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IHS pegs NFC growth in cellphones at 62% CAGR

Posted: 18 May 2011 ?? ?Print Version ?Bookmark and Share

Keywords:NFC-enabled? cellphone? shipments forecast?

IHS iSuppli expects the market for NFC technology for mobile payments to grow from just about 50 million units in 2010 to almost 550 million units per year by 2015. The market research firm confirmed that it has revised its NFC penetration projections due to recent efforts of U.S.-based cellphone carriers.

A faster market ramp, by about 100 million units per year from 93.2 million units in 2011, is supported by the recently announced agreement of three major U.S. wireless carriers to partner with leading credit card companies on a mobile commerce initiative, IHS iSuppli said.

AT&T, Verizon and T-Mobile have said they would work with Visa and MasterCard on their Isis joint venture, which was established to form a nationwide infrastructure for NFC-enabled mobile payments using mobile handsets in the U.S. The original announcement of the Isis joint venture in November 2010 did not include Visa and MasterCard.

With the participation of Visa and MasterCard, the Isis system will allow consumer credit card information to be securely stored on cellphones, and will use NFC as the communication protocol to facilitate the financial transaction.

The changes to the Isis initiative together with Google's efforts to promote mobile payments with Android smartphones, has prompted IHS iSuppli to increase its forecast for global shipments of NFC-equipped cellphones. IHS now predicts 93.2 million NFC-equipped cellphones will ship worldwide in 2011, up from the December forecast of 79.8 million. In 2014, 411.8 million NFC cellphones will ship, compared to 220.1 million in the previous prediction. Shipments then will rise to 544.7 million in 2015. This means that 30.5 percent of all cellphones shipped in 2015 will have the capability to conduct mobile commerce using NFC technology, IHS predicted.

Woldwide forecast

Figure or Table X: Caption.

"By partnering with the dominant playersVisa and MasterCardthe wireless carriers are making the right moves to create an ecosystem that will allow consumers to become comfortable with making NFC payments through their cellphones," said Jagdish Rebello, director and principal analyst for communications and CE with IHS. "The carriers hope to leverage the dominant position enjoyed by Visa and MasterCard in credit card payments to ensure a seamless consumer experience when customers use their cellphones to make payments. Such a move will drive an increase in unit shipments of cellphones with embedded NFC capability in the U.S. and around the world."

With NFC, consumers can pay their bus fare, buy a plane ticket or make an ATM/credit card purchase simply by holding their cellphones near wireless terminals.

Visa and MasterCard's move to participate in Isis represents an attempt by the credit card companies to prevent Google from gaining a strong foothold in the market for mobile payments, IHS said.

With the addition of the major financial firms, the Isis effort is set to gain momentum over the long term. However, Isis is facing some short-term delays while it recalibrates its mobile payment strategy to suit Visa and MasterCard. It has delayed a Salt Lake City trial of the NFC technology from early 2012 to the third quarter of 2012. Similar trials are already underway in Nice, France and nine other major cities. In Nice the trial is supported by four carriersOrange-France, SFR, Bouygues Telecom and NRJ Mobile.

- Peter Clarke
??EE Times

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