“Wise folk may or may not form expectations about what the future holds in store but the foolish can be relied upon to predict with complete confidence that certain things will come about in the future or that others will not.”
Thus begins an essay by the late, Nobel-winning scientist Sir Peter Medawar. I would recommend the essay – ‘Expectation and Prediction’ – to anyone embarking on forecasting, because it encapsulates, with absolute clarity, the critical distinction between the two pastimes. He continues:
“A prediction always pretends to foreknowledge where an expectation is merely a hypothesis with a future setting… which the passage of time will either corroborate or confound. We cannot be viable human beings without taking some view of what will happen in the future…”
To that end, we make assumptions based on our expectations of certain events – or combinations of events – occurring (or not). In my case, professionally, as those assumptions subsequently result in outputs from an Excel spreadsheet.
In the case of NFC, our forecasts earlier this year were predicated on a number of such assumptions, one of which was that Apple’s forthcoming iPhone 5 would contain an NFC chipset. Well, come September, the iPhone 5 appeared, and an NFC chipset was conspicuous by its absence. To us, this absence was so critical that it fundamentally impacted upon those forecasts: had an effect that was not so much trickle down as foaming torrent. Let me elaborate.
Apple is the great educator: not merely of its own, substantial user base, but of both the wider public and of the variety of corporate parties who are tangentially associated with the mobile environment. Apple launches an app store, and it becomes the de facto content distribution mechanism; Apple launches the iPad, and a market appears for tablet devices. Apple does not include NFC, and… Well, then.
Notwithstanding NFC’s backing by a plethora of financial institutions, vendors and network operators, Apple’s absence is significant – and, by the wide variety of corporate parties, is perceived as such. To begin with, Apple’s current reluctance to embrace NFC is likely to have a knock-on effect amongst retailers, who will perceive it as a lack of confidence in the technology. This, allied to their (correct) perception that there will be significantly fewer NFC-enabled handsets in the marketplace will make it far less likely that they themselves will invest in NFC-enabled POS terminals.
Next up are the brands: fewer POS terminals in stores provide less incentive for brands to initiate NFC campaigns. This in turn has further negative implications for the market, as there will thus be less visibility of NFC in stores or on posters, thus meaning less opportunity for the end user to experience the mechanism.
Finally, we come to the consumers. Despite the efforts of MNOs and their partners, consumer awareness of NFC remains low. The absence of Apple’s marketing (and its handsets) is a major blow in this regard. Furthermore, the decision in turn means that fewer players will focus on NFC as a priority in the short term, meaning still less NFC marketing, implying lower levels of NFC awareness amongst consumers.
Each of these negative factors reinforces the other; individually and collectively, they represent body blows to NFC payments and NFC couponing. It could even lead to a “vicious cycle” whereby – as a result of reduced consumer adoption – there is less incentive for Apple to introduce NFC into a future iteration of the iPhone. Hence our decision to revise the forecasts for NFC retail payments (and NFC couponing) downwards, primarily in North America and Western Europe.
Changing the way in which people pay for goods and services at the point of sale will require, to put it mildly, a fair amount of legwork from those interested in effecting the change: you are having to effect a fundamental behavioural shift. When you or I go into a shop, we have been accustomed since childhood to reach into our pocket for the coin of the realm; since our mid-teens, this mechanism has been complemented by the option of a small oblong piece of plastic. Suddenly, another option is becoming open to us – provided, that is, we have a smartphone that supports it. Except that: (a) even if you do have a smartphone that supports it, you probably don’t know that you do – witness the wider ignorance about contactless payments, and (b) if you do, you may not know how to use it to make a payment, and (c) even if you’ve ticked the requisite boxes, you probably won’t be able to use it in a given store because the POS terminals aren’t in place.
These are substantial barriers to adoption: barriers which, with the marketing might of Apple at its back, the industry might have eroded faster than now seems likely.
None of this is to bury NFC; far from it. In the longer term, the technology has significant potential, both in payments and in a wider array of applications. But to attain that potential, education is required – education of both the consumer and the retail sector.