Googles Schmidt demos phone with NFC chip

Google Inc. Chief Executive Eric Schmidt on Monday showed off a prototype of a mobile phone running an upcoming version of its Android operating system that will support near-field communications chips that can convert handsets into digital wallets. Schmidt added that the upcoming version of Android, dubbed Gingerbread, will be released “in the next few weeks.”

Near-field communications chips transmit signals short distances and are considered to be a key emerging technology that will enable consumers to use their phones to make payments at brick-and mortar locations.

“People don’t understand how much more powerful these devices are going to be. They are highly personal, location-aware and highly networked,” he said during an appearance at the Web 2.0 Summit in San Francisco.

Schmidt did not reveal the model nor manufacturer of the demonstration phone.

A number of hardware and software makers, including eBay Inc.’s PayPal, are rolling out new technologies that will enable people to tap or swipe their phones at a point-of-sale device which can deduct payments from those customers’ accounts.

Schmidt said Google would support “industry standard” NFC chips, which can provide a greater level of security than the magnetically-coded strips on the back of credit and debit cards.

Asked what kind of apps that Google or others could create to take advantage of this new technology, Schmidt said: “I don’t think we really know, it’s too new of an idea.”

Schmidt also took advantage of the opportunity to clarify a previous comment on privacy that he said were misconstrued by the media. Asked about an earlier comment in which he said Google should move up to the “creepy” line but not cross it, Schmidt replied that he meant to stress that “there is clearly a line that we should not cross.”

He suggested that facial recognition technology or real-time tracking on Google Maps were two areas that Google felt were too invasive to people’s privacy at this point. He added that society is going to have to grapple with these issues over time.

“My own opinion is that this debate is going to get worse, harder,” he said.

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