Skip to main content



Oh You Just Got Bluetooth, Now You Need NFC

NFC is a relatively new wireless technology based off the existing RFID (radio frequency identification) protocol.  It enables much of the same functionality as Bluetooth but with a few key advantages. Two of these advantages are the ability to share information without pairing devices and generally lower power consumption.  Another key point is the requirement that NFC devices must be within only a few centimeters of each other, which makes it ideal for application such as secure financial transactions where there is a desire to minimize the potential for “eavesdropping”.  Unfortunately, the adoption of NFC payment options by businesses has been slow due to the cost to adopt such payment systems, but the push toward NFC is gaining speed.

The motivation behind this trend comes primarily from the exponential rise in consumer owned NFC devices.  A recent report from CNET stated that approximately 40 million NFC enabled smartphones shipped in 2011 and this number is expected to increase 250% in 2012. Increased consumer adoption and increased business adoption will cause further growth in both sectors.  This situation is be depicted as an economy with network effects.

Motivation to adopt NFC technology can directly be visualized through the following graph:

Here the price of obtaining NFC is fixed at P*.  The line represents what a user thinks it is worth to adopt NFC technology when a given number of consumers (or businesses) have chosen to adopt.  The current number of users is between z’ and z’’.  In this region, all the users from the current position to z’’ think it is worth it to adopt NFC, thus the number of users will continue to increase until it reaches z’’.  The users beyond this will choose not to adopt for reasons such as a consumer’s desire not to own a smartphone or a businesses’ need to operate on a cash only basis.

http://news.cnet.com/8301-30685_3-20106237-264/nfc-equipped-phones-set-to-surge/

Image from: Networks, Crowds, and Markets by David Easley and Jon Kleinberg

 

Comments

Leave a Reply

Blogging Calendar

November 2012
M T W T F S S
 1234
567891011
12131415161718
19202122232425
2627282930  

Archives