26 Jun

On NFC, M2M and the Internet of Things (June 2011)

Near-field Communication (NFC) is a very-short range (proximity) radio communication technology introduced a number of years ago, but it is not until now that we are going to start seeing adoption and interesting applications that uses NFC. One is mobile payments, but there is much more than that. NFC is just a type of interaction, and it is about enabling for convenience and ease of use, and its true value will all depend on the application itself (that leverages NFC).

Some believe NFC will take off, while others believe that it is just noise, and not interesting. But what is going to happen is that once people get to use it, people are going to expect it. The adoption of NFC is going to be similar to what happened with “touch” screens on mobile. Many argued that it was not necessary; Nokia even had touch-based handsets many years ago before the iPhone, but failed to capitalize as it was so focused on its one-handed, key-based navigation as the best kind of navigation. But the convenience of touch, as shown by the iPhone, changed the world, literally, and how people interact with mobile handsets and tablets. The same will happen with NFC, which basically is a proximity-based ‘touch’ and it is mainly about convenience and security.

Some of the uses for NFC, as previously mentioned, include mobile payments, but NFC can also be used to interact with the objects and places around us; this latter use-case is what really excite me about the NFC. It can be applied to the “Internet of Things” and in some use cases, to Machine-to-Machine (M2M).

Since NFC is getting some steam now, I am taking the opportunity to inject some thoughts on NFC, M2M and the Internet of Things.

  • It is important not to equate the Internet of Things (IOT) to Machine-to-Machine (M2M). Related to this see: M2M vs. Internet of Things
  • Most, or many of the usages or interactions through NFC will be non-payment, such as with ‘things’ and “places” to learn or perform an action automatically; to me, “things and places” around us are all part of the IoT; those being directly connected to the Internet, or indirectly via the handset as a gateway to the Internet
  • NFC will get a boost soon; thanks to Apple, Google, credit card and payments companies, and even the operator. Expect companies like Square adopting NFC big time. Related to this see Google, PayPal See NFC Mobile-Payment Boom
  • There will be fragmentation due to SIM/operator-control vs. 3rd-parties (Apple, Google, etc.). There is a lot of potential for the operator to lose the game, similarly to how it lost on the app side of things, when 3rd parties just implemented their app store/markets strategy around the operator and outside the operator-deck, and won; will history repeat itself? It is very likely. Related to this see Mobility in 2011, the year of NFC

You can read more about NFC by visiting the NFC page or searching NFC on this blog.

Related to this see How would the Internet of things look like if it were driven by NFC (vs RFID). (Open Gardens blog)


20 Feb

Mobility 2011: The Year of NFC?

(This is part of a series of blog posts on Mobility in 2011)

Near-field Communications (NFC), the very short-range secure communications channel that will enable for a new breed of application interactions, is making a comeback. The year 2011 is, finally, the year of NFC. Today NFC is the new buzzword. NFC is the “next big thing”.

What makes NFC so attractive? From a user’s perspective, convenience. From a developer perspective, imagine application activation by swiping the handset.

NFC is so hot now, that the NFC Forum, the non-profit industry association that promotes the use of NFC short-range wireless interaction in consumer electronics, mobile devices and PCs and leads the standardization of NFC, recently redesigned its logo and marketing efforts.

Introduced around the year 2006, for some of us, it has been an eternity to get here. For example, back in 2007-2009 I co-founded a company called eZee, with the goal of bringing NFC-based applications and mobile payment into the marketplace; see eZee inc Mobile Coupon and Payment Vision. If you ask me, right on the spot, but 3 years too early. 😉

And as with mobile apps, NFC suffered from the same preclusion by the Operator. The pain was so heavy that many investors avoided NFC-related startups altogether. Those were the days just pre-iPhone and pre-Android. Nokia was the leader on NFC; it pushed the NFC API into J2ME (JSR-257), was doing its best to expand NFC. In the USA it was next to impossible to get your hands on a NFC handset; Operators were not ordering them, not yet, until the issue of the Secure Element was resolved. With trials and more trials, operators basically brought to a halt all related innovation and ecosystem. Note that near-field communications already had been proven in other regions such as Japan. Convenience the obvious benefit – fast, quick interactions.

