The Bloomberg story by Olga Kharif and Dina Bass cites "two people familiar with the plans" as saying Microsoft will update Windows Phone 7 to support NFC. The first handsets including it might be released later this year, the sources are said to have added.

NFC is a short-range transmission standard that, unlike Wi-Fi or Bluetooth, requires no previous setup, and allows devices to find one another instantly over a distance of about 12 inches. It was first widely used in Japan, where commuters employ it to purchase train tickets or pay for parking by waving their phones in front of sensors.

Microsoft announced in 2008 that it would collaborate with the RFID vendor Sirit to add NFC into its Windows Mobile smartphone operating system. Subsequently, various NFC-enabled Windows Mobile devices appeared, such as the Nautiz eTicket Pro shown at right. (Also, Twinlinx released a "sticker," the MyMax, that could add NFC to any Bluetooth-equipped Windows Mobile device.)

The rearchitected Windows Phone 7 operating system does not yet support NFC, however. Meanwhile, Google's rival Android OS has been moving forward via the following steps:

• NFC support was added to Android last December with the Android 2.3 "Gingerbread" release
  
• the same month, Google launched its Samsung-built Nexus S with integral NFC
  
• Google began testing NFC in Portland, limiting initial trials to posters and signs
  
• earlier this week, The Wall Street Journal reported that Google is working with MasterCard, Citgroup, and VeriFone on an NFC-based mobile payment service

The Bloomberg story by Kharif and Bass claims that by adding NFC to Windows Phone 7, Microsoft will "narrow Google's lead in handset software." The authors cite a January report that Apple, too, intends to bake NFC into an upcoming release of its iOS operating system.

According to the Bloomberg story, Microsoft is likely to get support in its mobile payments effort from Nokia, the handset maker that recently said it will use Windows Phone software on its devices. Nokia has said it will make NFC a standard feature of its 2011 smartphones based on the Symbian operating system, the report adds.

Bloomberg quotes ABI Research as saying the number of phones with NFC will double in 2012, from 35 million shipped in 2011. Also noted: Microsoft holds 14 patents referencing NFC -- the most recent of them awarded on March 22 -- according to the U.S. Patent Office.

Jonathan Angel can be followed at www.twitter.com/gadgetsense.

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