One of the great disappointments for me in last week’s launch of the iPhone 5 is that it doesn’t come with near field communications (NFC) capabilities. This was explained in an interview with Senior VP Phil Schiller:

It’s not clear that NFC is the solution to any current problem, Schiller said. “Passbook does the kinds of things customers need today.”

Phone as token

This comment seems to concentrate on using a phone as an NFC token, which is typically used for low value applications like buying a lunch or taking a short train ride. In this case the phone is used as the key to somebody else’s lock. Where NFC like payments systems are already popular (e.g. Octopus in Hong Kong) then many people achieve this already by putting a card (or the electronics from it) inside a phone case/cover.

Phone as terminal

It’s quite right that using a phone as an NFC token adds little value (maybe you get to have a transaction record on the device). The real missed opportunity is using the phone as a terminal – the lock for somebody else’s key. This opens up a number of additional possibilities:

• The phone can be touched against an NFC card to authenticate an individual or a transaction they’re carrying out (rather than clumsy hardware based two factor authentication systems that might be fine with desktop PCs but don’t work well in a mobile environment). This allows very high value transactions to be addressed.
• The phone can be used as a point of sale terminal – think something like Square, but without the need for a magnetic stripe reader. This would of course be the route to solving the problem of NFC point of sale equipment being expensive to roll out.

Conclusion

Apple seems fixated on phone as token use cases and how these can be tackled with software only based approaches like its Passbook. This means that it’s missing the opportunity to grow the ecosystem for phone as terminal applications (and that ecosystem is far more fragile with Apple keeping outside).