Nokia Helps Companies Tag Advertising in U.K. to Get Phone Users Tapping

Nokia Oyj (NOK1V) is offering companies advertising with embedded tags that can be read by some mobile phones as it tries to gain a lead in the technology over rivals such as Apple Inc. (AAPL) and Google Inc. (GOOG)

Nokia, based in Espoo, Finland, will announce deals with companies to use the functions in coming weeks, Rupert Englander, head of services in the U.K., said in a phone interview. Companies in the U.K. can order customized posters, stickers and business cards with near-field communications tags from Nokia’s NFC Hub website, which opened in June. Nokia is the world’s biggest maker of mobile phones by units.

“We’ve had some independent analysis done and it suggests there could be anything between 10 and 14 different devices in the U.K. supporting NFC by the end of the year,” Englander said. The NFC Hub is a “toolkit” where business users can experiment with the technology and track its use, he said.

People with NFC-equipped phones can tap them on the embedded tags to download a Web page or business card details, and companies can change the actions and monitor use centrally. Nokia is trying to advance its capabilities in smartphones after losing market share to Apple and Samsung Electronics Co., which beat the Finnish company in unit sales of these handsets last quarter.

Photographer: Jason Alden/Bloomberg

People with NFC-equipped phones can tap them on the embedded tags to download a Web page or business card details, and companies can change the actions and monitor use centrally. Close

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Photographer: Jason Alden/Bloomberg

People with NFC-equipped phones can tap them on the embedded tags to download a Web page or business card details, and companies can change the actions and monitor use centrally.

NFC is a wireless communications technology that operates over very short ranges, most efficiently by tapping one of the participating objects on the other. It’s a more complex version of radio-frequency identification, or RFID, that’s already used in many smart cards and transit passes.

Industry Plans

Apple hasn’t said yet whether its future phones will have NFC capabilities. Analysts including Richard Doherty, director of the consulting firm Envisioneering Group, have said Apple is considering the technology for future devices. Microsoft Corp. also has been working on a version of its Windows Phone software that will let users buy merchandise with their handsets, two people familiar with the plans said in March.

NXP Semiconductor NV, Europe’s third-largest chipmaker, last week predicted deliveries of NFC chips this year at the lower end or “slightly below” a range of 40 million to 100 million units, as adoption proceeds slower than expected.

“We feel NFC is going to be in a high proportion of phones in 2012 and it does have the potential to be a magical technology -- it’s very alluring to do things by tapping,” said Ben Wood, a London-based analyst at CCS Insight. “The problem is there aren’t enough NFC phones yet so Nokia is a little ahead of their time with this.”

Opportunity

Non-secure NFC applications for social contact are more likely to encourage the spread of the technology than payment or transport applications, which are “a big machine that will follow behind,” Wood said.

Nokia hasn’t announced a mobile wallet application using NFC technology.

“We’re eighteen months to two years from seeing any realistic opportunity for consumers to leave their wallets at home,” said Nokia’s Englander. “In the meantime we can engage consumers with the NFC capability to simplify finding out information about products, or interacting with social networks, or whatever a brand is doing to engage with their consumers.”

Mobile-phone operators Vodafone Group Plc (VOD), Telefonica SA, and Everything Everywhere, the partnership between France Telecom SA (FTE) and Deutsche Telekom AG, this year agreed to create a common platform for mobile payment systems in the U.K. Their joint venture aims to let people buy items ranging from groceries to clothes with a swipe of their smartphone.

‘IPhone Moment’

The operators, who lost the battle for online application stores to Apple and Google, are scrambling to drive revenue from additional services and boost smartphone sales.

NFC will be supported in 23 percent of handsets by 2015, with variations between countries as governments develop regulations for the payment systems that will drive the technology, according to Neil Mawston, a London-based analyst with Strategy Analytics.

“NFC will need an ‘iPhone moment’ where Apple or another major device player in the U.S. market can push a user-friendly, complete system of devices, readers, and apps into the hands of affluent consumers,” said Mawston.

Nokia has been experimenting with NFC products since 2004. The company introduced it as a dormant feature in its C7 smartphone last year and has embedded it in the N9 smartphone coming this quarter.

Nokia’s prices for posters with the tags start at 20 pounds ($32.60) and business card prices start at 7 pounds.

Industry Standard

The tags will also respond to NFC-equipped handsets from other manufacturers that share the standard set by the Open NFC Forum, including Samsung Electronics, LG Electronics Inc., Sony Ericsson and Research in Motion Ltd. (RIM)

RIM yesterday announced its first BlackBerry smartphones with built-in support for the technology.

“The big weakness with NFC Hub is that, although it supports merchants’ marketing campaigns, there is no use case for the merchant that has a revenue model,” Martin Garner, an analyst at CCS Insight, wrote in a report dated July 29. “If we get to the stage in 2012 where Apple and Google enter the market with more complete NFC offerings, it is hard to see why large numbers of merchants would not switch their services. Nokia needs to partner soon with at least one of the discount coupon players, such as Groupon, to head off this possibility.”

C7 handsets shipping with Nokia’s Symbian Anna software are already activated for NFC, and those with earlier software will get the update soon, Englander said. These handsets lack the security features that make them suitable for mobile payments, according to the CCS Insight report.

To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong in Berlin at kwong11@bloomberg.net

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