NFC is set to make its debut on an e-reader device. Last week Barnes & Noble announced its Nook e-reader will support NFC in the near future—perhaps by the end of 2012. Historically, the vast majority of mobile devices with embedded NFC capability have been smartphones, with the exception of a few niche tablet offerings. This remains true today, although we expect to see increasing near-term availability of other NFC form factors.
Integrating NFC into the Nook will enable a diversity of applications intended to provide customers with a more engaging, interactive shopping experience, including information access and mobile marketing. For example, Barnes & Noble plans to display an NFC-tagged copy of each best-seller in its stores, which customers can tap to be directed automatically to online reviews and other information related to that title.
Essentially, this initiative will bring together the best aspects of online and offline shopping—that is, the ability to access reviews/product information with the potential to touch (and purchase) the item immediately—at brick-and-mortar locations. From the retailer’s perspective, these customer-facing applications are intended to improve online-offline sales channel integration, one of Barnes and Noble’s key strategic goals. We question, however, how likely Nook users will be to use their e-readers while shopping. Wouldn’t a smartphone application be a far more accessible option?
That said, in the context of an online-offline channel integration strategy, we think the Nook initiative is an innovative approach and, furthermore, represents an exciting development for the greater NFC ecosystem. However, if highly-available, in-store accessibility to these cross-channel applications is what Barnes & Noble hopes will drive online-offline integration, we recommend extending these same applications to other mobile devices, smartphones especially. Relatively speaking, Nook unit sales are a proverbial drop in the bucket compared to the smartphone market. Thus, bringing these cross-channel applications to leading smartphone platforms (e.g., Android) will maximize the total addressable market, thereby furthering the mission of online-offline channel integration.
From an NFC adoption and awareness perspective, the Nook’s NFC integration represents promising early progress towards the types of information and marketing-related applications VDC believes will ultimately facilitate the transition to contactless payment. We have said this before, but it is an important point worth repeating: much of the media attention paid to NFC focuses disproportionately on contactless payment—often to the exclusion of other applications that are more viable in the now and near-term.
Although contactless payment and mobile commerce are tremendous longer-term NFC application opportunities, there are several critical pieces to the NFC payment puzzle that must fall into place before any broad-scale contactless payment activity becomes reality. Accordingly, we advise any enterprise considering investment in a B2C NFC solution to think beyond the realm of payment, as Barnes & Noble has done with the Nook. Contactless payment is just a small part of NFC’s broad-reaching utility—adjacent applications that provide compelling value and convenience to the consumer are what will drive adoption in the near term.