We are happy to note that Toro with recently made its appearance in TechCrunch’s CrunchBase. CrunchBase is the free directory of technology companies, people, and investors that anyone can edit.

So Gemalto just announced their “payez mobile” initiative with five major French banks. In other words, Gemalto is becoming the de facto single TSM (Trusted Service Manager) for financial institutions in France (these five banks probably represent 90% of the retail banking market in France). This is good news for Gemalto, but also for the whole NFC ecosystem. And this, for two reasons.

The first reason is that banks need one centralized TSM to ensure that their NFC services can reach 100% of their customers, regardless of the mobile carrier, and in exactly the same conditions. If a bank has to rely on one mobile carrier to activate their services on mobile phones, they potentially cut themselves out of 2/3 of their customers. Moreover, by signing-up to a mobile banking service, the user would reduce his freedom to switch to another mobile operator as easily as today. In the case of one single centralized TSM, the portability of phone numbers and banking applications should be made possible and easy.

The second reason why we welcome this initiative is that it makes it much easier for the rest of the NFC ecosystem (especially on the service side) to move in one single direction. Coordination and “standards” are always good to develop a market.

The “payez mobile” initiative in France can actually be linked to the “NeuCom” initiative in Taiwan (see 2 posts below), where the Taiwanese government decided to allow/promote the emergence of one single “neutral” TSM for whole retail banking market (note: the efficiency of such a neutral TSM still needs to be proven). So whether it is a private initiative like in France, or a government initiative like in Taiwan, we are seeing that some mature markets are opting for centralizing the OTA secure activation of financial services in the hands of one single TSM. If “payez mobile” and “NeuCom” were to set best practices for TSM, we might well see the TSM market turn into a national bidding market (like e-passport for example).

NFC is still a geek thing, when it should definitely be triggering the imagination of thousands service companies and other small businesses: hotels, real estate companies, airlines, classified ads companies, rental companies, social networks, etc. It is a user thing! Not a geek thing! It is technology made transparent, peer-to-peer, a link between the Internet and reality, etc.

The situation is actually like that: no NFC market = no NFC phones. But the problem today is that: no NFC phones = no NFC market. So we are trapped in a chicken & egg situation. So the geeks are pushing the NFC technology, doing trials to show that NFC technically works, etc., but the Bottom-Up approach has reached its deadlock: the NFC phone.

The chicken & egg situation also exists for a Top-Down approach. Airlines, retailers, advertisers, hotel chains, game publishers, social networks, etc. do not see NFC phones available. As a consequence, when entrepreneurs pitch their great ideas for NFC services, they just don’t see it because they cannot see that this technology is a “user” thing, that the potential is just huge for them! They think: no NFC phones = no NFC market. And this is a real problem for the whole ecosystem to move on. NFC startups are stuck because there are no NFC phones on the market. Creativity and imagination are left dry.

So the deadlock is the availability of NFC phones… Which actually depends on the good will of handset makers (the Tier-1s, who can spend money on R&D) to develop and commercialize NFC phones. Among these handset makers is Nokia (40% market share globally), which are working on their 3rd generation of NFC phones (3220 NFC>6131 NFC>6212 NFC). But they keep delaying the launch of the phone, they are playing hard-to-get for engineering samples, and they are proposing a version that the market does not really want (the market (MNOs) wants a SIM centric NFC phone).

So, if we lay everything on the table, what do we have?
- Bottom-Up approach stopped by availability of
NCF phones;
- Top-Down approached stopped by the availability of NFC phones;
- Tier-1 handset manufacturers (e.g. Nokia) reluctant to release NFC phones in a timely manner, and with the good features.

So the question we could legitimately ask is: Are Handset manufacturers voluntarily slowing down the NFC market to better prepare to propose NFC services? Nokia for example is definitely switching its business model to providing services. Maybe they see in NFC the next big thing for them, and they want to make sure they’ll get a big chunk of it. That would make sense, wouldn’t it? Or maybe I am just being too imaginative…

So the NFC & International Micropayment Forum met for the second time in Taipei on June 24th 2008. Toro went there because, as a Taiwan-based company, it was kind of our duty to attend the event. Moreover, Collis was sponsoring the event and since they are one of our shareholders, we wanted to support them. So we dropped by to say “hi!” to the people we actually meet once or twice a month already. Nothing to be expected, really, from this NFC Forum. Or so we thought.

The 1st half of the day was boring as expected, because we already knew the viewpoints of everyone in the ecosystem. We however heard formally what we already knew non-formally: everyone, from SIM card makers, mobile operators, banks, chipset providers, etc. wants to become a TSM (Trusted Service Manager). Because that is where they think the money is for now. Big mess in perspective, indeed. But that’s Taiwan…

The 2nd half of the event, after a better-not-to-mention-it lunch buffet, started just like the 1st half, with a boring and conventional speech from the national carrier, Chunghwa Telecom. But, then, when the topic moved from “TSM” to “Certification and interoperability”, we discovered a new face, a new company in the ecosystem. These guys seem concerned about interoperability issues, and for that matter their value proposal to the market is to be… a “neutral” TSM that centralizes all the secure OTA downloads in the country! People started laughing until they realized these guys have government backing.

