Smartphones To Be Smarter

BARCELONA, Spain — Cell phones are usually used to communicate with people far away. This year, they’ll get the ability to do the opposite: communicate with things that are close enough to touch.

It may not sound immediately useful, but phones will get some surprising capabilities with the addition of chips for so-called Near Field Communications, a wireless technology with a range intentionally limited to just a few inches.
The phones will be able to talk to payment terminals designed for “smart cards,” replacing credit and debit cards. They could be used as mass transit passes. You could tap two phones together to exchange contact information.
Or you could tap a “smart tag” on a poster, product or sticker to get your phone to do something, such as retrieving information from the Internet or placing a call to the product’s customer support line. Yankee Group analyst Nick Holland likens these tags to the links that take us from Web page to Web page, only now they’re in the real world.
Adding NFC is like adding a whole new capability on the level of GPS navigation or a camera, Holland said.
The industry has been talking about including NFC in phones for years, mainly to turn them into “electronic wallets.” Beyond a few trials, nothing much has happened, except in Japan and Hong Kong, where these systems have caught on for mass-transit ticketing.
But at the world’s largest cell-phone trade show, held last week in Barcelona, Spain, it was clear that the log-jam has loosened, in part because NFC chips are now cheaper. Millions of NFC-equipped phones will be in consumer hands in the U.S. and Europe before the end of the year.
Jim Balsillie, the co-CEO of BlackBerry maker Research In Motion Ltd., said at the show that “many if not most” BlackBerrys will have NFC chips this year. Google Inc.’s Nexus S already has one, and the company’s latest Android software for that and other phones has NFC support. Nokia Corp., the world’s largest maker of phones, has committed to putting NFC chips in all its next-generation smart phones.
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Based on job postings at Apple Inc., there’s speculation the new iPhone model due this summer will have an NFC chip. Apple wouldn’t comment.
NFC turns the limitation of short-range communications into an advantage. When an NFC terminal senses an NFC-equipped phone, it knows that’s because the user is holding it right up close and wants to interact in some way — for instance, paying for a can of Coke.
That means a lot of the complexity that comes with establishing wireless links — like logging on to a Wi-Fi hotspot or “pairing” Bluetooth devices with each other — can be dispensed with. Tap and something happens; but your phone will probably still ask you if you really want that can of Coke.
The simplicity of NFC also lets it cut through the complications of existing mobile payment systems, which let you send money through an app or text message. These systems have been more popular in Europe.
It’s possible to upgrade some current phones with NFC chips. Small memory cards that are accepted by some phones can be given NFC capabilities. Both MasterCard and Visa are experimenting with “jackets” for the iPhone that have NFC chips, for instance.
But not all phones are compatible with these solutions, so the most likely way to get NFC into consumer’s hands is with new phones. Research firm Yankee Group estimates that there will be 151 million NFC-enabled phones in 2014, up from 834,000 in 2010.
The wide support from phone manufacturers comes after nearly a decade of much talk but little action. Bill Gajda, head of Visa Inc.’s push into mobile payments, said the NFC idea has faced “a series of chicken-and-egg problems.”
Phone makers didn’t want to include the chips in their phones if the wireless carriers didn’t want them.
Wireless carriers saw no use for the chips if merchants didn’t have terminals that accepted them. Merchants didn’t want to invest in terminals if there would be no phones to use them.
With phone makers and wireless carriers now supporting the idea, the hope is that stores will take the jump too, Gajda said.
Written by
PETER SVENSSON
AP Technology Writer

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