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With rumors heating up that makers of Android smartphones will add NFC chips to “several” models due out by the first part of next year, the battles among suppliers of those chips and the software that supports them has been heating up, as well.

Pent-up demand from mobile operators and service providers starved of NFC phones could mean tens of millions of euros worth of orders for NFC chips, with plenty more available in royalties and licensing fees for software suppliers. So the competition has been fierce among vendors jockeying for position in the coming market for new Android-based NFC phones.

And that market looks promising. Unlike the rumors of the fourth-generation iPhone going to NFC, which did not pan out earlier this month, sources who work on Google’s Android platform say NFC smartphones packing the open-source operating system are much more of a sure bet to hit the market over the next several months.

Such Android handset makers as Samsung, HTC and likely LG and Motorola are preparing for NFC, based on keen interest or orders from mobile operators, including South Korean telcos, SK Telecom and KT; China Mobile; as well as American and European carriers, NFC Times has learned.

With such a potentially lucrative market up for grabs, suppliers are fighting for every edge.

Leading the battles are rival NFC chip suppliers Inside Contactless of France and Netherlands-based NXP Semiconductors. They have been firing off a series of tit-for-tat announcements this spring targeted at phone makers and mobile operators.

The announcements, some made with software partners, seek to convince the phone manufacturers and telcos that their chips and software would be interoperable across all Android handsets and would spur third-party developers to stock Android app stores with lots of services using NFC’s tap-and-go technology.

But if the vendors hold to their present positions, they risk having the opposite effect: fragmentation of the forthcoming Android phones. That would mean, for example, a mobile-couponing app that uses NFC tag reading would work on Android phones made by Samsung using one vendor's NFC chip, but not on those from Motorola packing another's chip, without redevelopment.

Vendor Clash in Nice
NFC Applications running on Android phones are not the only places where interoperability problems could cause hassles. There are also potential trouble spots with payment and other secure applications that run directly on secure chips in NFC phones, regardless of the phone operating system.

For example, French banks have been late launching mobile payment in their NFC project in Nice, France–with at least one of the banks citing interoperability problems between vendors.

The problems are one of the main reasons bank Crédit Mutuel-CIC has held back on launching its m-payment service, according to Patrice Hertzog, payment systems manager for Crédit Mutuel-CIC. He said it has been difficult for the bank’s trusted service manager, Gemalto, to set up and manage the bank’s PayPass application on SIM cards produced by other vendors, such as Oberthur Technologies.

The problems have occurred despite much standards work by the French Association Française du Sans Contact Mobile, or AFSCM, and prior trials involving multiple French banks, mobile operators and vendors. That leads some to suggest that vendor rivalries are behind the problems. But others point out the project, involving many players, is a complex one. Crédit Mutuel and another bank, BNP Paribas, plan to launch their services by next month, one or two months late.

The Promise of Android
NFC-based payment applications on SIM cards or other secure chips would link to payment or wallet applications running on the mobile phones. These phone apps provide the user interface for consumers, enabling them to initiate and complete purchases, check transaction records and collect and redeem related loyalty points.

These payment apps and many others that could involve NFC for loyalty, ticketing, access control and peer-to-peer transfers are where the Android API, or application programming interface, would come into play. Without a common API, developers would have to redevelop the app for each Android model that uses a different NFC chip and supporting software.

Of course, the apps would also have to run on phones with other operating systems, because consumers might be using BlackBerrys, Windows Mobile or Symbian devices or the iPhone, as well as feature phones running more basic Java midlets–provided these phones also carry NFC chips.

These other operating systems are generally controlled by individual companies, such as Research in Motion for BlackBerry, Microsoft for Windows Mobile, now called Windows Phone, and Apple for the iPhone. While Symbian–still the market leader in terms of devices shipped–is now open source like Android, it is mainly used by Nokia. So, it does not have the support from the range of handset makers that Android enjoys. U.S.-based research firm IDC predicts Android will surpass the iPhone and BlackBerry operating systems to become the No. 2 smartphone platform after Symbian by 2013. And Android is catching up with the iPhone in terms of application developers.

“Android is the most promising,” said Einar Rosenberg, CTO of NFC application house Narian Technologies. “Android has tens of thousands of applications. The number of application developers is almost equal to Apple’s iPhone. But it’s (Android) the only one with multiple handset manufacturers.”

First Volley of ‘Open’ Android War
Inside Contactless has been the most aggressive of the prospective Android-NFC vendors, seeking to differentiate itself from its larger rival, NXP, which last fall already was promoting its NFC chip for Android phones with software partner Trusted Logic.

