Is Qualcomm Signaling the End of NFC?

Apple's (NASDAQ: AAPL  ) in on it. And now Qualcomm (NASDAQ: QCOM  ) has followed suit with its own version of the technology. With the help of Bluetooth Low-Energy, the newest fad in the micro-location then is to say goodbye to near-field communications and hello to beacons.

The move away from NFC and toward beacons
It's tough to implement a new technology when the demand really isn't there. That was the problem for near-field communications, or NFC, technology. Google has been a big advocate of the technology. In 2011, Stephanie Tilenius, former vice president of Google commerce and payments, said at the TechCrunch Disrupt conference: "[W]e're making a big bet on [NFC] as a company. There is a lot of potential there." Since 2011, however, the progress has been nothing more than boring.

There is one major problem with NFC technology that has inhibited demand from gaining any momentum: inconveniently limited range. NFC tags have a range of about 7.87 inches in theory, according to Gigaom. In reality? Gigaom says 1.57 inches is the "optimal range." With such a small range, the applications of NFC technologies are extremely limited.

Beacons answer this problem.

"There's no need to wander around the room, bumping your phone," Apple mobile development chief Craig Federighi said at Apple's Worldwide Developers Conference in June. Highlighting iOS 7's AirDrop feature, the comment mocked NFC technology. Despite years of buzz in the rumor mill, Apple has refused to adopt the technology. Instead, Apple has placed its bets on Wi-Fi and Bluetooth alternatives. In the Bluetooth arena, Apple has just put beacons to work in its Apple retail stores.

Beacons, which use Bluetooth Low-Energy, create a beacon around particular regions so an app can be alerted when users enter them. Apple's iBeacon technology has a range of 50 meters. Even more, this new technology is location aware. In other words, the beacons know exactly where you are within this 50-meter radius. Qualcomm's Gimbal proximity beacons, for instance, are accurate down to 1 foot -- both indoors and outdoors. Qualcomm's description for its Gimbal beacons sums up the technology well: a context-aware proximity platform.

Beacons are affordable, too. Qualcomm's Gimbal beacons are available for as little as $5 to $10 each, with volume discounts.

Apple's competition or ally?
But are Qualcomm's new Gimbal beacons going to dampen Apple's opportunity in the new space? Maybe. But that's not really the question investors should be asking. The more important question is this: Does Qualcomm's move into beacons signal the beginning of the end of NFC technology? Beacon technology isn't going to make a difference in the performance of the world's most valuable publicly traded company.

And it's tough to bet on Qualcomm. The company is known to attempt to diversify its business by getting on board with loads of new technologies -- and many of them never quite take off. Think Mirasol Displays. Or just head over to Qualcomm's website and look at the 38 different technologies the company supposedly has products for. Chances are you haven't heard of many of them.

That said, Qualcomm's move into the space shows Apple isn't the only one that sees opportunity in the new space. The more tech companies getting into the space, chances are the more opportunity there will be for commerce to give beacons a try. Why wouldn't other companies jump in on the tech? It's a more practical avenue for wireless commerce. Even more, it looks like a technology that could help spark the inevitable advent of the "Internet of things."

So who's the winner here? For now, the only evident winner is probably the consumer.

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