Apple, Inc.'s iPhone 6 Could Include a Technology It Has Long Shunned

Reports suggest that Apple could finally be about to embrace a technology Samsung has been using for years.

Aug 30, 2014 at 3:00PM

Apple's (NASDAQ:AAPL) next iPhone could include a technology it has consistently gone out of its way to avoid: According to Wired, the iPhone 6 will ship with an NFC chip. Apple's competitors, notably Samsung (NASDAQOTH:SSNLF), have been building NFC chips into their phones for years. In fact, Samsung has consistently used NFC-based features as a key point of differentiation. 

If Apple's iPhone 6 does come with an NFC chip, it will mark a dramatic reversal for the Cupertino tech giant. It may, however, be necessary to facilitate a greater push into wearables and mobile payments.

Apple's reluctance to embrace NFC
Samsung has used NFC in its smartphones since 2010, and in its flagship handsets since the release of the Galaxy SII in 2011. The inclusion of NFC hasn't radically improved Samsung's phones, but has given them a few useful features that Apple's rival iPhones (at the time) lacked.

Samsung's Galaxy SIII marketing heavily emphasized S-Beam, a unique feature that allowed owners of Samsung's Galaxies to exchange files by tapping their phones together. Modern Galaxies retain this feature, but Samsung no longer places so much emphasis on it, likely because, in 2013, Apple brought this feature to the iPhone in the form of AirDrop.

Unlike Samsung's S-Beam, Apple's AirDrop does not rely on NFC, but rather a combination of Bluetooth and Wi-Fi. In some ways, it's more convenient, because users don't need to actually touch their devices together, but it's creation, along with Apple's continued refusal to include NFC in the iPhone, seemed to signal a general dislike of NFC on Apple's part.

In 2012, Apple's Senior VP Phil Schiller disparaged the technology to AllThingsD, saying that it wasn't clear that NFC was the solution to any current problem.

Mobile payments and wearables
But that was nearly two years ago -- times have certainly changed. If Apple is preparing a push into mobile payments and wearable gadgets, the inclusion of NFC could prove quite convenient.

In addition to making it possible for Galaxy owners to swap files, the NFC chips included in Samsung's handsets make it easy to pair with its smartwatches -- through the use of NFC, a Galaxy handset can connect to a compatible Gear smartwatch with a quick tap.

Apple has been rumored to be working on a smartwatch of its own for quite some time. In fact, it could be announced the same day as the iPhone 6, according to Re/code. Pairing Apple's watch to a nearby iPhone could be done over Bluetooth rather than NFC, but Apple may find the simplicity of NFC pairing enticing.

More important could be its use in facilitating a mobile payment system. Samsung's Galaxies can, because of their built-in NFC chips, be used with ISIS and Google Wallet -- two mobile payment systems that rely on NFC. Apple's iPhone can also be used with ISIS, but requires a special case containing an NFC chip. 

Apple's interest in mobile payments has been widely reported on, and the company's management has made hints about a possible entrance into the space. During Apple's earnings call last April, CEO Tim Cook noted that Apple had some 800 million iTunes accounts, most of which had credit cards linked to them.

Like AirDrop, Apple already has an alternative technology that it could use for mobile payments -- iBeacon. Included in last year's iOS 7, Apple's iPhones can transmit data to nearby iBeacons using Bluetooth 4.0. But if Apple is including NFC in the iPhone 6, it may have found that NFC technology is preferable for mobile payments.

Not the first time
Of course, it's worth noting that rumors of an NFC-equipped iPhone have been around literally for years. In 2010 and again in 2012, various reports suggested that the iPhone 4 and iPhone 5 would feature NFC -- obviously, that didn't happen.

But neither of those iPhones included much in the way of mobile payments or support for wearable gadgets. With Apple seemingly on the verge of pushing into both sectors, it may finally be time for the company to follow Samsung's lead.

Leaked: Apple's next smart device (warning, it may shock you)
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Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

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The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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