Archive for April, 2011

WTF is NFC? The brand marketer’s guide to NFC applications

We’re only a few months into 2011, and already there is a new contender for ‘biggest buzzword of the year’: NFC.

NFC stands for ‘Near Field Communication’, and is a variant of RFID, the wireless transfer technology that has enabled everything from travel cards to that seamlessly social Coca-Cola Facebook “Like” wristband. NFC is a super short-range version of RFID that is being natively built into next generation smartphones, and is tipped to be the technology of choice for everything from location check-ins to mobile payments.

It’s been kicking around for years, but in the last few weeks NFC has captured a lot of attention and imagination thanks to a cascade of big announcements. Included in those:

So from a near standing stop, the hardware required for NFC is going to be reaching a critical mass of adoption in short order. The other half of the equation is the infrastructure, and that’s coming into place as well with everyone from Visa, Mastercard, Orange, and Sprint getting behind NFC in a big way in 2011.

All this points to a potential tipping point for NFC, both in consumer awareness and in the availability of the services.

So, what is NFC and can we do with it?

NFC chips are being built into the next generation of the key smartphones as we speak, with some already available, and many more on their way. VentureBeat reports that there will be 35 million NFC-enabled phones by the end of the year, and 1.5 billion within four years. These NFC-enabled phones will then be able to pass data back and forth between both NFC tags and other NFC devices. You can think of NFC tags as cheap and potentially disposable memory chips. You can make millions of them, and they are thin enough to live within a sticker, as Google and Sony have shown. There are a few different types of tags, and some can just send information to devices, others can receive information back and allow two-way exchange.

NFC devices themselves can be implemented with three modes.

The first is called card emulation mode, and allows the mobile to function as credit or debit cards, tickets, hotel keys, etc.

The second is reader mode, with enables the mobile to receive information from NFC tags. So instead of shooting a QR code or establishing a bluetooth connection, you simply swipe your mobile across the tag and receive the associated content.

Lastly there’s P2P mode, which allows NFC devices to pass information back and forth. This would allow two mobile devices to exchange information like the Bump iPhone app, but it would allow it across different devices (e.g., a Blackberry and an iPhone) as the communication method is standardized via NFC.

What can we do with NFC?

  • Mobile payments
    Mobile payments are the killer app for NFC, and the key reason that everyone from financial giants to carriers to phone manufacturers are jumping on the bandwagon. NFC has a built-in ‘card emulation mode’ that allows it to act as a mobile wallet, allowing customers to simply swipe their phone over anything from a vending machine to a card reader in Starbucks to make a payment. The very short frequency range helps ensure security, and it’s possible that purchases under say $15 will not require an authorization, and anything over that may require a security code to be entered.
  • Ticketing and hotel keys
    The card emulation mode also allows the NFC device to serve as a substitute for event tickets, loyalty cards, or even hotel keys. So at reception when you check in you’d swipe once to pick up your key, and then swipe again over your room door to unlock it. No key to remember as long as you have your phone with you.
  • Location check-ins
    Leading Japanese social network Mixi has already introduced NFC-based location check-ins via Android, allowing users to check-in instantly by swiping their phones against an NFC decal at a physical location, meaning your check-in is physically verified, can work in places that GPS signals don’t reach (like underground), and you’re saved the step of tracking down the location you need to check in to.
  • Enhancing a physical experience
    At the PIAS music festival, 10,000 people received cards with an NFC chip embedded in them, enabling a whole range of enhanced experiences from photo sharing to connecting people at the event to entering contests. A similar experience was provided at the STRP art festival in Holland, where RFID tags were used to connect people with the art.
  • Object-based media
    Physical products are increasingly coming with sensors and wifi connections, allowing them to gather and share data. But an even simpler and more ubiquitous form of ‘connecting’ objects is available with NFC, allowing objects to be very cheaply include NFC tags that will allow them to bundle in media and simple interactivity. Timo Arnall’s great post on iPhone RFID: object-based media includes a video that brings this concept to life.
  • Smart posters
    A use case that has been talked about for years, smart posters would include NFC tags that store anything from media to URLs, and have those seamlessly transfer to the users’ phones when swiped across the poster.
  • Phone-to-phone information exchange
    One of the standard NFC features is the ability to exchange information between two NFC devices. This will allow functionality like the ‘Bump’ app on iPhones to work across different and competing devices.

