UPDATED 16:11 EDT / MAY 27 2011

Google, RIM: Divergent NFC Plays

Google kicked off its NFC play this week with the announcement of a beta launch of its Wallet technology, initially to be trialed in New York City and San Francisco.

The purpose of this article is to briefly discuss two points: (1) Is smartphone-based phone payment technology important? and (2) How does Google’s approach differ from Research In Motion’s approach with NFC on the BlackBerry?

Let’s start with the first issue: the importance of mobile phone payments. Call me a hopeless Luddite or a skeptic, but I feel like I’m missing something here. Of all my desires in life, being able to pay for my coffee by swiping my smartphone at a box on the Starbucks counter does not register in the top 100.

Basically, the couple of credit cards already in our jeans pockets do the job just fine. In addition, they also don’t require a functioning battery. In contrast, my Android smartphone rarely lasts much beyond 3 hours. If I were to leave my apartment without my regular credit card, talk about range anxiety!

Can you imagine: You are rushing to get on the subway, or to fill gasoline in the middle of the night, and … your Android phone has depleted its battery, as usual. I don’t see anyone voluntarily relying on Android-based NFC to the exclusion of the good old credit card perhaps even combined with a $20 bill.

In other words, NFC payments feel to me like like a solution in search of a problem. I don’t see this taking off until some new compelling argument has been brought to the equation. My sense is that it will take a few years.

What about RIM? This August, plus or minus a couple of weeks, RIM will be replacing its entire BlackBerry handset portfolio with very significantly improved devices, every single one of whom will contain NFC.

The cellular-inclusive versions of the PlayBook tablet that are scheduled to be launched also in the July-September time-frame will also include NFC. This includes models for Sprint (WiMax), Verizon(LTE) and AT&T (HSPA+). I don’t there will be any other handset/tablet company who by September of this year will have embraced NFC so totally as RIM.

The only exception could be Apple, if it releases new NFC-inclusive iPhones and iPads by September, and that is a possibility although not necessarily very likely.

So what is driving RIM’s industry-leading lurch into NFC? At BlackBerry World less than one month ago, RIM explained its key driver for NFC in the very near term, and I would never have guessed what it was. Folks, it’s building access. Building access?

Yes, building access. You know, those cards issued by your employer that you swipe by the doors and turnstiles to let you in. It turns out that enterprises want to get rid of these cards in favor of incorporating this functionality into the BlackBerry devices that all employees are issued.

This shows the difference in RIM’s approach vs Google’s approach. Google will be trying to convince consumers to get on a path to leave their credit cards at home. RIM will rely on employers to force their employees to use the BlackBerry instead of the building access card.

Google relies on voluntarism among what may be a skeptic and cautious public. RIM will leave it to the employer’s dictatorial powers to decide. When Chairman Mao says “go to the rice field” — you go to the rice field.

I am not sure how much this will matter, but perhaps RIM is up to something here. When employers mandated mobile email after the 1999 launch of the BlackBerry, it put RIM on a path to sell over 100 million devices and sustain over 50 million users. Perhaps this move by RIM in conjunction with large enterprises (and governments) will help pump some oxygen in the BlackBerry’s life cycle.

Hey, by year 2001 Apple was left for the dead, but it got a second life not a single analyst in the world anticipated at the time.

That said, it’s not like there aren’t any issues with using a BlackBerry as your access card. BlackBerry devices also — eventually — run out of battery. I think most people who have used both know, however, that the average life of a BlackBerry is much better than the average life of an Android device, although that advantage is not uniform and may not last forever into the future.

More broadly speaking, I believe there will be other applications for NFC that are likely to prove very important, whether they are adopted using force or in a voluntary scenario. I just don’t know what they are yet. One month ago, I hadn’t thought of building access as the driving force behind RIM putting NFC in every BlackBerry and PlayBook by September this year. Surely there must be other equally or more compelling applications that will emerge over the next couple of years.

I think it’s too early to call any winners or losers in the NFC game. Generally speaking, I can see good cases to be made for Apple, Google and RIM all alike to be very successful with NFC. I do think the market seems so totally focused on Apple and Google (Android) that it may have overlooked the fact that RIM is also making a solid enterprise/government play here.

 

[Cross-posted at The Street]


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