NFC technology has huge growth potential
In the previous part of this series, we discussed how Apple (AAPL) has reportedly partnered with a few payment networks for its NFC technology on the iPhone 6. We also discussed how Apple’s motivation to introduce NFC technology comes from the growth potential of the mobile commerce market.
The point you need to note here is that Apple isn’t the first player to bring NFC technology to the market. History suggests that Apple has waited for the technology to develop before entering into this space. For example, Apple launched its first iPhone in 2007, when players like BlackBerry (BBRY) and Nokia (NOK) were already established in the smartphone market.
No doubt NFC technology has huge growth potential. According to a report from Berg Insight and as the chart below shows, NFC handset shipments grew from 35 million in 2011 to 140 million in 2012 and could continue to grow to 1 billion by 2017 at a compound annual growth rate (or CAGR) of 48%.
Retailers have been slow to upgrade their systems
Google (GOOGL) entered the NFC market a few years back with the Google Wallet mobile payment system that allows users to store credit and debit card details and make payments by simply tapping their mobile phones on any PayPass terminal at checkout. However, this technology failed to take off because retailers were slow to upgrade their systems to be compatible with NFC.
However, this could change once Apple enters into this market with the iPhone 6. According to a report from Bank Innovation, Apple is in talks with Nordstrom (JWN), a department store, to make Apple’s mobile payment technology compatible with its systems.
Once Apple enters into the mobile payments market, other retailers should also become serious about upgrading their technology, as Apple is the biggest smartphone player in the U.S.