Thoughts About NFC, Contactless Services, And Nokia Lumia Devices

A couple of weeks ago, I stated that there was much more to Near Field Communications (NFC) than just contactless payments. The WIMA conference starting today in Monaco will showcase numerous use cases for the technology.

I continue to believe that most consumers using an NFC device in 2012 will more likely use it for device-pairing or data-sharing purposes than for payments. Pairing NFC accessories and reading NFC smart tags will open up new opportunities. NFC will be a key technology for interacting with the world around you — and it is time to test it, as highlighted in this recent piece of research written by my colleague Anthony Mullen. There is an ongoing debate about bar codes’ potential replacement by NFC; I think both technologies serve different objectives and have different advantages but will continue to co-exist. Radio and optical technologies are converging, as highlighted by French startup Mobilead, which does a fantastic job of delivering a great branded experience mixing QR codes and NFC tags.

There are numerous challenges for the mainstream usage of contactless services but, needless to say, there is a lot of innovation and momentum. The largest device manufacturers have now integrated NFC into their product portfolios, and this will help in building a critical mass of devices in the years ahead. Nokia announced today that Orange will be the first operator to launch an NFC version of the Nokia Lumia 610. The Lumia 610 NFC also has the hardware and software enablers to implement NFC payment and ticketing solutions, and it has been certified for contactless payments with MasterCard PayPass technology. It’s good to see Nokia adding NFC to Lumia devices before the launch of Windows 8. It’s likely that Nokia and Microsoft will try to position themselves as the leading handset platform for contactless services and secure financial transactions.

My colleague Sarah Rotman Epps s recently explained how Nokia and Microsoft are positioning the Lumia 900 in the US. To get back in the game and emerge as the third platform, Nokia had to — and still has to — execute perfectly. Let’s be fair: So far, so good, in light of the U-turn strategy announced only a year ago. Unfortunately, Nokia has just acknowledged that the Lumia 900 has a software bug. Before arguing that this will set back Nokia’s US ambitions, we should note that Nokia has reacted quickly in fixing the bug: the company has developed a solution that will be available around April 16 and says it will offer anyone who has bought a Lumia 900 — or will have bought one by April 21 — a $100 credit to their AT&T bill. In the first quarter 2012, Nokia sold more than 2 million Lumia devices at an average selling price of approximately EUR 220. That's a weak performance all the more if you look at Nokia's total smart device net sales (12 million) in Q1. 

At the end of the day, Nokia’s real challenge involves branding. No matter how good the metro UI is, no matter what people think of Windows as a mobile OS, no matter how good Microsoft is at supporting developers, and no matter how quickly NFC is integrated, a lot revolves around how Nokia rebrands itself. To what extent will the new positioning of Lumia devices — with their tagline of “The Amazing Everyday” — nurture the Nokia brand? How can the respective attributes of the Nokia and Microsoft brands be combined? Consumers’ perception of this brand evolution will be critical to Nokia’s success.