iPhone 5 is NFC-free, but includes loyalty-loving Passbook

September 13, 2012  |  Cotton Delo for Advertising Age  |  Comments

When the iPhone 5 arrives on shelves Sept. 21, expect to see the usual long lines outside Apple and dealer stores, even though the latest iteration of the smartphone was the least surprising in terms of new features. The phone is bigger, faster, thinner and boasts a sharper screen and a better camera. But the latest version of Apple’s most important product was almost as notable for what it doesn’t have, and that’s technology known as NFC, a feature already built into many Android phones, which would allow consumers to easily pay for things at retailers using their iPhone and iTunes account.

Google Wallet uses NFC technology, as does ISIS -a payments joint venture with Verizon, AT&T and T-Mobile.

Apple did officially roll out Passbook, which it announced in June. The app allows users to keep their digital movie tickets, retail coupons and loyalty cards in one place and will send relevant content to users’ lock screens “at the appropriate time and place,” such as their boarding pass when they arrive at the airport, according to Apple’s site. Partners announced for Passbook included Delta, American Airlines, Starwood Hotels, Sheraton and Ticketmaster.

However, Apple’s decision not to roll out an NFC-enabled phone doesn’t necessarily mean that the mobile-shopping ecosystem will suffer. “There are still plenty of other market forces that will continue to push digital wallets and mobile wallets,” said Denée Carrington, a senior analyst at Forrester.

Apple also announced at the event that there are now 435 million iTunes accounts, up from 400 million in June. The fact that so many millions of consumers are already paying for content with credit cards synced to their Apple accounts indicates why mobile shopping is considered such a huge opportunity for the company – and a potential way for it to outflank Google and its Android operating system, which has 43% of the U.S. smartphone market vs. Apple’s 33%, according to eMarketer.

While gift cards and coupons are the likely entry point for developers building experiences for Passbook, the possibility that it will eventually be integrated with iTunes makes it seem like a more ambitious play for Apple.

“It seems like a natural evolution for Passbook to sync with iTunes payment credentials at some point in the near future,” Carrington said.

The iPhone 5′s larger screen also might trigger some experimentation with mobile ad units, and offer a bigger canvas for Apple’s iAds.

“Now you have the additional height, so how do you leverage that, and how do you incorporate that extra resolution into ad creative as well?” said Krishna Subramanian, CMO of the mobile-marketing company Velti, who added that in particular he expects to see rich-media ad units expand.

In a uniform of buttoned-down, collared shirts and jeans (but no turtlenecks), Apple executives reeled off statistics to show how deeply embedded Apple’s suite of products are in consumer culture (i.e., 400 million iOS devices sold through June) and gushed over the beauty and other attributes of the new phone, which is 18% thinner than the iPhone 4S and 20% lighter, but has a longer screen (4 inches diagonally) that allows for a fifth row of icons in the main display.

“It’s the most beautiful product we’ve ever made,” said Phil Schiller, Apple’s senior VP-worldwide marketing during a carefully orchestrated show at San Francisco’s Yerba Buena Center for the Arts this morning.

As for other features enabled on the new phone, Apple’s senior VP of iOS Scott Forstall noted that the voice-activated personal assistant Siri would be improved. He gave practical examples, like Siri pulling up a list of current movies from Rotten Tomatoes when asked for a movie recommendation, or a list of sushi restaurants that have tables for four at 8 p.m., which ran counter to much of the marketing Apple has done around the product.

To read the original article in Advertising Age, click here.

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