Now with Google introducing NFC on its Android software stack and device manufacturers embracing Android/NFC, and (rumors that) Apple will be introducing support for NFC, and organizations such as ISIS (a joint venture by AT&T, T-Mobile and Verizon), and in Europe with projects such as the “Six Pack” with operators and financial institutions involved, the right mix of players and events are happening. The NFC ecosystem is evolving!

2011 will be a definite year on the battle between operator control and the ecosystem. This should look familiar to you as it is similar to how apps moved from the Operator controlled deck and into the ecosystem, 3rd party developers and app stores and markets. Operators have a true challenge ahead of them. It actually is an amazing transformation across the board.

While many equate NFC with mobile payments, payments is just one application. Other types of applications for NFC include check-ins, digital-to-physical world interactions, sharing device-to-device (such as contacts), authentication/authorization, transportation and ticketing, discovering information about a place or object, coupons and marketing, and so on. In fact, perhaps over time, most of the NFC-based interactions won’t be payment related.

Next I will expand on NFC, the players and the year 2011.

The NFC Ecosystem

The NFC ecosystem is a complex one. And when involving mobile payments it is not only complex, but it is extremely (greedy) political. Below I attempt to illustrate some of its players:

Past experiences alone tell me that the control of the NFC ecosystem, led by mobile payments, will shift from the Operator (and the SIM card) and into the ecosystem via non-operator and external secure elements and Trusted Service Managers (TSM).

The NFC Specifications and Standards

The NFC specifications focus on link-level protocols and message payloads to enable NFC-application proliferation. The specifications describe NFC at the low-level such as Logical Link Control (LLC) protocol and connection handover, data exchange formats, support for various popular Tags such as FeliCa, and communication protocol formats for various interaction types such as support for Texting, URI and Smart Poster payloads. All the required protocols are there. The NFC software stacks are there. But the SIM-card centered mobile payment debate continues.

The SIM-Card vs. External Secure Elements Debate (or Debacle)

While NFC has uses beyond payments, the debate of who controls that Secure Element (SE), a mobile payment artifact, is the top reason why NFC adoption has taken forever. For those not familiar with SEs, a SE is a secure location in the device, typically a Smartcard, where things such as secure keys are stored and which must be very difficult to compromise.

Many believe the SIM card, which already plays a key role on handsets by identifying the subscriber and related account, should be the SE of choice for mobile payment. At first, this makes sense as from the technical perspective, the SIM card is very secure, it has a secure channel between the SIM card and the NFC chip over Single Wire Protocol (SWP), and the Over-the-Air (OTA) management aspects are in place. But from the business perspective, there is a huge drawback — it gives way too much control to a single stakeholder, the operator.

The truth is that SEs can be implemented in various ways: 1) the SIM card, as explained above, 2) secure internal memory, and 3) external SEs such as in a microSD. The latter is becoming a strong contender for NFC.

The debate of SIM-cards vs. external SEs will have a major implication on who will benefit the most. If it turns out that the SIM card is in fact the top choice for SE, then a new/different kind of battle for SIM control will commence.

While the above takes place, two technologies are filling the gap: 1) 2D barcodes and 2) RFID stickers:

  • 2D barcodes have great potential and uses; I love them. But are not as convenient as NFC, as it requires multiple clicks from the user to start the app and read the barcode itself;
  • RFID stickers I see as a temporary solution. RFID stickers can be provisioned with info such as account information, and may require multiple stickers for multiple purposes. RFID stickers are “standalone”; with no application interface on the handset itself, the sticker is very static. This is opposed to NFC-based apps, which have an application component, a component on the SE, and the application can interface with the NFC channel and the SE, allowing you to create any UI experience (differentiation) on top.

Apple & Google and Financial Institutions Take the Lead

Enough trials. Enough debates on SEs. Time to move on. And this “move on” means for the ecosystem to take lead. Enter Apple and Google, and financial institutions. The Operators should be very concerned. The whole app scenario is repeating, that is, control shifting from the operator and into the ecosystem.

And it gets better.

Not only Apple and Google have/will be introducing devices (and sofware) that supports NFC, but expect them to become major players on NFC-based payments. Providing NFC hardware and software support is just part of the story. Expect Apple and Google to position themselves right in the middle of this; in the middle of each mobile payment transaction. But how? There are different ways, with different levels of control and influence:

  • One way is to position their own “Checkout” application and back-end system at the center of each payment transaction and getting a percentage for each;
  • Another way is to position themselves as a financial institution;
  • And the third way, is to become a Trusted Service Manager (TSM).

