Could commoditization already be looming on the horizon for the NFC hardware market? VDC thinks it is closer than many industry participants realize. The competitive landscape of the NFC chip market is becoming increasingly crowded, with Intel entering the market in January 2012, Texas Instruments following suit in mid-February, and earlier this week, Marvell Technology Group announcing its entry.
With competition in the NFC chip market heating up, device manufacturers will increasingly be presented with a host of new products offering new/varied feature sets, enhanced performance and aggressive pricing structures. Increased IC competition is a good thing for the NFC market, as it will surely facilitate innovation and price reductions, but we caution device manufacturers not to be seduced by heady specs and low pricing and to remain focused on providing the best performance for their target device and application markets. We’re not just saying don’t buy technology for technology’s sake—we are saying that the applications first have to work in a fundamental sense before you can consider adding the “bells and whistles”.
The NFC market, although garnering significant media coverage and growing rapidly, is still nascent. There are a limited number of installations, consumer devices and applications. In instances where NFC is currently used, the applications it serves are generally less complex (e.g., ticketing, access control, and marketing) and do not require high performance ICs with robust feature sets. At present there is no real need for a highly advanced, feature rich IC – the market needs to get off the ground before such requirements emerge. As the old adage says, you have to walk before you can run.
At this relatively early stage of NFC’s technology lifecycle, device manufacturers should be looking for a chip supplier that not only has a portfolio that delivers best-in-class performance for targeted devices and applications, but that is also willing to partner to continually develop and deliver premium solutions for current AND future markets.