. Not only a square peg – Phone NFC is an oversized, overpriced square peg.