With all these different use cases about to start rolling out NFC should end up becoming indispensable and ubiquitous, and the idea of phone swiping is going to take hold quickly, acting as a universal command for interacting with the world, exchanging data back and forth to enable a more seamless experience wherever you go.

Why would I use NFC instead of Bluetooth, QR codes, or traditional RFID?

From a marketers’ perspective, one of the key questions is how NFC differs between RFID, Bluetooth, QR codes, and other technologies that have traditionally performed some of the functions listed below.

Bluetooth

Bluetooth is a familiar technology for many marketers, having a lot of potential for distributing multimedia content and alerts from set locations, such as retail destinations or events. Bluetooth actually has a number of advantages over NFC — it transfers data faster, has a much larger range, and one Bluetooth station can connect with many devices at once. It’s essentially a local broadcast system.

NFC has one major advantage over Bluetooth, which is speed of connection. Bluetooth takes several seconds to establish a connection, while NFC connections are instantaneous. NFC having a much shorter transmission range actually has advantages in security as well, as it makes it much less likely for a transaction to be intercepted.

Interestingly one of the expected use cases for NFC is to accelerate the process of connecting two Bluetooth devices, using NFC to make the connection and then Bluetooth to transfer the with its faster transfer rate. So in some cases the technologies could be complementary with each other.

QR codes

QR codes are easy to create, instantly recognizable, virtually cost free, and fast to access.

However NFC is near instant and a much more seamless experience than QR codes. With QR codes you need to load up a QR reader app, take the photo, wait for it to be transcribed. With NFC you’ll just swipe your phone. The ease of the experience means it’s much more likely for someone to actually do it. And increasingly with phones building NFC natively into the chipset, you won’t need to download a reader app like you do with QR codes, making it more broadly accessible.

The other case where QR codes do have an advantage is distance. With NFC, you need to be inches away from the tag — literally, you swipe your phone across it. QR can be placed on billboards or buildings where you wouldn’t be able to physically reach with your phone.

RFID

Traditional RFID has a longer signal range, but is less secure mainly for that reason. NFC chips are also being built directly into phones, which will make the development of NFC apps much simpler and more robust, and it should be much more seamless to use.

GPS

Right now location-based check-in services such as Foursquare and Facebook Places are based on GPS, which uses satellite positioning technology to figure out roughly where you are and offer a choice of places to check in. Google’s Recommended Places service is using NFC to shortcut that whole process, embedding NFC chips in the “Recommended on Google Places” stickers that are places on businesses’ doors, signs or windows. Customers could simply swipe their phone over the sticker as they are walking by, and presto, they are checked in. No loading an app, no waiting for the GPS, no searching for the place you’re in.

Summary

As we’ve seen with promising technologies like augmented reality, we always need to be careful about overhyping new technologies before they are ready for prime time. However NFC is not a technology waiting for a use case. It has immediate real-world applications, and will be a measurable step forward in seamless commerce transactions and brand experiences for a mass audience. It seems like an obvious winner from a use case scenario, and the ’swipe’ or ‘tap’ will become a key way that we interact with our connected world.

The question mark with something like NFC is always around infrastructure and device adoption, but with so much benefit to be reaped and all the players coming on board, it looks like it will be ubiquitous in a hurry. In fact there’s so much of a rush into the market, the main questionmark seems to be around format fragmentation, whether the mobile payment options from all the various players will be inter-compatible or if we have a Mastercard vs Visa or VHS vs Beta format war looming.

Either way, it’s exciting to see a technology as powerful like this coming onto the horizon, and looking forward to seeing both the big plays by infrastructure giants like Google and Visa, as well as the innovative brand experiences pioneered by any brand looking to provide a more seamless and social experience for their audiences.