Apple's (NASDAQ: AAPL ) CEO Tim Cook stoked the mobile payment fires again last week, making a number of leading comments to The Wall Street Journal. Cook told the publication that mobile payments continued to be of interest to Apple. During Apple's earnings call, Cook further noted that Apple has some 800 million iTunes accounts, most of them with credit cards on file.
Virtually all sell-side analysts expect Apple to eventually go after mobile payments -- the question is when and how. A push into mobile payments could be a boon to Apple's business, but if it uses Near-Field Communication technology, it won't be the only company to benefit -- NXP Semiconductors (NASDAQ: NXPI ) also stands to gain.
KGI revives the NFC rumor
KGI Securities analyst Ming-Chi Kuo believes Apple's next iPhones will include NFC chips. Like clockwork, this rumor seems to reappear each and every year ahead of the next iPhone release -- and so far, it's always been wrong. However, to be fair, Kuo has successfully forecast many of Apple's previous product announcements, though his track record isn't perfect.
Apple's competitors, Samsung and Sony, have been including NFC chips in their mobile devices for years. Some of Samsung's most advertised features (S-Beam) rely on the NFC chips present in its Galaxy handsets. Sony uses NFC to allow its Xperia smartphones to pair with other Sony-made electronics.
But if Apple is bringing NFC to the iPhone, it would presumably be used for mobile payments. Other mobile payment upstarts, including ISIS, have attempted to use NFC technology to create mobile payment ecosystems, but so far no one have been unable to crack the market. The problem with NFC-based mobile payments is that it requires merchants to have NFC-compatible terminals. Many still don't, and there's little incentive to install them.
Apple has actively resisted NFC technology
If Apple does ship an iPhone 6 with an NFC chip, it will mark a dramatic sea change for the company. It hasn't just avoided using NFC technology -- it's actively worked to design alternative solutions. AirDrop, for example, is an Apple-exclusive feature that allows two nearby iPhone owners to send each other data. In other words, it offers near identical functionality to Samsung's S-Beam, but doesn't rely on NFC chips.
iBeacon is Apple's other NFC-alternative. Included in iOS 7, this feature allows iPhones to interact with nearby physical sensors using Bluetooth Low Energy. So far, Apple has yet to really exploit it, but eventually, this could allow iPhones to offer electronic pairing and digital payments without an NFC chip.
The one company that could benefit
Ignoring Apple's historical opposition to NFC, assume Kuo is correct. If that's the case, there's one company that stands to benefit: NXP Semiconductors.
The chip company is a major player in the NFC space. In fact, it helped to develop the technology, giving it a robust NFC-related patent portfolio. It also supplies the NFC chips used in many popular smartphones, including the recently released Galaxy S5.
NXP isn't the only maker of NFC chips, and there's no guarantee that if Apple did adopt NFC technology, it would go with NXP as a supplier. Regardless, Apple's embrace of NFC would be a big boost of confidence in NFC's long-term future, which remains somewhat controversial. As long as Apple avoids NFC, there's widespread doubt that it will ever catch on.
But if Kuo is right, the iPhone 6 could serve as a gateway to Apple's next great service -- mobile payments -- and benefit NXP shareholders.
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