NEW YORK (
) -- We've all heard that within a year or so we're going to be paying for stuff in stores with our phones instead of our wallets, using near field communication (NFC) technology.
I spoke recently with CEO Remy de Tonnac of
. Based in Aix-en-Provence, France, Inside Secure is a fabless semiconductor company. It designs and marketing the secure chips and technologies used by payment cards and mobile phone manufacturers to allow contactless payments.
The company competes primarily against
among its investors. Inside Secure is privately held, but it has said it thinks a public listing could make sense in the future.
The entire NFC space has been hot as
has announced support for contactless payments through its Android mobile operating system and as there has been much speculation about whether
will enter the space.
Here are some highlights of de Tonnac's comments from our conversation:
We got started in this space in 1995. We were called GemPlus back then. We were a leader back then in smart cards. In 2000, we took a strong position with banks and what was known then as smart contactless cards. Today, we have a 75% market share in that business.
Back in 1999, our chief innovation officer wanted to put contactless chips into PDAs. We were really the pioneer in this space and got some of the earliest patents for what was to later be called NFC.
At the same time,
was working with Nokia on what they called "proximity services." They later coined the term NFC in 2002. We were among the earliest members of the NFC Forum with the company that's now known as NXP Semiconductor
then still part of Philips.
We all had this vision for where the industry was heading with payments, but we had to wait for the world to catch up with us. After leaving Inside Secure and being one of the venture capitalists in it, I rejoined the company as CEO a few years ago to help us get back some of the momentum we lost to NXP.
NXP is now much bigger than us and has a high profile in the space because of their IPO last year and their greater size. However, we believe we will compete well with them in 2011 and even more next year. We are now the largest private fabless semiconductor company.
We are working with all the big phone manufacturers. We have investments from some strategic partners like Visa, Qualcomm, and
In my view, other, larger companies like Samsung,
are still in the very early development stages.
NXP has come out and said there will be 70 million NFC-enabled phones shipped this year and 150 million next year. I agree with that assessment. It could be even bigger if Nokia decides to jump in this space in a big way. Last year, Nokia made bold promises about shipping a number of phones this year with NFC. However, they've only delivered one so far, and they've obviously been beset with a lot of internal strategic issues.
Even still, that growth is explosive. What we envisioned for our industry is finally here, and we will all benefit. A tidal wave is about to happen.
I believe one thing that you don't hear enough about yet is the importance of security. That will have to be tied into to NFC solutions to make everyone feel more comfortable with the technology. There are different ways to do that -- with fingerprint sensors for example.
There is some debate now about where your personal information like your Social Security number or bank account information is going to be stored. The carriers want it on your SIM card (which they own). The banks want it on a separate chip. They will fight it out, and it will vary by market.
The carriers are quite aggressive. Look how
in Japan bought a bank recently as part of their push into mobile commerce.
One of the buzzwords in Silicon Valley now thanks to a recent Mary Meeker presentation from Kleiner Perkins is: SoLoMo. That's Social, Local, Mobile. NFC is all about this trend. There will be hundreds of thousands of new NFC apps.
You will do reloading of your subway pass over the air on your phone. You will walk by store fronts or posters and tap them for more info if you want it. There will be localized "check-ins" with special offers pushed to you if you opt in. There will also be lots of impulse-buying apps and the advertising that surrounds it all.
It's no surprise that Google and Apple are so closely interested in NFC. It plays right to their sweet spot.
I know of one large mobile company that did an NFC trial recently in which it saw its ad rates go up two to three times in an NFC app vs. a non-NFC environment. That gets their attention.
The next two years will be very exciting.
At the time of publication, Jackson was long NXP Semiconductors and Apple
Eric Jackson is founder and Managing Member of Ironfire Capital and the general partner and investment manager of Ironfire Capital US Fund LP and Ironfire Capital International Fund, Ltd. In January 2007, Jackson started the world's first Internet-based campaign to increase shareholder value at Yahoo!, leading to a change in CEOs in 2007. He also spoke out in favor of Yahoo!'s accepting Microsoft's buyout offer in 2008. Global Proxy Watch named Jackson as one of its 10 "Stars" who positively influenced international corporate governance and shareowner value in 2007.
Prior to founding Ironfire Capital, Jackson was President and CEO of Jackson Leadership Systems, Inc., a leadership, strategy, and governance consulting firm. He completed his Ph.D. in the Management Department at the Columbia University Graduate School of Business in New York, with a specialization in Strategic Management and Corporate Governance, and holds a B.A. from McGill University.
He was previously Vice President of Strategy and Business Development at VoiceGenie Technologies, a software firm now owned by Alcatel-Lucent. In 2004, Jackson founded the Young Patrons' Circle at the Royal Ontario Museum in Toronto, which is now the second-largest social and philanthropic group of its kind in North America, raising $500,000 annually for the museum. You can follow Jackson on Twitter at www.twitter.com/ericjackson or @ericjackson.
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