Inside fired off its first salvo in February by offering a free, “open-source” protocol stack for mobile phones running Windows Mobile and Linux–with Android promised the next month.

The protocol stack are the layers of software on the phone that link the NFC chip with the phone’s operating system and also with the application interface, or API. No NFC phone could run NFC applications without this middleware. At lower layers, it supports the radio frequency protocols to enable the NFC chip to communicate with contactless readers. At higher layers, it includes the protocols standardized by the NFC Forum for tag reading and peer-to-peer communication. And it also links the NFC chip and other software with applications, such as payment, running on SIM cards or other secure elements.

Inside developed its own software stack for its MicroRead NFC chip. And making this stack open source “fits right in with the trend toward open platforms in the mobile industry” like Android, said the France-based chip supplier in the February press release. Inside called its initiative “Open NFC,” a term it trademarked.

But prospective customers who wrote to Inside asking for more information following the release found that the offer was not so open. They received a letter from the chip vendor saying it was, “Not Inside’s intention to publish its Open NFC code on the Internet, neither to create an open source community around Open NFC.” The chip maker, however, said it might do so later, “depending on market reaction.” Also, Open NFC documentation, test compliance kits and other materials would be available only with a nondisclosure agreement.

NXP with Trusted Logic answered in April, announcing their own “open-source” software for Android. They would make the API open, though not the protocol stack
below it. Still, they called it the “most complete Android proposal on the market.” And the two suppliers titled their offer: “Open NFC API,” apparently deciding Inside could not trademark the term Open NFC.

Inside wasted little time in responding. It announced the next day it would put its full source code on the Internet for free download–including its NFC software stack and full API documentation for Android and other platforms. In doing so, Inside declared itself the “only provider of Open NFC software in the industry.”

On the Defensive
The bold move put NXP and Trusted Logic, as well as such other NFC middleware suppliers as Stollmann of Germany, on the defensive. They were forced to explain to inquiring handset makers and operators why they, too, were not offering their open-source Android NFC software for free–just like the Android operating system itself.

The free middleware especially appeals to tier-two handset makers, such as ZTE and others from China, which would not want to pay for NFC phone software. It could determine how fast they move to NFC.

In response, NXP decided to reach out to a competitor, but not Inside. NXP agreed to make its market-leading NFC chip, the PN544, interoperable with a new NFC chip from Switzerland-based STMicroelectronics on the Android platform. Stollmann, which had developed the software stack for ST’s ST21NFCA chip, joined in the “consortium,” along with Trusted Logic. The middleware suppliers adapted their software to support applications on both chips.

The four companies then jointly announced June 1 they would offer a “common hardware-independent” API for Android.

“Whatever their (handset makers) choice of silicon and protocol stack, there will be one common point, the Android API,” Laurent Degauque, telecom and NFC marketing manager in ST’s smart card division, told NFC Times. “An Android application developed on a handset based on an NXP NFC chip will be compatible with an Android application on a handset based on an ST NFC solution.”

But without the third global NFC chip maker, Inside Contactless, as part of the agreement, there would be no hardware independence, contrary to the promise in the June 1 press release.

Loïc Hamon, vice president for NFC marketing at Inside, said that announcement by the four parties ran contrary to the spirit of a meeting held five days earlier and attended by representatives of Inside, NXP and Trusted Logic, along with a major mobile operator and major handset maker. Hamon said the vendors were in agreement at the meeting that they should be “promoting a single industry view.” This was at the urging of the big handset maker and handset manufacturer, which he declined to name.

Inside’s February release did include words of support for the open-source approach from telco France Telecom-Orange and Motorola, though Inside declined to confirm either was at the meeting.

“We were not surprised with the content of the (June 1) PR,” Hamon told NFC Times. “We are not sure we understand the rationale behind this PR, especially as it is in complete denial of the past week's agreement among ourselves. You cannot have parallel discussions with us and a big operator and manufacturer and then do exactly the opposite.”

Representatives of NXP, Trusted Logic and Stollmann said it was clear to Inside that it was welcome to join their group. But they say Inside declined, preferring to stick with its open-source stack and the API tied to it, which they contend is not ready for the market.

The four vendors say they have their own support from big handset makers, though, like Inside, declined to name them.

“We offered to the other main silicon members (to join), one (STMicroelectronics) said, ‘we like this and agree that this is way to go.' And the other said, ‘We are doing good marketing (on open source), ’ ” Charles Dachs, NFC marketing and product manager at NXP, told NFC Times.

He said the stakes are high for Inside’s refusal. “The (common) API, is very important because that is the API on top of which applications are going to be developed, and what we do not want to see developing in the market are different sets of APIs because that would result in extra complexity for application developers, not having the capacity to reuse their applications in all handsets.”

