Philips NFC Enables Two-Way Wireless Identification and Communication

Imagine you have an 802.11 wireless network in your home. Someone buys you a WLAN-enabled electronic picture frame as a gift. How can you get the picture frame to connect to your network, install the necessary drivers and display pictures? And how can you prevent your prankster neighbor from sending his pictures to your picture frame?

Enter Near Field Communication (NFC), an RFID-like technology protocol trumpeted by Philips, Nokia and Sony. Just as you would tap or wave a contactless credit card at a point of sale, NFC enables an interface for commerce, service discovery and device matching. Although users may think they need to touch devices together, this is unnecessary because the NFC tags communicate wirelessly. In the WLAN home networking scenario, the user would move the picture frame close to the PC (or an authentication card) and a quick authentication exchange would take place, igniting a richer WLAN conversation to complete the installation.

There are other ways to securely add new devices to a WLAN network—for example, the picture frame could come with a code that the user would manually enter into the PC or users could rely on a USB dongle (if the picture frame comes with a port). But the beauty of the NFC interface is its simplicity.

Technology Analysis
At first glance, NFC looks like the superfluous offspring of RFID and Bluetooth. But many of the potential applications are compelling, especially when NFC is used in conjunction with other wireless technologies. NFC, unlike basic RFID, enables two-way identification and communication of other information.

The WLAN scenario described above fits into one of three broad application categories for NFC:

• Device connectivity: In addition to the WLAN networking, NFC can facilitate a Bluetooth session. For example, Nokia N-Gage players can touch devices together rather than going through the “Host” and “Join” menus. Laptop users in airports can bring their laptop in proximity to a “Wi-Fi here” card or sign.
• Service discovery: Nokia and Philips are most optimistic about the near-term service discovery applications. For example, when a mobile device reads a tag on a poster, the phone will automatically open a WAP site. We have heard of this scenario before. For example, WideRay makes boxes that hang on walls in public places. The idea is that people approach these boxes and synch their PDAs to retrieve information stored in the boxes. However, tags in the NFC system are inexpensive compared to the WideRay boxes. Like RFID tags used in supply chain and tranport pass systems, the tags are passive and require no independent power source.
• Mobile commerce: NFC also can be used for mobile commerce as the technology to enable ticketing and contactless credit card transactions (with the credit card and ticket numbers loaded into the phone). Nokia has experimented with RFID mobile commerce—trials with Octopus in Hong Kong and with MasterCard in Orlando. But unlike RFID phone covers, NFC is built into the heart of the phone, enabling the type of interaction described above (scanning a tag on the poster initiates a WAP call). Nokia believes the integrated scenario ultimately lowers costs for all participants.

NFC will have to work with other technologies to provide the final solution. Consider the WLAN home networking example again. Although Microsoft has shown little interest in NFC, the company’s Web Services Discovery solution (launched May 4, 2004) is a natural complement to NFC. If the PC and the picture frame are both Web-services-enabled, WS-Discovery will kick in to automatically to connect the devices on a network.

Technology Strengths

• Endless compelling applications: Although NFC seems like a technology looking for a solution, it is a genuine problem-solver. User interface obstacles are blocking wireless Internet adoption and NFC offers a way to access a WAP site without entering a URL.
• Compatible in the mobile commerce arena: Contactless payment is already a booming business, particularly in public transport systems in Asia. NFC is compatible with Sony’s FeliCa payment system and the ISO standard for contactless payments.

Technology Challenges

• Seeding the market: The WLAN scenario assumes that the electonic picture frame and the home PC both are NFC-enabled. Philips could sell an NFC-enabled USB dongle with its WLAN televisions (the user would then plug the dongle into the PC), but this would eliminate the simplicity NFC can provide.
• Cost: Although Philips has committed to NFC enabling all of its network-enabled electronics, the cost per chip will be at least $2.00.

Recommendations

Sony and Philips need more partners. For each application area (such as WLAN home networking), Sony and Philips will need to partner with leading providers to enable the promised simplicity of NFC-based commerce. For WLAN home networking, the dream team would include Cisco, Intel and Microsoft.

Wireless carriers should get involved in mobile commerce trials. With payment functionality integrated into the phone (via the NFC chip), the carriers will play a supporting role in enabling secure payments. In addition, carriers and credit card issuers can help each other reduce churn when credit card numbers are stored inside of cellphones. The Yankee Group originally published this article on 30 June 2004.