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Why Consumers Won't be Waving a Cellphone

In its latest analysis of the Near Field Communication (NFC) market, ABI Research forecasts that by 2012, some 292 million handsets -- just over 20 percent of the global mobile handset market -- will ship with built in NFC capabilities. 2007 will be critical for NFC technology as key standards and operator trials complete the foundations for the first real deployments.

"NFC in mobile phones promises a quicker and easier way to execute a host of key tasks by just waving the phone," says senior analyst Jonathan Collins. "Making payments, unlocking doors, downloading content, even setting up wireless networks and many other applications, can all be enabled from an NFC handset."

But early enthusiasm for NFC adoption in handsets -- fuelled by its functionality and flexibility -- has been tempered by the complexity of the ecosystem required to support multiple, revenue-generating NFC applications.

ABI Research believes that NFC will not become widely available in the handset market until the notoriously short-sighted or strategically inept wireless operators are confident they will see a clear return from specifying NFC in their latest handsets.

"As the dominant mobile handset purchasers in the world, mobile operators stand as the gatekeepers of NFC's entry into new handsets," notes Collins, "and until they are comfortable with getting a return on the investment in those handsets, NFC will not reach a mass market."

While the simplicity of NFC use reflects its lineage in already-deployed contactless payment, ticketing and access control technologies, the multiple applications NFC facilitates bring a host of complexities and interoperability issues when it comes to creating the business relationships required to enable and manage NFC applications on each handset.

Success in developing NFC relationships, primarily between card issuers, contactless transportation ticketing providers and mobile operators, will determine the speed and shape of deployment and consumer availability of NFC in handsets.

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