To define a manageable NFC ecosystem, which is commercially sound and technologically feasible is a very complex microeconomic challenge. It is no surprise that in spite of the numerous initiatives and the efforts by a large number of important, influential players we still do not see any reasonable solution.
The complexity lies (at least) in the following aspects:
To launch massive NFC services different industries and their representatives need to work together, need to jointly elaborate and agree on technical, commercial, business and other issues. This is unchartered territory without any prior experiences or references. These parties so far had no such pressures, were used to doing their own businesses alone, and at most were willing to coordinate within their specific industries, and were respecting only guidelines, rules, recommendations and standards within their own respective businesses.
Some of them – the BIG guys – are also facing a situation, never met by them before, that their counter parties are just as powerful and influential as they are. In these relationships domination does not work, to be successful a new type of corporate attitude is necessary.
Legacy procedures and practices
NFC is called disruptive technology. Although this phrase is used for its service capabilities the statement is also true in respect of its effect on existing business and operational practices. The simple fact that service providers will not control exclusively any longer their own service environment, but will need to share it with other parties, sometimes with their own competitors, changes the basic principles of the operations. It is a fundamental paradigm change.
If this situation was not disruptive enough then the changes in the overall logistics of service provisioning will definitively be a challenge. The difficulty will further be increased by the fact that legacy and new procedures will need to coexist for a longer period of time.
New business actors – longer value chains
There is general consent that the operation of the NFC service environment will see the appearance of new actors in the traditional value chains. If for nothing else then for providing the secure element, which will store the service applications, and potentially also for supporting the over the air service delivery and support, which is a new activity that most businesses cannot perform on their own. The inclusion of the new actors will have substantial technical, logistical, security and business effects on the legacy operations, partner and customer relationships.
The simultaneous operation of legacy and new business lines, the involvement of new actors in the value chains, will mean that instead of the expected savings to be generated by the new technology, cost increases will be inevitable at least for the foreseeable future. As the services mature, and economies of scale of the operations improve, the financial side of the new business lines will also be more promising, but it is hard to predict how long it will take until black figures can be reached.
Earlier attempts to establish workable ecosystem have failed in the past, because they failed to understand and address the above listed challenges. Frequently rules of the operation and the business model were kind of dictatums from one group of companies, or single industries failing to understand that the new environment requires new approaches and without the involvement and cooperation of all key actors no satisfactory solution can be elaborated.
We at the Stolpan Association believe that with a fresh look and open mind it is possible to establish an open, interoperable ecosystem which satisfies the requirements of both the users and service providers, as well as provides reasonable financial conditions for all actors in the value chain.
With the knowledge gained through our research activities and the experience from our pilot operations we think we can provide important contribution to industry progress.
We are also interested in your expert opinions and concepts. Please share them with us in the Stolpan LinkedIn Group by participating in our discussions or by starting a new topic. We have not covered yet all important issues relevant for the progress of mobile NFC. If you would like to recommend new topics please do not hesitate to contact us.