While one tends to associate the notion of affordability with emerging markets, reasonably-priced NFC-enabled handsets have actually first appeared in the developed world. Take the example of Orange UK, which launched its Quick Tap service earlier this year with Barclaycard, offering the service on only one NFC-enabled handset: the Samsung Tocco Quick Tap. The operator is selling the handset for £60 on a prepaid plan with a £10 top-up included. Does it get any more affordable than this? Similarly affordable is the Samsung S5230, which is being offered to users of the French Cityzi NFC service in Nice.

In North America, Western Europe, and across the the developed markets of Asia, young customers will be among the early adopters of affordable NFC-enabled handsets, due to their interest in new services and their budgetary constraints. How big a market do they represent? According to Pyramid’s projections, handsets with an average selling price (ASP) below US$200 will account for over 50 percent of total handset sales in Western Europe in 2016. We estimate that in this region, 35 percent of handsets below US$200 will feature NFC functionality in the same year. In North America and the developed markets of Asia, this percentage will be even higher. Do the math, and you’ll soon realise why Google, mobile operators and banks are so excited about NFC.

The second wave of affordable handsets will hit some of the more progressive emerging markets in Central and Eastern Europe and Latin America. These are countries such as Brazil, Chile, Turkey, Poland and the Czech Republic, which tend to be the trendsetters in their respective regions. The sales of NFC-enabled handsets in these markets will be driven by the overwhelming supply of such devices that will arrive between 2013 and 2014, as well as service providers’ push marketing strategies. While some of those markets will see affordable NFC-enabled devices even earlier, many of these initial handsets will not support mobile payments, but peer-to-peer apps and tag reading. Once consumers become accustomed to using these less advanced apps, and the NFC ecosystem matures, affordable NFC-enabled phones supporting mobile payments will be just around the corner.  

Only in the third wave, beyond 2015, will we see the propagation of affordable NFC-enabled handsets across the globe, including in some truly emerging markets, where lack of connectivity will inhibit a substantial uptake of NFC services in the near future. The harbingers of this trend in Africa and in the less developed Asia-Pacific markets could be the gray market vendors, who have been quite accurate in predicting the demand in markets in those regions over the last several years (consider their leadership of the multi-SIM handset space in these regions). The popularity of these handsets will in turn put considerable pressure on large handset manufacturers like Nokia and Samsung to introduce feature- and price-competitive products within 6-12 months in an effort to maintain market share. In the end, NFC will become standard functionality on handsets all over the world, used by rich and poor alike.

Stela Bokun
Stela Bokun is mobile devices practice leader with Pyramid Research.

The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members.