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Part 2 of 2: Security/Access Control Could “Unlock” Domestic Opportunity for NFC

This blog is a follow-up to my previous entry, in which I discussed the market opportunity for NFC-enabled Security/Access Control in the enterprise. Security/Access control is a key non-payment use case that has driven several high-profile enterprise NFC deployments during the past 18 months.

While enterprise environments present the most obvious market opportunity for vendors of NFC-enabled Security/Access Control solutions, we believe the consumer/domestic market also has strong potential to drive near-term growth in the NFC market. As NFC-enabled smartphones increasingly win share among consumers, this domestic Security/Access Control opportunity will ripen as consumers seek to leverage NFC technology embedded in personal devices for a broader range of uses, both in- and out-of-home.

To address this emerging market, both well-established home lock/security vendors such as Yale and early-stage startup companies such as Lockitron have introduced products that enable “keyless” entry for homeowners. Essentially, these solutions combine a traditional door lock with an NFC reader and, when paired with an NFC smartphone and the appropriate app, these NFC-enabled locks allow doors to be opened and secured using a smartphone instead of a standard key.

In addition to the simple convenience keyless entry offers, these NFC-enabled locks also provide homeowners with the ability to program specific rules governing access to their home and to share access credentials with others—remotely and (of course) with no need leave a key under the doormat. For example, one could program their lock to grant recurring access to a housekeeper only for a specific day and time, or share access with out-of-town guests for the weekend.

From the perspective of driving NFC adoption in general, domestic Security/Access Control has two critical factors working in its favor: First, it offers clear, easy to understand value propositions to the consumer—improved convenience and enhanced security, among others. Second, and equally important, deploying this application is as easy as purchasing and installing the lock (taking NFC smartphone ownership for granted, of course). Unlike many other NFC applications, domestic Security/Access Control can be deployed irrespective of merchants’ contactless infrastructure investment, or the cooperation of other stakeholders.

That said, domestic Security/Access Control is not a layup growth opportunity for the NFC market. Just as competing technologies (e.g., QR codes, 2D barcodes) have challenged NFC in the market for mobile marketing and mobile payment solutions, so do others (e.g., Bluetooth, WiFi/cloud solutions) present competition in the realm of home Security/Access Control. How NFC-based solutions will fare against the competition depends largely on how strongly consumers embrace NFC-enabled smartphones and how successfully vendors can differentiate NFC-based solutions from the competition. Assuming NFC smartphone penetration continues its robust growth, we advise vendors to begin addressing the latter issue now—play the “wait and see” game, and it will likely be too late.

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