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Research Firm Forecasts Higher NFC Phone Shipments and Installed Base of Devices

U.S.-based ABI Research has increased its projection of NFC-enabled phone and tablet shipments to 270 million this year, up by about 15% from earlier projections, the firm told NFC Times.

ABI had earlier estimated that there would be about 235 million NFC-enabled handsets and tablets shipped in 2013 and a total of 285 million NFC devices shipped for the year. Senior UK-based ABI practice director John Devlin said he has recently increased the shipment forecast for handsets and tablets to 270 million and total NFC devices to 320 million. Besides phones and tablets, the other consumer electronic devices include PCs, TV sets and cameras.

Actual NFC-enabled smartphones and tablet shipments were estimated to have approached 150 million units in 2012, based on higher-than-expected shipments of NFC chips by NXP Semiconductors. ABI like some other analysts had underestimated the 2012 shipments in their earlier projections.

The new shipment forecasts for 2013 would contribute to what ABI projects will be an installed base of 420 million NFC-enabled phones and tablets in the hands of consumers by the first half of 2014.

That’s part of 500 million NFC-enabled devices that ABI announced this week would be “in use,” by 2014, that is, as an installed base, taking in shipments from 2014 and previous years.

The installed base would hit the half billion mark by the first half of 2014, Devlin told NFC Times. About 80% of these NFC-enabled devices would be handsets, mainly smartphones but also tablets. Besides PCs, cameras and TVs, the rest could include game consoles and home appliances.

Devlin forecasted the installed base to be 400 million to 450 million total NFC devices at the end of 2013.

Devlin attributed the relatively rapid move by device makers to support NFC over the past year to an earlier decision by Google to support NFC in its Android mobile platform, and to a decision by original equipment manufacturers, or OEMs, to incorporate NFC in their devices for nonpayment uses. Google introduced its first NFC-enabled Nexus device in late 2010 after incorporating NFC with Android.

“Google pushed to include it within Android and on the back of this, several of the OEMs with broad product portfolios saw additional benefit in introducing NFC in a wider range of products,” Devlin told NFC Times. “If the MNOs (mobile network operators) had wanted to push, and more importantly pay for it, then NFC handsets, and (NFC) SIMs, could have been delivered sooner.”

Device makers see NFC as a way to “enhance their products” by increasing their usability. That focuses on enlisting NFC technology to enable users to quickly connect devices and other consumer electronics and transfer content and data.

But Devlin added that without a doubt “payments are still a core part of many stakeholders plans since most of these nonpayment use cases are not going to realize new revenue streams.”

He noted that such device makers as Samsung Electronics and BlackBerry have clear strategies around NFC, including Samsung’s plans to enable payment on the embedded secure chips in its Galaxy and other NFC-enabled Android devices. BlackBerry sees a revenue source in trusted service management and also has an embedded chip in its NFC devices–though it is not expected to promote it for payment.

Both Samsung and BlackBerry are looking at other applications for the embedded chips, such as secure enterprise access and other ID, he said. On the other hand, such device makers as Sony and LG Electronics “are taking a different path as they horizontally integrate NFC across their broad product portfolios,” said ABI.

While both Sony and LG have included embedded chips in at least some of their Android phones, they have emphasized NFC connectivity among consumer electronics devices at recent trade fairs, such as the Consumer Electronics Show in January. That includes Sony’s “One-touch” pairing of devices and sharing of content. Sony introduced NFC-enabled TVs, speakers and headphones, as well as a terabyte storage unit, along with a new flagship smartphone, the Xperia Z, and the similar Xperia ZL.

NFC device shipment projections have proved difficult to make, with analysts either underestimating or overestimating them the past couple of years, as they did in 2011, when handsets came in at only about 40 million, lower than some early projections. For 2012, ABI had earlier estimated the handset and tablet figure would come in close to 100 million. Shipments came in higher, based in large part on higher shipments of NFC-enabled phones by Samsung.

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