Shipments of cellphones equipped with Near Field Communication (NFC) will expand by nearly a factor of 10 from 2012 to 2017, reaching 1.2 billion units as the majority of smartphone makers are increasingly adopting the wireless communications and payment technology in their products as a de facto standard.

This year sounds the starting gun for the fast growth of the market, with worldwide shipments of NFC-enabled cellphones growing to 268.4 million units, up 123 percent from 120.4 million in 2012, according to a new report from IMS Research at information and analytics provider IHS. Significant growth will continue over the next four years with NFC-outfitted handsets reaching an estimated 1.2 billion in 2017.

The rapid proliferation of NFC in cellphones will be driven by a number of factors, including the expanding availability of contactless readers and rising consumer awareness. However, a key challenge during 2013 is to develop services and applications that consumers want, which will help to develop mass appeal and adoption of the technology.

Excluding Apple, nine out of the Top 10 smartphone suppliers have launched at least one NFC-enabled product into the market. With Apple losing market share from other smartphone suppliers such as Samsung, and in light of Apple revenues and share price suffering, the chances of NFC being incorporated into future iPhones and other devices looks more promising.

If Apple, in fact, decides to incorporate NFC into future devices, its move will have a positive impact on the profile and growth of the market. But then again, it could also be argued that Apple has rarely been one to follow the crowd and prefers to be a technology pioneer. This would mean that Apple might potentially adopt another technology besides NFC, an action more in keeping with its business model and walled-garden approach to business. Time will tell which way Apple decides to go with NFC.

Android dominating

Android-based smartphones in 2012 dominated the NFC marketplace with 103.1 million units, or 86 percent, of all NFC-enabled smartphones shipped. In 2017, the number of Android NFC-enabled smartphones will reach 718.7 million, or 67 percent of the enabled handset shipments, IHS believes.

NFC by modem type

Shipments of NFC modems in all kinds of devices including smartphones are expected to rise rapidly during the next five years. By 2017, all NFC modem device-type shipments will grow to 1.46 billion, up from 150 million in 2012.  

The most popular method of incorporating NFC into cellphones now is by embedding a standalone modem device directly into the handset. This type of method made up 96.8 percent, or 133.5 million, of all NFC modems that were shipped in handsets in 2012. However, throughout the forecast period, other implementations will become more popular, such as combination connectivity integrated circuits (ICs). IHS forecasts that shipments of combination connectivity ICs are projected to increase to 612.0 million units by 2017, or 50 percent of all modems, up from 31.7 million units in 2013.

NFC is a short-range, high-frequency wireless communication technology that allows cellphones to communicate with smartcards and readers, as well as with other NFC devices. NFC is used to perform safe, contactless transactions involving payment, public transportation or transfer of data.

While NFC was initially been targeted at mobile handsets, the technology is increasingly being used in other devices, including tablets, sports and medical devices, gaming consoles, headsets and consumer white goods.