Mobile companies have been wary of Google since it launched its Android operating system in 2008. Some mobile firms, such as Nokia, continue to keep a careful distance from Google. But others have been praising Google at Mobile World Congress, the big telecom trade show in Barcelona, Spain this week. The search giant, these companies say, has an unparalleled ability to win mainstream acceptance for mobile services like near field communication and voice commands.
This year, the biggest beneficiary of the Google halo effect is NXP Semiconductor. Since 2002, the Netherlands-based company has been making controllers that enable cellphones to communicate in a “contact-less” way with phones and other devices. Gadgets that incorporate NXP’s chips can make payments and exchange information with a simple tap — against a receiver or each other — through a wireless connectivity technology called near field communication (NFC).
The convenience of using NFC to purchase goods has long generated interest in the technology. In the U.S., however, there were few adherents — and virtually no cellphones that offered NFC. NXP President and Chief Executive Rick Clemmer compares the company’s early years promoting NFC to the movie “Field Of Dreams”. “We thought, if you build it, customers will come — but no one showed up,” joked Clemmer in an interview.
NXP’s luck changed in January when Google announced its Nexus S phone, which uses NXP technology to offer NFC services. Instead of hunting for business, NXP is now focused on cranking out enough chips to support its new customers. The group includes all the major handset makers, according to Clemmer. One partner is Nokia, which has said it will equip all of its smartphones with NFC beginning this year. NXP says its chips will also show up in tablets.
Rudy Stroh, the head of NXP’s Identification Business, credits Android’s viral popularity for the changes. “We’re seeing a lot of traffic — like never before — because we’re part of the Google ecosystem,” said Stroh in an interview.
Clemmer says NXP’s chip shipments are evidence of the upswing. Between 2002 and Sept. 2010, NXP shipped a total of 1 million NFC chips. In the last three months of 2010, as Google prepared to launch the Nexus S, NXP shipped three to four times that amount, said Clemmer. This year, NXP expects to ship at least 45 million chips but hopes the number will be much higher, possibly as much as 120 million. “We got a lot of traction in the fourth-quarter with the Android announcement,” explains Clemmer. “There has been a snowball effect.”
NXP’s next task is to show consumers that having an NFC-enabled phone or tablet is useful. U.S. retailers have been slow to adopt NFC for their payment and customer loyalty programs. NXP says it is collaborating with developers on a number of NFC applications that should attract merchants. Ideas include systems that would let users log into Wi-Fi hotspots, access Yelp reviews of establishments and navigate to landmarks on Google Maps, all by tapping their devices against a NFC sticker or tag. One particularly interesting idea concerns hotel check-ins. Frequent travelers could store their customer rewards information, room preferences and even electronic room keys on their phones via NFC, says Clemmer.
Merchants will need both convincing and advising before they deploy NFC programs, Clemmer concedes. But Google’s strong brand and myriad retailer relationships give him confidence such programs will launch soon. “We couldn’t have done this on our own, but Google will push this through, quickly,” says Clemmer.
Even companies that compete with Google have been praising it at Mobile World Congress. Vlingo, the maker of a popular mobile application that lets people complete tasks using voice commands, says it enjoyed a boost in business after Google released a similar app in August. “We thank Google for making this idea mainstream,” says Hadley Harris, Vlingo’s vice president of marketing. “We’re getting more interest in deals because of them.”
The Cambridge, Mass.-based firm, which began in 2006 as a downloadable BlackBerry app, recently inked partnerships with Samsung and Nokia. Samsung is loading Vlingo’s software on its Galaxy Tab tablets and Galaxy smartphones while Nokia is putting Vlingo on its Symbian smartphones. Vlingo is also branching out to cars, where it will function as a “virtual assistant” in dashboards, and to Internet-connected TVs. Harris says some of these partnerships would have taken an extra year to sign if Google hadn’t released its “Voice Actions” app.
“This will be the year things flip for Vlingo,” says Harris. For Vlingo and NXP, at least, the Google Effect has positive results.