Microsoft Corp. (MSFT) is working on a version of its Windows Phone software that will let users buy merchandise with a flick of the handset at a checkout counter, two people familiar with the plans said.
Microsoft plans to include mobile-payment technology in new versions of its operating system for smartphones as part of an effort to narrow Google Inc. (GOOG)’s lead in handset software, said the people, who asked to remain anonymous because the features aren’t public. The first devices boasting these features may be released this year, the people said.
The company joins a growing list of software providers aiming to benefit from rising demand for ways to purchase products and services on the go. Mobile payments may be used in $245 billion in transactions in 2014, up from $32 billion in 2010, according to Gartner Inc. Chief Executive Officer Steve Ballmer is under pressure to regain mobile-software market share lost to Apple Inc. (AAPL), maker of the iPhone, and Google’s Android.
The phones running Microsoft’s new software will be based on so-called Near Field Communication, which lets devices communicate wirelessly with objects immediately nearby. NFC technology enables payments and also lets consumers use a handset for other tasks, such as redeeming coupons and loyalty points at local merchants.
Microsoft rose 12 cents to $25.61 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have dropped 8.2 percent this year.
Mobile-software providers are weaving NFC support into their operating systems. Google has made NFC part of Android for mobile devices and in December introduced the first Android phone with NFC capabilities. Apple is said to be working on adding the feature to its mobile operating system, people familiar with the company’s plans said in January.
Having NFC features may be crucial to Microsoft’s efforts to boost shrinking market share. Redmond, Washington-based Microsoft is expected to hold about 5.5 percent of the mobile operating system market this year, compared with 39.5 percent for Android, 15.7 percent for Apple’s IOS, and 14.9 percent for Research In Motion Ltd.’s BlackBerry, according to IDC, a consulting firm in Framingham, Massachusetts.
Microsoft is likely to get support in its mobile payments effort from Nokia Oyj, the handset maker that recently said it will use Windows Phone software on its devices. Nokia said it will make NFC a standard feature of its 2011 smartphones based on the Symbian operating system.
The number of phones with NFC will double in 2012, from 35 million shipped in 2011, consultant ABI Research estimated. In 2014, 340 million global wireless users will use mobile payments, according to research firm Gartner.
Microsoft holds 14 patents referencing NFC, most recent of them awarded on March 22, according to the U.S. Patent Office.