As Apple Stays Away, Google Doubles Down on NFC

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When it comes to NFC, the mobile technology made possible with chips from companies such as Broadcom (UNKNOWN: BRCM.DL  ) , Apple (NASDAQ: AAPL  ) and Google (NASDAQ: GOOGL  ) are heading in opposite directions. Apple continues to shun the technology, going so far as to push alternatives. Google, meanwhile, loves it, building a feature into the latest version of Android that gives NFC-based mobile payments their best chance of success yet.

iOS 7 ignores NFC in favor of AirDrop and iBeacon
Despite the growing prevalence of NFC among Android devices, Apple chose not to include it on the new iPhone 5s. Instead, Apple went in an entirely different direction, including two alternative technologies capable of similar functionality.

Samsung's Galaxy phones include S-Beam, a feature that allows users to send each other data (files, playlists, and so on) by simply touching their phones together. At the heart of this technology lies NFC. Apple has built a similar feature into iOS 7 (AirDrop), but it doesn't rely on NFC. Two nearby iPhone owners can send each other data, and they don't even need to bump their phones together; instead, using a direct Wi-Fi connection, the files are beamed from one iPhone to the other.

Another major use of NFC is mobile payment technology. With Google Wallet, owners of some Android handsets can use their phones as a method of payment, tapping the device on the merchant's NFC-equipped terminal. Again, Apple has created an alternative -- iBeacon. Now, stores can set up physical sensors that connect to the iPhone using Bluetooth. Apple has yet to really exploit this technology, but it could eventually be behind a long-expected push into mobile payments.

KitKat gives Android devices the ability to mimic cards
Unfortunately for Google, its push into mobile payments has been less than successful. Even if you have an Android handset, want to pay with Google Wallet, and the merchant you happen to be buying from has an NFC-equipped terminal, there's a good chance that it won't work: AT&T, Verizon and T-Mobile have blocked it.

Because Google Wallet needs to access a part of the handset controlled by the carriers, they can block access -- and they have, in favor of their own, upcoming competitor. But Google has created a workaround.

Google's next version of Android, KitKat, includes a modified version of Google Wallet that uses a slightly different technology. Now, the program doesn't need to access the phone's secure element at all -- carriers should have a difficult, if not impossible, time of shutting it down. There are still challenges to the widespread acceptance of NFC-based mobile payments, but with this new technology, Google has just removed a significant barrier. 

Google uses a Broadcom chip to make it work
To make this new system work, Google is relying on an NFC chip made by Broadcom. Its new Nexus 5 is equipped with the BCM20793M, a special NFC chip that doesn't include the secure element at the heart of Google Wallet's old functionality.

Many investors may think of NXP Semiconductors when they think of a play on NFC, but Broadcom is heavily tied to NFC itself. Broadcom's Mobile and Wireless division, a business segment that includes Broadcom's NFC business, brought in half the company's revenue last quarter and about 25% of its profits.

To be fair, that segment operates several other businesses, most notably Wi-Fi, but Broadcom has cited NFC as an area of growth. Indeed, Broadcom has reportedly scored several NFC wins this year, including Samsung's Galaxy S4.

The future of NFC
Without Apple's support, it's hard to be too bullish on NFC. Still, Google's Android continues to grow in popularity, and with KitKat's new functionality, the future for NFC-based mobile payments has never looked better.

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Read/Post Comments (8) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 03, 2013, at 7:11 PM, normgarry wrote:

    Apple's fingerprint scanner is going to see very wide usage. Not sure if it will be a force for good or bad though.

  • Report this Comment On November 03, 2013, at 11:05 PM, mvanover1 wrote:

    I use a Google Nexus 4 phone with ATT service and I am able to use Google Wallet. So, I'm not sure if you actually did research before you wrote this article.....

  • Report this Comment On November 03, 2013, at 11:27 PM, TMFMattera wrote:

    Hey mvanover1, thanks for pointing this out. Yes, AT&T does block Google Wallet, but you can get around it by buying an unlocked device.

  • Report this Comment On November 04, 2013, at 12:07 AM, colleran wrote:


  • Report this Comment On November 04, 2013, at 7:33 AM, dojobug13 wrote:

    To save you a search, according to Wiki, "Near field communication (NFC) is a set of standards for smartphones and similar devices to establish radio communication with each other by touching them together or bringing them into close proximity, usually no more than a few inches."

  • Report this Comment On November 04, 2013, at 7:37 AM, jdmeck wrote:

    Don't need it and don't trust it. Apple, please stay away from it.

  • Report this Comment On November 09, 2013, at 10:10 PM, bobert567 wrote:

    what company makes the 64 gig computer chip for the new apple smartphone

  • Report this Comment On January 08, 2014, at 10:48 AM, dypark wrote:

    "the future for NFC-based mobile payments has never looked better."? Not sure how the author draws this conclusion from his own article. At best, future of NFC seems questionable.

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