ABI Research on NFC Tags

New York-based ABI Research, one of the most widely respected market intelligence firms for new technology, just published their take on NFC tags and it’s extremely bullish. From their point of view, there is an “enormous growth opportunity for NFC tags over the next few years,” with shipments likely to break the barrier of 10 billion units by 2023.

The report, titled “NFC Tags Ready for the Mainstream,” gives four main reasons why the timing is right for NFC tags to take off.

1. More People Are Using NFC on Their Smartphones
   Short-range wireless connectivity, in the form of near field communication (NFC) began appearing in smartphones several years ago as a premium option in high-end devices. Now NFC is moving from flagship and mid-tier devices into everyday models. Also, it’s now supported by both leading smartphone operating systems, Android and iOS. North America and Europe have been the fastest to adopt NFC-driven applications such as contactless mobile payments, contactless ticketing, wireless pairing and connected product interactions. But OEMs in other regions, including China, are adding NFC to their smartphones, so support for NFC is increasingly global.

   Given these trends, ABI Research predicts that NFC penetration in smartphones will increase from roughly 66% of devices in 2018 to more than 90% by 2023. The near universal availability of NFC readers, as part of NFC-enabled smartphones, means that brand owners can safely assume that most consumers will be able to read NFC tags, so there’s added incentive to include NFC tags on products and their packaging.

 

2. NFC Tags Are Affordable and Much More Versatile Than QR Codes
   NFC tags have a reputation for being pricey. But the cost of producing silicon-based NFC tags has fallen dramatically in the last decade, with tags now costing just one tenth of what they used to. The drop in price comes from various improvements in the manufacturing process, which have led to higher output.High-volume manufacturing capabilities have made NFC tags very affordable, with fully certified and tested NFC tags (such as NXP’s NTAG210 micro) priced at less than US$ 0.05 per unit in very high volumes. ABI Research’s view is that, at prices that low, NFC tags become a viable option for even the most cost-sensitive consumer goods and that will help drive adoption.

   NFC tags are often lumped in the same category as QR Codes, which like NFC tags, can link a smartphone to a URL where consumers can get more information or initiate an action such as a payment. But that’s about where the comparison ends. That’s because, as ABI Research points out, NFC tags are so much more versatile.

   NFC tags come in a variety of formats, from low-cost, feature-light versions that offer a simple URL link to higher-security, feature-rich solutions that offer sophisticated features that QR codes simply can’t match. For example, there are silicon-based NFC tags, such as NXP’s NTAG 424 DNA, that can send encrypted messages to support robust authentication schemes, and tags, such as NXP’s NTAG TagTamper, that can issue smart, status-aware messages based on information gained from sensors that track package opening or temperature changes.

   ABI Research believes that the NFC tag’s ability to support such a broad range of use cases is part of its attraction. NFC tags offer a unique combination of affordability and versatility, and this plays into ABI Research’s predictions for strong growth.

 

3. Consumers and Businesses Are Eager for NFC Interactions
   Today’s consumers are mobile savvy and highly receptive to digital interactions with products, and this trend is only expected to continue. ABI Research predicts that more and more products will use NFC tags to increase consumer engagement, before and after the purchase, giving consumers easy access to value-added content, certifying authenticity and integrity and making product use more rewarding and more interactive. Consumers are using NFC tags for on-demand access to content and offers and gaining reassurance from NFC tags that verify product authenticity. Businesses are reaping the benefits of these tag-enabled consumer interactions, too. Direct one-to-one communications help foster brand loyalty and yield valuable insights into consumer behavior. Moving up the scale on tag functionality and using sophisticated features to send secure personalized messages, brand owners are also able to offer high-value promotions for premium goods, such as exclusive access to signature items or VIP seats at an upcoming event.

   Another compelling use of NFC tags is in the supply chain, where tags connect products to the IoT, enabling real-time tracking of individual items and the ability to monitor storage conditions and detect package tampering. ABI Research anticipates that the cost advantages of using NFC tags in the supply chain, especially to increase channel efficiency, will increase overall demand too.

 

4. The Ecosystem Is Ready to Go
   In addition to large-scale manufacturing capacity, NFC tags are supported by a mature ecosystem of vendors, cloud-service providers and packaging integrators. Silicon NFC tags can be added to a wide range of product designs without slowing down production lines, and this makes it possible to support large-scale deployments for fast-moving consumer goods, medications and other items. ABI Research describes facilities that can integrate and provide final testing of NFC tags within labels, caps, closures, sleeves and neck tags at very high speeds (up to 8,000 products per minute). Also, because silicon NFC tags don’t generate micro plastics or contain nanoparticles, they are an environmentally responsible option that can be handled by existing recycling processes. Another reason why NFC tags are easy to deploy is that they offer interoperability and compatibility. NFC tags and readers have been part of the NFC Forum’s global certification program since 2017, so manufacturers can now verify that their products are interoperable with solutions provided by different vendors. ABI Research also points out that since NFC tags are fully compatible with both the Android and iOS ecosystems, brand owners have a greater return on their investment because they can use NFC tags to reach a broader audience.

From ABI Research’s perspective, the market for NFC tags is mature enough that many of the barriers to NFC adoption, such as price, availability and consumer acceptance, are being removed. And, given the benefits that NFC tags deliver to brand owners and consumers, deployment of NFC tag ICs is set to skyrocket. More specifically, they predict shipments of NFC Forum compliant tag ICs will more than quadruple in the next several years, growing from just over 4 billion in 2018 to more than 10 billion in 2023.

Download the full report.