I suspect that Apple will supply their own mobile payment app (#1 above), but also become a TSM (#3). Google probably will use a different angle, one focus on their Search, Places and Recommendations, Ads and Hotpot, combined with their own Checkout payment app; we will see, but they should also consider the TSM route.

Similar to Google and Apple, financial institutions will take lead on NFC and mobile payments by providing mobile payment apps and potentially also taking the TSM route. Most likely financial institutions will go the microSD route:

Source: Nearfield Communication World

This is similar to how Visa Europe last year used a microSD-based NFC solution for mobile payments based on DeviceFidelity‘s In2Pay. Expect more of this happening.

What is a TSM?

A Trusted Service Manager or TSM is the entity that manages the process of provisioning a device (Secure Element) for mobile payment. Gemalto defines a TSM as follows:

“In mobile payment, the Trusted Service Manager (TSM) works behind the scenes to make the entire process of downloading your payment account onto your cell phone efficient and secure. Mobile commerce and payment necessitates a new level of cooperation between wireless operators and financial institutions. A TSM knows both banking and mobile phone security and systems, bridging multiple banks and operators while ensuring that consumer credit card information is completely secure. ” – source Gemalto.

The diagram below provides a simplified view of a TSM; as you can see, TSM are at the center to the whole mobile payment process.

TSMs are basically right in the middle; provisioning payment applets (on the SE and/or SIM card), payment apps, and the secure keys. TSMs can mainly focus on the provisioning aspects, or can offer additional services such as communicating with financial institutions over secure channels for payment processing related tasks, with the device, and with the network.

For Apple and Google, and perhaps the financial institutions, this could mean “TSM on-demand” with user-initiated provisioning via their respective app store/markets and tools; imagine using iTunes to securely setup your iPhone for payment, downloading the secure keys, apps and applets, all integrated into one experience.

Note that becoming a TSM doesn’t preclude others’ apps (and related secure keys) on the same SE, meaning that if Apple or Google, or the operator for that matter, decided to become a TSM, they can be ecosystem-friendly.

You might recall in 2010 a deal between Apple and Gemalto. This rumor was centered on Gemalto-provided SIM cards to enable iPhones to be activated on any operator via an App Store download. While this might be true, this deal felt to me like something else; I will not be surprised if perhaps Apple is planning on using Gemalto’s Trusted Service Manager (TSM) technology to help Apple become a TSM for mobile payments on iPhone.

Will companies like Apple, Google and financial institutions collaborate with ISIS and the like?


It is not the first time we have seen a conglomeration of operators that gets together to address NFC and mobile payments. Just a few years ago at Mobile World Congress, a number of operators joined forces on mobile payment. Nothing came out of this.

In 2010, ISIS, a mCommerce joint venture by AT&T, T-Mobile and Verizon in the USA was formed. This is a natural response to the threat by 3rd party companies such as Apple and Google trying to take over mobile payments. I do expect for ISIS to succeed somehow, but to be determined how this in fact will play out.

Note that ISIS is an all operator venture, and the “Six Pack” project in Europe does consist of operators and financial institutions together. Operators have the upper hand, but we live in a new world of mobile ecosystems; it is imperative they work with the ecosystem.

In Conclusion

The year 2011 will (should) be the year of NFC. But it is just the beginning. It really is about preparing for the decade of mobile payments and contactless interactions. Imagine using your handsets to learn about items on the store or places via NFC, exchange your contact info with others, check-in into places, redeem your coupon, and/or make payments, just by swiping your mobile handset.

NFC brings a new kind of interaction — it is about convenience. For me, I’ve been waiting for this for a long time and it is very exciting due to the new kind of apps that will come out of this.

You can read more about NFC, including the JSR-257 Contacless APIs for JavaME, in the NFC section on my blog About Mobility.

Related previous blog posts:



19 Aug

Follow up discussion on Apple and NFC; Oh and Nokia

Back at Forum Oxford a lot of interesting debates occur. The topic on Apple and NFC is no exception. Being a European forum is no surprise how many Nokia fans get all ticked off about Apple, because things like NFC has been championed by Nokia (with no real success). One of the forum members is a well respected (no BS) Mobilist that I follow. His name is Dean Bubley. I thought about posting here one of our exchanges at the forum:

Dean>> “I think this is one of those rare occasions where Nokia gets it right (i.e. dropping NFC) and Apple gets it wrong (embracing NFC).”

