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Chicken and egg question solved

Week 38, 2010

In our industry the chicken and egg question goes: there are no NFC handsets because there are no NFC apps, and there are no NFC apps because there are no NFC handsets.

One of the difficulties on the path to NFC adoption has been for a few years the form factor issue. Where are the NFC chip and the antenna to be located in a handset? We have already witnessed many options supported by various vendors. The NFC Secure Element is commonly integrated in the SIM card reserving the rights of the mobile network operator, or mounted in the handset at manufacturing stage. Some attempts have been shown, and some trials are ongoing with an external connector leading to an antenna outside of the handset.

The MicroSD format, which until now was just an option among others seem to be gaining increasing support from the industry. In the last few weeks, Bank of America, Wells Fargo and US Bancorp (cf. Smart Insights Weekly #10-37), Chase in the USA, and Akbank in Turkey (cf. Convergence section) have all announced pilots using the MicroSD implementation for NFC.

DeviceFidelity, the strongest supporter of this solution, with its InPay solution seem to be gaining more market presence. The MicroSD format brings the advantage of physically separating the NFC hardware from the handset, thus making maintenance issues easier to manage. Also, the MicroSD format takes advantage of an existing interface present on most handsets, to allow deploying NFC as an add-on to existing handset installed base. As MicroSD form factor fits in existing handsets (and vendors propose accessories to add a MicroSD slot on the iPhone), it gives back power to application developers giving them more independence from handset vendors.

ViVOtech and DeviceFidelity have just announced a partnership to promote the solution. Tyfone, another strong supporter of MicroSD form factor has just benefitted from a US$ 5 million influx from its investors. RFinity is another company involved in these developments. Giesecke & Devrient even set up a dedicated entity, Giesecke & Devrient Secure Flash Solutions, to promote this solution (cf. SIW #10-07). And a few months ago, ABI Research identified MicroSD as a privileged path for NFC deployment (cf. SIW #10-20).

Have we found the answer to the chicken-and-egg question?

Thierry Spanjaard

Chief Editor

Smart Insights