By Daniel Eran Dilger

Published: 07:50 PM EST (04:50 PM PST)

The latest battle to emerge in the war between Google's Android and Apple's iOS is the race to add support for Near Field Communications, a chip that enables users to tap their phone to initiate secure transactions.

Google chief executive Eric Schmidt demonstrated a prototype Android phone at the Web 2.0 Summit today, focusing on features of the next major release of the Android OS, codenamed Gingerbread. A primary feature of the new release will be support for NFC, according to a report by TechCrunch.

Google plans to release Gingerbread "soon," with Schmidt saying it will happen within the next few weeks. The company released its last major distribution and SDK of Android OS 2.2 "Froyo" in May 2010, but Android phones are just now getting updated by the mix of hardware vendors and service providers who customize Android to their own handset and add layers of custom software, storefronts, and other bundled additions.

The addition of NFC to the upcoming Gingerbread release was a surprise, and particularly interesting because open software projects like Android can't really deliver surprises unless their development is not really open. Google effectively closes the open community of development on Android to deliver new releases with just a few select partners prior to delivering a major new release, at which point the software is again opened for volunteers to contribute towards.

Apple and NFC

Apple has been working to deliver NFC as an iPhone feature for at least a year, with reports of iPhone prototypes using RFID (Radio-Frequency IDentification) chips first surfacing last November.

This August, Apple hired Benjamin Vigier, who has been working with NFC technology since 2004. His previous role was project manager for mobile wallet, payment and NFC at mFoundry, a company that specializes in mobile payments.

In October, news broke that Apple had partnered with Gemalto, a Dutch security vendor involved in the NFC market, to deliver an open SIM that could be used to sell iPhones that work on any carrier, without requiring a SIM card tied to a specific one.

In addition to working across carriers and allowing users to select and activate service plans for their phone during the ordering process, the chip is also expected to provide NFC transaction features, authenticating users so they can make purchases directly from their phone without swiping a separate credit card. NFC is already widespread in some markets, including Japan.

Feature wars

Google has regularly added new features to Android to keep it differentiated from Apple's iPhone. It debuted support for a digital compass feature in the T-Mobile G1 in September 2008, a feature Apple later added to the iPhone 3GS the following summer. Google's partners also beat Apple in delivering higher resolution screens by about six months, although Apple's Retina Display on the iPhone 4 set a new standard in hardware.

Apple has pulled out some first features of its own, including iPhone 4's integrated FaceTime video conferencing and a 6-axis gyroscope. Apple and Google are also battling for supremacy in mobile ad sales, mobile software sales, music stores and streaming features, and support for enterprise features, where Android trails iOS significantly.

Apple and Google each have unique core strengths that enable them to either get features to market quicker (as Google does in partnering with multiple hardware vendors) or bring features to a large installed base faster (as Apple can in exercising control over the whole device platform).

Frenemies

Apple is also engaged in bidirectional patent disputes with Android vendors, including Motorola and HTC, but not with Google itself. Apple's partner in NFC, Gemalto, has sued Google directly for alleged infringement of its Java Card technology in Android, a suit that also names HTC, Samsung, and Motorola.

Google is also the target of a lawsuit by Oracle over the use of Java patents, a case that is not directly connected to Apple but does involve its close partner.

Apple and Google continue to partner in other areas, with Google supporting Apple's WebKit project and paying the company for directing search queries from Safari, both on the desktop and from iOS devices.