CEO>> Nokia continues pushing for NFC. Last July they re-iterated their commitment.

Dean>> “Nokia did a bunch of trials, which despite the PR hyperbole were absolutely not “successful”. There is no clear consumer need, no business model, and a myriad of technical and user interaction problems.”

CEO>> Consumer feedback from trials (at least in the USA) have been positive. (note to self: try to find the results for the trials)

Dean>> “Quite rightly, Nokia realised that adding NFC to phones wouldn’t make them any extra money, any time soon (or indeed, probably ever).”

CEO>> See my comment above. The problem is the operator was not distributing (ordering) the Nokia NFC handsets. The problem is the operator wants control via the SIM card. But, Nokia will push forward with the non-Single Wire Protocol (SWP) handsets next year. Nokia and the other handset manufacturers realize that forcing NFC-app enablement via the SIM only will just slow things down/won’t work.

Dean>> “In particular, users would have to be insane to trust mobile payments to an operator rather than a 3rd party.”

CEO>> Again, this is why handset manufacturers will be offering non-SWP NFC handsets as well (via microSD NFC?). This will allow for 3rd party applications vs. operator-centered/controlled, where apps are restricted to a few big-name players.

So let’s see how Apple will approach this; very likely by not using the SIM/SWP approach.

And yes, part of NFC solutions are the services on the cloud. This approach would allow and leverage the developer ecosystem to bring useful apps to the consumer.

About ROI, it will be there via the apps similar today, plus perhaps additional transaction-based revenue.

And let’s not equate NFC to payments only; there are other interesting scenarios we will see once this is made available to the developer ecosystem.


17 Aug

Apple and NFC — iPhone will trigger the Mobile RFID/NFC revolution

There is a lot of noise/rumors about Apple and NFC after Apple’s hiring of NFC expert sparks digital wallet rumors.

NFC is one of those technologies that I have written quite a bit about (see my NFC/Touch page) and that I believe will change how people use their handsets. Unfortunately it has taken forever to hit the mass market; blame the operators…

And as I’ve previously written, I’ll say it again in 2010 — Even though Nokia was first in understanding the power of proximity and had introduced some of the first handsets, it is the iPhone what will drive the NFC revolution…

Related to this see:

17 Nov

Near-Field (Proximity) Communication in late 2009

It almost is the end of 2009. And where does near-field proximity communication-based applications stand? From mobile marketing, to customer loyalty, payments and authentication, to information exchange, transportation and health-care. Well, it still stands very far from its full potential.

Due to its characteristics, proximity is an excellent class of physical interaction. And inherently a very special class of interaction. It can be very personal, in theory secure, and it can be very localized — all excellent attributes for interactions that provide secure context.

Regardless of its potential and benefits to consumers (which is about convenience) and the real business models that exist, NFC have had major adoption (growing) pains. Pilots have said again and again that consumers do like the convenience, but it is the enablement problem what has basically prevented its adoption. It took Bluetooth more than 10 years and it will take NFC the same.

If we wanted to deliver the convenience benefits of proximity-interactions today, what is the answer? Will it be RFID or NFC the one that stands up at the end? Will it be embedded chip-sets, USB or microSD, or plain RFID stickers?

While not the perfect vision the NFC Forum members had, sticker (RFID) are the short-term solution for this today. Some call it an interim solution, but we will see.

From Blaze Mobile (to whom I provided my services to back when they were called MobileCandyDish), to Giesecke & Devrient, Alcatel-Lucent (my current employer), Oberthur Technologies, MasterCard, First Data, and Tetherball, they all are dealing with the realities of NFC and while waiting for it have decided to follow the “RFID sticker” route. Blaze Mobile was one of the first one years ago.

Stickers. But RFID stickers are very limiting as they are limited to “one function”. How many stickers can you fit, or want to fit, on the back of your phone? Yet stickers bring NFC close to reality. Expect branded and colorful RFID stickers of all kinds.

When I saw ViVOTech (a leader on NFC and contactless in general) recently announce their ViVOtag product; in other words, even ViVOtech has submitted to the realities of NFC, I said to myself, “NFC is dead, long live NFC” – this time is the sticker way. Yuck. See ViVOtech Launches ViVOtag.

