Yes, as crazy as that sounds, but according to Kenta Yamaguchi’s piece on ASCII that’s exactly what is happening. The point of his story is that starting today, second brand carriers Y! mobile and UQ Mobile are selling iPhone SE instead of iPhone 8. Until yesterday they only offered the budget Apple Pay Suica capable iPhone 7 and normally they would offer iPhone 8, but iPhone 8 is nowhere to be seen in the budget lineup. Instead they are offering iPhone SE only 4 months after it went on sale at first tier carriers.
Yamaguchi san says the SE is so popular that major carriers are bitching it will slowdown the 5G migration in Japan…while still selling as many iPhone SE units as they can. 5G will just have to wait until Apple comes up with a budget 5G Touch ID iPhone SE.
The first problem was the iPhone lineup. iPhone 8 didn’t fit because only A12 Bionic devices and later support NFC background tag reading. This was solved with the release of A13 Bionic powered iPhone SE and deletion of iPhone 8 from the lineup.
The second problem was the clunky ‘launch an app’ or ‘launch Safari’ to do anything. This has been a problem for NFC tag solution providers like SmartPlate. User interaction needs to reside on a task focused pop-up sheet while the screen is on. The new iOS 14 App Clips framework that works hand in hand with iOS 14 Core NFC to load just what is needed to take care of the NFC tag task at hand, is the right solution.
The pieces appear to fit very nicely now: the NFC background tag sheet pops-up ‘while the screen is on’, the right code snippets load in for a simple focused task, the user can Sign In with Apple ID if needed, and pay with Apple Pay. Simple, uncluttered action; no apps, no Safari launch. And we have background NFC tag reading on every current iPhone model.
There are a few flies in the ointment:
Face ID in the face mask era is a lousy unlock and Apple Pay user experience, App Clip powered NFC background tag reading is gonna rock on Touch ID iPhone SE even though it was designed for Face ID.
A network connection is required, Apple Pay transactions at the NFC reader work without a network connection but App Clips + Apple Pay transactions need a network connection for the obvious reasons of loading app clip content, and because of this…
A weak borderline WiFi connection can jam the entire process even with WiFi Assist turned on.
The NFC advantage over QR Codes here is that background tag reading automatically pulls up the App Clip sheet when the screen is on while QR Code users have to manually pull up the QR reader app and scan a code to join the fun.
The combination of App Clips, NFC tags and Apple Pay will be extremely disruptive in markets where NFC and QR payment players are very competitive. Places like Japan. PayPay and Line Pay lose their edge. Smart QR payment players can adapt and add NFC tag support in their payment apps. And they can bypass Apple Pay if they want to, though it won’t be as slick. Ultimately they are not wedded to QR codes, PayPay and Line Pay have always said they would add NFC if customers want it.
App Clips finally unlocks the power of background NFC tag reading and is the other big WWDC20 Apple Pay development in addition to CarKey and Apple Pay QR Code AliPay payments. App Clips puts NFC tags on equal footing with QR Codes for the first time with the added edge of the ‘when the screen is on’ background tag read sheet pop-ups. This will be huge.
Please redo the dumb dark mode driven Wallet transit card UI. All recent Wallet UI tweaks are not about making a better overall Wallet card UI experience and mostly there so it doesn’t suck in dark mode. Sorry, but it still sucks. Honestly, iOS/macOS system wide dark mode is such an overhyped piece of UI crap. I don’t use it anymore.
More built in embedded Secure Element provider support: Calypso, CEPAS, etc.
Apple Pay Japan is still missing some important e-money prepaid cards like WAON, nanaco, Edy that have been on Google Pay for some time now, it would be nice to have loyalty prepaid card support for items like DOTOUR Value Card too, and please improve the Apple VAS experience, it’s old dog slow on the store reader.
I’d do a postmortem after WWDC…maybe. Enjoy the show.
Touch ID that removes the Face ID face mask problem in markets like China and Japan, this issue has been constant blind spot in the western tech press, until now.
A13 Bionic for superior battery performance and Express Card with power reserve
Cheaper battery friendly Haptic Touch instead of the more expensive battery hungry iPhone 8 3D Touch.
And the budget price. The iPhone market position in Japan stalled with iPhone XS/XR as government pressure took away carrier rebates that had driven iPhone sales. The Japan market, like markets everywhere, was ripe for an updated entry level iPhone, but the Touch ID plus A13 Bionic combination is especially potent right now because of the face mask situation in the COVID-19 crisis, and social distancing driving people away from hard cash towards contactless payment use. Touch ID is still the best and stress free experience for using Apple Pay on iPhone. The secret sauce is A13 Bionic that delivers superior Suica Express Transit performance along with power reserve, and much more.
So what kind of user is the new iPhone SE aimed at? The Apple Store trade-in page suggests a big divide at the iPhone 7 Plus point, there is more resale demand for Apple Pay Japan compatible devices.
The challenge for Apple and carriers in Japan is getting pre-Apple Pay Japan iPhone users to upgrade. Many iPhone 6/6S users took the opportunity to get a cheap battery upgrade from Apple during the iPhone performance throttling brouhaha. A big reason why these users have been hesitant to upgrade is the Face ID with face mask issue. This is the dominate issue now for Face ID iPhone users, my own observation is that many people in Japan just turn it off and use passcodes.
Now that iPhone SE solves that problem with top tier Apple Pay Japan features and performance it will be very interesting to see how it plays out. We are already seeing signs that contactless payment use is growing in Japan because of COVID-19 social distance issues. As Tomo Hagiwara of Aquabit Spirals puts it…unfortunate success, behavioral transformation in action. This could be the most important Apple product launch in 2020.
I’ve always said the iPhone SE2 hits the iPhone sweet spot in Asia, especially now. An affordable entry level device with face mask friendly Touch ID and Bionic powered Secure Element + global NFC: Express Cards with power reserve and Background NFC tag reading. It was almost a year ago when Jennifer Bailey unveiled NFC Tag Apple Pay. Steve Moser of MacRumors tweeted the essential features: tap and Apple Pay without an app or signing up for an account. Apple has not said a word since.
I think part of the problem for Apple is pictured in the slides accompanying Moser’s tweet, the ‘Pay with Apple Pay in app’ one. The allure of background NFC tag reading is that it’s almost ‘Express card lite’; as long as the screen is on, even locked, iPhone natively reads a NFC tag and does something like activate loaded and ready Apple Pay. The trouble is, only Bionic chip iPhone models do this. Non-Bionic iPhone models have to use an app to read NFC tags. Think quick, would you fire up an app, sign in, and read a NFC tag just to buy cheap coffee? Probably not.
My take is the entry level non-Bionic iPhone 8 is holding up NFC Tag Apple Pay. Apple Pay needs the entire iPhone lineup to be Bionic and app free, an entry level A13 Bionic iPhone SE2 solves this problem. It’s a perfect iPhone for the Japanese market in these face mask mandatory times where Face ID doesn’t work, and a nice match for the recently announced JCB NFC tag payment service that uses SmartPlate software. It probably won’t doesn’t have a U1 chip that would let iPhone SE2 have a longer service life as UWB Touchless joins NFC in iOS 14 Apple Pay. Nevertheless the iPhone SE2 with Bionic NFC will be more than ample, it will do very well.
Update: one thing I forgot to mention is the Sign in with Apple requirement that goes hand in hand with Background NFC tag reading. The current deadline is June 30.