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Industry Report

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Near Field Communication, a Revolution at 10 centimeters

Near Field Communication, a Revolution at 10 centimeters

CHOI Eun-Jeong

Apr. 20, 2011

Transcript

Welcome to our video program. I'm Eun-Jeong Choi from the Technology and Industry Research Department.

Recently, an interesting video image on Samsung's Android phone, the “Nexus S,” was posted on YouTube. The video, shot by MobiSocial, a research team at Stanford University, shows the transmission of picture files by simply touching two Nexus S's together. Such simple file transfer can seem like magic. Then, what is the secret behind this transfer technology?

The answer lies in the NFC chip. NFC refers to Near Field Communication, a technology to wirelessly transfer data between devices that are within 10 centimeters of each other. This chip allows people to exchange data or read information from other devices or read electronic tags. Using this technology, you can share all kinds of files including text, images and video, and upload everything in one tenth of a second. Most importantly, NFC employs encryption that can ensure the highest level of security.

Such characteristics are especially welcome in the mobile sector. In Korea, telecommunications provider KT introduced NFC-based mobile payment in October 2010. Users can download membership cards, coupons, credit cards and the transportation card T-money; store them in the NFC chip in their mobile phones; and contact the phone on an NFC payment terminal to make payments and get discounts and membership rewards points.

NFC-based mobile transaction payments are expected to surge from 860 million in 2009 to 35.6 billion in 2014 globally, recording an average annual increase of 106.4%.

NFC is also popular in mobile advertisements, as companies can effectively convey their corporate image to consumers through a simple tactile experience. Japanese social networking website Mixi unveiled its mobile advertisements using NFC in February 2011. When users touch their NFC smart phones to an advertisement embedded with an NFC chip, information on their location and the advertisement is automatically transferred to their friends on Mixi.

Google showcased its NFC-based advertisement in Las Vegas in March. In the event, tourists were able to free tickets for the Las Vegas Monorail by touching their NFC smart phones to the NFC sticker on the tour bus. Google cooperated with the Las Vegas Monorail to provide 10,000 tickets, and won a strong response from tourists in Las Vegas.

NFC technology is also used for various additional services. Thanks to BMW's NFC car key, people will be able to check whether their car doors are locked via their mobile phones, in addition to fuel and battery status and car service records. Also, they can obtain rail and hotel reservation services by downloading train tickets and reservation information on the key. The US company Objecs has even inserted NFC tags in headstones in park cemeteries to give detailed information on the deceased.

As such, NFC technology is set to change the lives of not only smart phone users but the general public. To take an example, when used for mobile payment, NFC can spare consumers the need to carry a wallet filled with cards and cash, as well as the trouble of searching for the necessary card at the cashier. For service providers, they can expect a cut in sales activities such as providing customers with conventional magnetic cards. In addition, in advertisements, NFC can replace leaflets and paper coupons.

We now live in a world flooded with information and data. By providing information through simple contact, NFC has the capability to simplify our increasingly complex lives.

2011 is the first year of NFC growth. Competitive companies like Apple and Google are taking swift action to enjoy early mover advantages in the world's NFC market by developing technologies and business models while securing patents.

Indeed, NFC is becoming more and more widely used. The number of NFC smart phones is expected to quadruple between 2011 and 2014 to 220 million.

Accordingly, related companies need to monitor the movements of their global rivals and establish a cooperative system with the government. Meanwhile, unrelated companies can consider the introduction of NFC in their day to day lives, and create new business opportunities.

Thank you for watching. I'm Eun-Jeong Choi.

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