Apple and NFC: More Tea Leaves in the Cup

by Mercator Advisory Group 0

A major Apple blogger has examined the hardware support software in the beta version of iOS 6, just announced this month. Lo and behold, here’s what the 9to5mac team found:

We’ve previously been able to pull data from PreEVT iPhone 5,1 and iPhone 5,2 prototypes codenamed N41AP (5,1) and N42AP (5,2), which leads us to believe that the new iPhone will have a bigger 1136×640 display. We also detailed a lot of the hardware here but forgot one very important little bit of information. Further investigation into this hardware code dump leads us to believe that these iPhones also have Near Field Communication (NFC) controllers directly connected to the power management unit (PMU).

The implications here are obviously monstrous. With the recently announced PassBook application (which we detailed prior to its announcement while speculating about an NFC tie-in), Apple will be set to compete with Google Wallet and the similar service Microsoft unveiled last week. Apple could tie in with a payment processor like Citibank’s PayPass system for credit card transactions or it could become a payment processor of sorts with its hundreds of millions of credit cards already on file at iTunes.

The industry has tried to divine Apple’s intentions regarding NFC for some time. Its patents, its hiring activity, and a swirl of supporting rumors have suggested NFC is coming to the iPhone. While NFC didn’t make it into the iPhone 4S, it seems more and more certain that NFC will be in the next iPhone model. Expectations are that will be this fall with release of an iPhone 5. While Apple could credibly shrug and say “never mind” for another cycle, Apple isn’t likely to take a pass this time around. After all, it’s releasing its Passbook application with iOS 6, a wallet to hold gift cards, coupons, boarding passes and other items. Hooking NFC to Passbook makes too much sense.

Once Apple’s flagship smartphone contains NFC, then the floodgates should open. But that still isn’t a certainty. If the carriers restrict NFC payment operations to Isis and demand fees for non-payment NFC use, then Apple’s roll-out could be muted. If Apple’s market power wrests control of the NFC chip for, minimally, non-payment applications from the hands of the mobile operators, then Apple becomes the preeminent provider of NFC capability. That should make Google, in particular, nervous.

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