There are other vendors going the route of USB or microSD NFC devices such as Tyfone, Giesecke & Devrient and DeviceFidelity. Another example is Sony — see Sony’s next generation Memory Stick which might potentially be integrated with NFC.

In the meantime Gemalto Boosts Rollout of SIM-Based Mobile Contactless Services and touchatag, an Alcatel-Lucent venture and Clear2Pay partner on technology for contactless payments.

And as I wrote before, Will the iPhone trigger the Mobile RFID/NFC revolution?

So there is lots of interest, noise and activity related to mobile NFC/RFID. It is a matter of time, I’m convinced. But the ideal solution is NOT stickers, yet stickers are the fastest and cheaper way to get there, and because of that, the best way to validate the applications and models. And once that happens, I hope that for the sake of the consumers themselves that we move on to a solution that allows for MULTIPLE applications such as smart-cards or handset-based (which includes USB or microSD-based) approaches.

For a good paper on alternative NFC form factors see white-paper by The Human Chain titled Alternative NFC form factors.

Now, last but probably the top deployment reason why proximity interactions based on NFC/RFID are extremely important: to work around that pesky patent on barcode interactions (i.e. nn-ee-oo-mm-ee-dd-ii-aa); with the NFC/RFID path there is clear and well documented (including in the NFC standards) prior-art.

It is time for operators and device manufacturers to push for NFC. Yes, enabling NFC require investment but pilots already provided good results. Go sticker in the interim to validate, and remember that it is about the applications and usability. No need to wait on Apple, again, to define the path. (The exception to all this is Nokia who has been forward looking since day one, with the handsets, APIs, documentation and toolkit to make this happen.)


13 Nov

Will the iPhone trigger the Mobile RFID/NFC revolution?

Will history repeat itself?

There was/is the 12 keys keypad cellphone.
And few care about Touch.
Then came the iPhone.
Now everyone loves Touch.

There was the operator Deck.
Everyone hated the Deck.
Then came Apple.
And created the App Store.
Now everyone loves the App Stores.
And everyone still hates the Deck.

There was RFID. Then came NFC.
With clear use-cases and business-models.
Yet it has taken forever to deploy this.
Pilots and more pilots, when it is going to end?
Embedded chip-sets or stickers.
But few seem get it. (Nokia does!)
Who is going to take the first big step?
Operators don’t get it. Or do they?
And stuck with pilots they are.
“Hey, this is great!”, the pilots say.
Enablement is expensive! That is what they say.
But guess what?
Proximity support, the iPhone will have.
And all of the sudden, “RFID/NFC on the go” everyone will want.

And I say, if the iPhone introduces support for proximity, it will trigger the mobile RFID/NFC revolution… Wanna bet?

Here, some rumors via the NFC World Blog:

NFC specialist Narian Technologies and who runs the Near Field Communications Group on Linkedin.com, has reported the following:

Had to share this news. A highly reliable source has informed me that Apple has built some prototypes of the next gen iPhone with an RFID reader built in and they have seen it in action. So its not full NFC but its a start for real service discovery and I’m told that the reaction was very positive that we can expect this in the next gen iPhone.

If Apple does it, expect every phone manufacturer and their sister to begin pumping out NFC enabled phones, at least for service discovery and sync.

This just reinforces what we knew based on the two separate patents Apple submitted that had the iPhone enabled to read RFID tags. I’m told that the touch project video and the BT SIG’s specs were all driving forces to push this forward as well as other factors.

Guess I’ll be touching my iPhone to my Mac to link them together to sync iTunes by next year.

07 Feb

Updated Near-Field Communication (NFC) Page

In response to @AjitJaokar at ForumOxford, I’ve updated my page on NFC to further explain NFC vs. RFID as well as the elements of a Java-based NFC mobile application; see NFC/Touch Page.

RFID” is a broad term that refers to Radio frequency ID. But not all RFIDs are created equal with differences in range and frequencies, and some are in fact proprietary. But there are number of main standards out there, for example FeliCa (made by Sony and very popular in Japan) and MIFARE (made by NXP and very popular in transportation and elsewhere) with tons of deployments. The Oyster card is based on MIFARE for example.

The following diagram shows on An Exploration of the NFC-related Elements on Mobile Handsets (click to enlarge):

Elements of NFC Apps

Read the rest at the NFC/Touch Page.