Near Field Communications (NFC) a short range communication system based on RFID technology that utilizes a reader/tag for two-way communication between two items. NFC is integrated with many devices and may be employed for various purposes and applications including mobile commerce, mobile marketing/advertising, identification/security, and more.
NFC technology has been around since the last few years but hit the market just in 2010. Till 2009, NFC technology was undergoing pilot testing phase. There is a lot of research and development being carried out in this field and several prototypes were made for various products and applications. The applications of NFC technology include mobile payment, access control, ticketing, data sharing, and advertisement. A number of products commercially available as of today are limited, but the market will witness an immense growth in the products and applications for NFC technology in the years to come.
In 2011, only 5% of the total mobile phones were NFC-enabled; it is estimated that in the coming five years, this number will rise to approximately 46% by 2016. This indicates the rapid adoption of the NFC technology and the increasing mobile application of NFC technology. As more number of NFC products is made available, the market will see the growth in verticals such as retail, ticketing, and smart advertisement application.
The NFC market is almost evenly distributed amongst North America, Europe, and APAC. North America and Europe are the major contributors in the NFC chips market with combined share of more than 60%. APAC is fast catching up and had almost one fourth of the share of the total chips market in 2011. APAC is the fastest growing region. This high growth of NFC market in APAC is attributed to the countries such as Japan, China, and South Korea. These countries were amongst the early adopters of technology. Currently, the NFC application market constitutes a smaller group of players. As the market for NFC applications will grow, it is expected that more number of industry players will increase their involvement.
The growth of the NFC applications market is expected to be exponential with the revenue growth from $7,686 million in 2011 to $34,515 million by 2016, at an estimated CAGR of 35% from 2011 to 2016. The most attractive of all the segments is the mobile payments segment; followed by the ticketing and access control. Transportation is expected to be the fastest-growing vertical over the next five years, exhibiting a CAGR in excess of 200% (revenues). NFC-enabled transit fare and ticketing systems are expected to have a profound effect on this sector, providing operational efficiencies, increased automation, and improved customer experience and convenience.
The major players that provide chips and controllers for the NFC products are NXP Semiconductors (U.S.), Broadcom (U.S.), and Renesas (Japan).
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