Inside Stays Outside NXP-Led Group
Inside’s Hamon denies Inside was asked to join the vendor consortium, although he indicated the chip vendor would decline if asked.

“Why would we do that?” he said. “If we align with this group, we don’t have a (protocol) stack. We are dependent on Trusted Logic, which is a proprietary one, and Stollmann. You cannot change anything. Likely you have to pay for it. You cannot contribute, and it’s not available for everybody. Most of our customers won’t be happy.”

Turning the question around, Hamon asked why the onus was on Inside to join the NXP-led group.

“There is only one stack available with open source, why is NXP not letting us port our Open NFC–which is the only open source project available–on their hardware?” he said. “We will demonstrate Open NFC is open and hardware independent.”

“They want to adapt PN544? C’mon, let’s be serious,” responded Dachs, speaking of the NXP’s main NFC chip. “What we want is something out there, which is going to be mature, which is going to bullet-proof. What we do not want is just any piece of code, even if open-source code, without guaranteeing it has the right level of maturity and backing from the right players in the industry.”

Neither ‘Ready’ Nor ‘Free’
Both Trusted Logic and Stollmann contend Inside’s NFC software stack is not ready and even if it is open source, Inside would be mainly responsible for keeping it updated. In addition, the task would likely fall to handset makers to integrate the stack on their devices. Inside is a chip supplier, not a software company, the companies say.

“I can tell you, that is a huge task to integrate an NFC stack on an Android handset,” said Philippe Dubois, general manager, professional and consumer devices, for Trusted Logic, told NFC Times. “Android is not mature; it is in the first and second or third generation. NFC technology is quite new (as well). Open source is good when you have things that are quite mature.”

Stollmann's managing director Christian Lührs said by giving away the software stack and the API connected with it, Inside is trying to bind handset makers to its chip. The same could have been said for NXP, but now it has agreed to a common API with STMicroelectronics.

Besides ST, Stollmann has worked with NXP on NFC software stacks. But Inside turned down a proposal by Stollmann to develop a software stack for Inside’s MicroRead NFC Chip, said Lührs.

“Our interest is to support every NFC chip on the market,” he said. “The API is not depending on a certain hardware platform, or on a certain NFC chip."

Of course, Stollmann and Trusted Logic, which is owned by Gemalto, charge for their middleware, so it’s not surprising they argue against Inside’s offer for “free” software. But they contend there is a price behind it.

“At the end of the day, there is no free breakfast,” said Lührs. “Inside needs to pay the software engineers. They need to put it on the chip price.”

Hamon said Inside has committed to maintaining its software stack, though he declined to say exactly how many engineers the chip supplier will have working on it. He also rejects the contention Inside is using the stack to lock in customers.

On the contrary, handset makers could adopt the software and “become autonomous, insuring that they can have multisource strategy,” he said. There is only one slice of Inside’s software stack bound directly to its MicroRead chip, the Hardware Abstraction Layer. But that amounts to less than 5% of the stack, Hamon said, and it is not difficult to change this layer to tie the stack to other chips.

Trusted Logic’s Dubois, however, contends it is not so easy to rewrite this software layer.

Google’s Play
About the only thing the vendors and other observers agree on is that if suppliers do not put aside their differences, it’s possible Google and the Open Handset Alliance business group promoting Android would not adopt an NFC API as a standard part of Android. Or, Google might bypass both of the competing APIs and develop its own.

Meanwhile pressure is increasing from some operators and handset makers for the vendors to agree on a common API.

“We want it to work the same way whichever chip is in the (Android) phone,” Vincent Barnaud, director of contactless solutions at France Telecom-Orange, told NFC Times. “We need common APIs, and (common) interaction with SIMs. We can’t expect Google to standardize if there are conflicting solutions out there.”

Inside could keep its open-source software stack and the group of four led by NXP could continue to use proprietary stacks, say observers, as long as they align their APIs. Even “small variants” between the two APIs could create problems for application developers, said a spokesman for Sagem Wireless, a France-based tier-two handset maker that plans to introduce NFC-enabled Android phones, probably with Inside chips. “It is important that all parties work in close collaboration so as not to jeopardize the imminent rollout of NFC devices,” the spokesman said in a statement to NFC Times.

Given the building pressure and the need to present some semblance of unity to Google, it seems likely the vendors will eventually agree on common NFC reference software for Android phones.

If they don’t, there will be fragmentation, which could cause app developers to stay away and slow down the rollout of NFC-enabled phones. That is a rollout which industry backers say they have already waited for too long. NT