Mobile World Congress, the annual jamboree on all things, well, mobile, intensified coverage this week on the potential for Near Field Communication or NFC. The latest Android operating system (and at least one phone, the Nexus S) has had this capability for some months but what really got everyone going was the rumour that the iPhone 5, due perhaps in the middle of the year, would support NFC too. If you already have a ‘phone with NFC, I’m guessing you feel like the first person to have a fax machine. It’s very shiny ‘n’ all, but what do you do with it?

NFC is already a familiar technology for anyone who travels regularly on the London Underground, bus or train network via the Oystercard. Using the Oystercard is both quicker than cash methods, especially with auto-topup that ensures you never run out of cash on your card, and also cheaper – probably a far greater positive motivation to make the switch (O2 have trialled Oyster-equipped mobiles too). Oystercard may qualify as one of UK government’s most successful projects ever. There are numerous other opportunities to use NFC use in the UK too – for instance, many, if not all, branches of Pret A Manger have terminals at the till where, if you have a suitably enabled debit card (Barclays I believe), you can swipe the terminal and make payment. In 2 years of near daily visits, I haven’t ever seen anyone use them and most of the terminals have long since been tucked out of the way. In the USA, NFC-equipped key fobs have long been used to pay for petrol and other goods too. MasterCard has been testing its own technology, PayPass, in partnership with Nokia and others since 2006 (and since 2009 in the UK with, amongst others, Boots) – indeed, MasterCard say that as at August 2010 they had 78m cards and 245,000 merchants accepting them globally.

This is a technology that has been trying to happen for some time – so is the fusion of mobile and NFC the trigger to growth in mobile payments?

Twice in the last month I’ve travelled through Europe on BA flights. I opted to use their new iPhone app boarding pass – definitely not an instance of NFC use (it’s a standard square barcode) but I thought the experience might be similar. From initial check in to sitting in the seat, I had to give my phone to 6 different people – the checkin person, the BAA boarding pass verifier, the BA Lounge steward, the staff in the duty free, the gate checkin person and the crew on the plane.
There are two things that make me pause for thought here:

1) Each time I presented the boarding card – often many minutes or even an hour or two apart – I had to slide to unlock, open the BA app and select the boarding pass – that is, you have to have the app open and working. Each time you go through the process, there is an opportunity for the screen to dim, a text/call/facebook badge to signal or, worse, the phone to hang, crash or do something otherwise unhelpful (admittedly a rare event, but it does happen).

2) The oddest thing, though, is actually handing over your phone to someone else – my phone is practically tethered to me and giving away control is quite alien. Now partly this is because it’s a bar code that needs to be scanned rather than a contactless payment transaction but I can’t help feeling that when something goes wrong, the first thing that will have to happen is you have to hand your phone over – just as now, if you can’t get your chip and pin card to work, staff in a store try for you, using your card.

Driving adoption of mobile payments enabled by NFC will require overcoming some challenges:

1) Do you need a PIN and how often? In most trials, payments of between £10-20 have been possible without PIN verification at the payment point. This plays to the convenience angle – the cash substitute – but still means you need a PIN (or possibly two – you may choose to lock your phone with a PIN knowing that it is now effectively cash, as well as having a payment-related PIN)

2) Who is carrying the payment risk? With chip and pin – which was effectively a mandatory change introduced by banks – the retailer took the risk if they only required a signature, the credit card company if a pin was used (and, in theory, not the customer in any circumstance, unless the pin had been disclosed to a 3rd party). How this works with NFC payment will directly affect adoption (both in terms of retailers deploying readers and customers using) – if the retailer carries the risk when no pin is used (that is, for a low amount) then either a PIN will always be required or the retailer won’t rush to install terminals; if the customer carries the risk, then adoption is also likely to be low. Of course, this risk needs to be contrasted with the equivalent risk of you losing a wallet full of cash. If the retailer isn’t carrying the risk they would likely be strong advocates for payment via this method – as long as the margin taken by the various people in the chain is lower than the retailer’s equivalent cash handing charge.

3) Will NFC be cancelled at the same time as the ‘phone is blocked from making calls? This is plainly related to the risk question. If you report your phone stolen and the carrier disables call, but somehow low value payments can still be made, who is going to bear the risk of those payments? If it’s the retailer or the customer, there’s trouble ahead.

4) Will any phone and any reader work in all combinations or will it be like the early days of ATMs when you had to go to your own bank, or the early days of MMS when you could only send to another ‘phone on your own network?

5) Is the phone cash or credit? If it’s cash, how do you get money on to it – an auto top-up just as the Oyster card has is the most convenient (you don’t want to have to top it up when you’ve just got to the front of the queue in Pret).

6) If I can move money between two NFC enabled devices, two mobile phones for instance, what steps will law enforcement take to monitor such transactions so as to police money-laundering? And what effect will that have on take up, privacy issues and so on. The obvious one is to limit the transaction size to a low value and to prevent too many transactions from taking place in a short period so as to reduce the chances of bulk laundering. But, doing so will also complicate matters for legitimate consumers – what if you bump up against the limit yourself yet have no idea that you have?

7) What data is transferred to the merchant when i make the transaction? Just amount? Name? Mobile number? Address? Date of birth?