NeuCom is the name they coined in February 2008, when they setup the company in Taiwan. It seems that one of the well-known TSM, Venyon Oy, which had little if any market in Taiwan, decided to go directly to the Taiwanese regulator to change things big time. So in 10 minutes, we have passed from a situation where everyone wants to become a TSM and is investing in expensive OTA platforms, to a situation where the regulator is likely to kill the market by proposing a neutral government backed system (which means: cheaper than the private TSMs), and centralized to allow better interoperability.

So this NFC Forum was finally “the place to be” if you work in NFC services in Taiwan. I believe things will never be the same around here after this June 24th 2008. As a matter of fact, one of the largest bank in Taiwan, TaiShin, already announced that they would probably go with NeuCom. Congratulations to Greg Pote, Chairman of APSCA, who organized this event like a Shakespearian tragedy.

Nokia has extended its push into Internet services with the acquisition of small Berlin-based social networking start-up Plazes. Plazes, with a headcount of 13, provides location-aware services that people can use to plan, record and share their social activities. Nokia will integrate this service into its own handsets. The Finnish vendor did not disclose financial details of the deal, which is expected to close in the third quarter this year.

Ok, this news is not related with NFC but it really could be

Hi, there !

Welcome to the Toro blog, version 2.

The Toro Blog is intended to keep you posted you on how we understand our environment, and how we react to it as a company.

Our ecosystem is the NFC industry (NFC Forum, NFC chipset makers, OTA perso bureaus, MNOs, application issuers as banks or transportation systems…), but also the marketing industry with advertisers, media buyers, brands, and merchants who have an interest in this new media for mobile marketing purposes. In short, we will share with you our knowledge on the NFC technology, the (future) NFC market but also a part of our daily life at Toro.

You might also be interested in the fact that we are based in Taiwan, in the very heart of technological Asia, where people adopt new technologies, and build new usages on top of them, faster than anywhere else in the world. We are in the Greater China area, where business potential is huge, and growth rates are around 10%. Only exciting things can happen here and, as a matter of fact, Taiwan is today the most advanced economy when it comes to NFC. The infrastructure for contactless transactions is indeed ready, people are eager to use their phones for transport and payment, and operators are ramping-up for commercial rollout this year. Many NFC fundamentals are taking shape right here, right now. That is actually why Toro is setup in Taiwan. We want to be where the NFC market is starting, and not in Europe or in the US where it will take at least another 2 years to really start taking-off.

So this blog is meant to be the main media to talk to our followers and partners on how we understand the emergence of NFC, and how we cope with the –sometimes chaotic- organization of the NFC business in Taiwan, Asia and the world.

Gemalto has announced its selection by Italian telecom company Telecom Italia Mobile (TIM) to support the launch of a transportation-related NFC program in Trento. The program will enable TIM customers to use their mobile phones to access public transit.

TIM-issued phones will have SIM cards embedded with Gemalto applications, enabling the remote purchase of tickets at anytime. Travelers will also be able to validate their transport pass even when the battery of their mobile phone is off.
Working with several telecom operators, Gemalto has launched transit-related NFC programs in several locations throughout Europe, including the French cities of Grenoble, Rennes and Paris. The TIM system will be the first such NFC system in Italy.

A new report done by IDTechEx compares and contrasts Near Field Communication, and particularly RFID enabled mobile phones, with contactless smart cards and tickets. It emphasizes how they are forms of RFID with advantages and disadvantages and different development paths. The researchers came to the conclusion that there will continue to be rapid growth in sales for at least ten years. This follows 800 million Chinese acquiring contactless national ID cards in four years and 47 million Japanese adopting NFC-compatible phones in three years. These were two of the fastest rollouts of electronic products in human history, the report states.

NFC, a communications protocol that enables electronic devices to communicate with one another if held within a few centimeters, is underpinned by a global ISO specifications. It has attracted the attention of the largest telecommunication companies, transport companies, banks and others and new trials are frequently announced all over the world.

However, it has yet to take off, despite phones with the Sony Felica interface, compatible with NFC, being placed in the hands of 50 million Japanese in little more than two years. The many trials confirm that we are all like the Japanese in seeking the convenience that such phones can offer. So why the delay? Why do more and more trials, the report asks?

With NFC phones, the telecommunication companies have nearly all the power and they have often failed to seek a mutuality of benefit with others in the value chain. That has meant that very few NFC enabled phones have been made available, banks are cautious about letting their cards be mimicked by the phones and transport operators are cautious about the ticketing option being loaded. It will all be resolved in due course. The wealth of value added services for the telecommunication companies will see to that but, as with retail contactless payments, the speed of progress will depend on how much mutual benefit emerges.

At least there is a role model of success. The large telecommunications company, NTT DoCoMo, is behind the early success of the Japanese phones now commonly used for shop purchases and ticketing. It struck realistic deals, including emulating the Suica stored value card held by 22 million people. IDTechEx explains why a $4 billion business in contactless cards and tickets and their systems will emerge in 2018 and details the elements of that business. Ten year forecasts are given for all these devices and systems.

IDTechEx forecasts that, while the yearly number of mobile phones sold rises from one to two billion in the next few years, the number of NFC phones sold will rise from 134 million in 2008 to 860 million in 2018. East Asians will continue to show the way, not because of differences in consumer wants but because their governments and industry make sure the inter-industry haggling stops and projects that benefit the nation go ahead.

And we will prove it to all you guys !
Welcome on the Toro’s Blog ! Let us some time to set up this blog and we will bring you very soon all the best from Toro and the NFC world.

Stay Tuned !