The security and risk issues with mobile payments are complex so it’s very likely that other capabilities will emerge alongside payments that could drive adoption of NFC and then make the move to payments a simpler change

a) Loyalty cards and rewards – no need to carry a separate card to track your nectar points. You could make payment, collect points or even redeem points all at the same time. Or you could just collect points and have an app that tells you how many you’ve got and what you can do with them

b) Mobile check in services – Foursquare has this nailed but perhaps an NFC-enabled check in point by the cash desk or even at the door would mean more people checked in and, coupled with loyalty cards, could drive rewards for doing so

c) Advertising – Bluetooth-enabled advertisements have emerged relatively recently but they broadcast to anyone nearby (push). NFC-enabled posters would require a conscious action (pull) to get the information, making the person a potentially more valuable customer

d) Museum tours / tourist info – placing your phone on an NFC pad next to an object in the British Museum could bring up the details of whatever you were looking at, in a BM app. It would be like SatNav indoors. The data transfer rate of NFC probably isn’t sufficient for much information to be transferred (and it’s unclear, to me, how the exchange of data from NFC to app would work) so the app will still be the repository of the latest information

With many phones shipping this year with NFC there will at last be sufficient mass to perhaps drive the long-pending mobile payments / digital money revolution perhaps started by Mondex in the 1990s.

These days – especially these days – we’re used to revolutions starting and finishing far faster than that. I think this one has already run its course – another Digital Compact Cassette, MiniDisc, Betamax technology.

Nokia Bets On Red and Black

So Nokia plans to

a) Form a strategic alliance with Microsoft around Windows Phone 7 (one assumes for phones and tablets). Nokia expects to be able to direct development on this platform as well as bring some of its own technologies, such as Maps, into it

b) Maintain MeeGo, shipping product this year, and move it to an open source operating system

c) Keep Symbian alive, selling upwards of 150m units over the next few years, so that they can transition those customers to another Nokia platform

The rallying cry that comes with this wide-ranging, bet on every number, approach is:

– There are other mobile ecosystems. We will disrupt them.

– There will be challenges. We will overcome them.

– Success requires speed. We will be swift.

– Together, we see the opportunity, and we have the will, the resources and the drive to succeed.

The sceptic in me says that trying to keep everything going whilst simultaneously adopting a new platform is going to be very hard. After all, it’s a platform that is widely exploited by plenty of hardware-only manufacturers, such as HTC, who will also be able to exploit whatever results from this strategic partnership. I can’t imagine that Microsoft will branch their o/s and have a Nokia-only version of Windows Phone 7 and one (or more) for every other manufacturer. This probably makes Microsoft the winner out of this deal, even though rumour has it that they paid hundreds of millions to swing the decision.

This deal brings together a company, Nokia, who have proven history in shipping millions of physical product a year (and so who have a supply chain that is already well orchestrated) with, the phone above notwithstanding, a series of (near) first-of-their-kind innovations – camera phone, touch screen phone and so on; and a company, Microsoft, who have software that needs hardware that they can influence more and an entertainment division in Xbox – and, more recently, Kinect – that might provide a ready source of exclusive software that could differentiate their new partners hardware (notwithstanding that anything that works on a Nokia phone should also work on an HTC phone, assuming that HTC and the others don’t now vote just to work with Android). And, of course, if Nokia and Microsoft get this right then every Nokia-phone owning user will probably use Microsoft Office products in the cloud – and how many business people will end up buying (or having the corporation buy for them) a Nokia phone solely for that reason?

What is certainly true is that between Microsoft and Nokia there’s a lot of money, a lot of desire and a lot of smart people. It will be interesting to watch how this unfolds. Let’s hope it doesn’t result in a lot of wasted money, desire and talent – which could take a lot of time to become clear, by which time it will be too late for Nokia.

Me Tu, Nokia?


Plenty of people much smarter than me are theorising about what Nokia’s new CEO, Stephen Elop, will announce this Friday at their analyst briefing. The leaked memo he sent out, published by the WSJ, has a perhaps mildly inappropriate description of a burning platform in this post-Deepwater Horizon world but the text does act as a great rallying call for a company that has little outwardly visible sense of direction for some months (Elop was appointed in September 2010).

As to what he’ll announce, opinions are split between a rush to Android or to Windows 7. Either strategy will, perhaps, mark the next stage in Nokia’s route to demise.

They are both “me too” platforms where Nokia will be able to differentiate only with beautiful hardware – and, as the picture above reminds us, Nokia doesn’t always get that right or even vaguely usable. Picking Android will perhaps allow the most customisation and innovation, but at the risk of fragmenting the platform even further and losing developers along the way. Picking Windows 7 would, on the face of it, appear to be Elop’s most likely choice given his CV.

Personally, I would like to see Nokia work hard to create its own ecosystem rather than try and muscle into already over-crowded existing ones. Adopting Android will see them disappear in a sea of near equivalents, adopting Windows 7 would perhaps make them Microsoft’s prime partner and perhaps even allow them some influence over the future direction of the operating system, but not nearly as much as they’d have if they had control of their own hardware and software integration.

I will be watching with interest. I doubt that Nokia will win me back but I’d like to see them remain viable.

Counting people, counting floods, counting tax, counting crime

There’s something about January:

January 2002:

1901 census: But within hours of its launch the site encountered problems denying people access to historical information. At the time, this was described as “teething troubles”.

January 2003:

Flood warnings: online government suffered another embarrassment when the Environment Agency’s new flood warning website was itself flooded with demand.

January 2005:

Self assessment: On Monday the deadline for filing self-assessment tax returns, the Inland Revenue’s web service was handling a record 4,800 returns an hour. Despite a 50% increase in capacity, it couldn’t cope. While the service didn’t crash, thousands of taxpayers could not log on. Others succeeded in filing but did not receive confirmation emails. The Inland Revenue said any failed submissions re-sent within 14 days would not be liable for the normal £100 fine for late filing

January 2011 (well, ok, February 2011):

Crime data: There was something very similar about the launch: the site unceremoniously crashed under the load from people keen to sift through the data online. A visit to that site now tells us that this service “has now been integrated into the website, and includes street-level crime data and many other enhancements.”

We so need to learn this lesson, once and for all.