Feeds

3G, security drive smart card sales

Bottom called

  • alert
  • submit to reddit

Beginner's guide to SSL certificates

The advent of 3G and various credit card security programmes will enable smart card manufacturers to leave behind a troubled 2002 and look to a period of sustainable growth.

Fierce competition in the low-end SIM market dampening revenue growth in 2002. But the expansion of 3G will create brisk demand for high-end 32k and 64k SIM cards this year, analyst firm Frost & Sullivan forecasts. At the same time, financial and identification applications are offering opportunities for vendors to expand their markets.

Mobile market

Slow growth in the mobile subscriber base in Europe, over-capacity of low-end 8k and 16k cards and the cancellation of orders by Chinese telecom operators created tremendous price pressures in the global SIM card market in 2002. As manufacturers resorted to aggressive price-cutting strategies to gain market share, revenues and profit margins declined.

Frost & Sullivan expects prices to continue falling in 2003, but at a lower rate than last year, when prices of SIM cards fell 25-30 per cent. Manufacturers are expected to offset price declines through improved product mixes, with a focus on Java cards as well as on high-end 32k and 64k SIM cards with higher prices and larger memory.

As telecom operators roll out 3G coverage and value-added services on GSM networks demand for high-end SIM cards is likely to rise.

Increased penetration of mobile telephony in countries such as India as well as in Africa and Eastern Europe also provide opportunities for growth.

Visa et al push smart card-based credit cards

Frost & Sullivan reckons SIM cards are critical to providing secure mobile transactions over GSM networks. And the migration from magnetic stripe cards to smart cards within the financial sector is expected to provide greater opportunity to use these cards for mobile commerce.

This migration has been delayed in Europe and parts of Latin America. However, high fraud rates together with incentives from Visa and MasterCard are expected to accelerate compliance with EMV (Europay/MasterCard/Visa) standards. A case in point is the UK's Chip and PIN programme.

Frost & Sullivan notes that both Visa and MasterCard have initiated several low-cost smart card programmes that offer a range of smart cards from single application payment cards to sophisticated multi-application Java-based cards of various memory sizes. This provides a sound business case for financial organisations to start issuing smart banking cards, according to Frost & Sullivan.

The 9/11 effect

Post 9/11, the number of government-sponsored ID projects has spiralled. Governments worldwide are assessing smart card-based systems for secure identification.

Frost & Sullivan notes a particular interest is combining the use of smart cards with biometrics for secure identification.

"Contactless smart cards are being identified as among the best ways to store biometric data on travel documents such as passports, visas and identity cards," according to Frost & Sullivan. "[Meanwhile] both Visa and MasterCard are backing the use of contactless technology as a faster and more convenient way to conduct payment transactions, a sign that bodes well for the smart card market."

Fax and figures

In 2002, a total of 1,906.4 million smart cards were shipped globally, with memory smart card accounting for about 55.7 per of unit shipments. Microcontroller smart cards make up the reset.

Frost & Sullivan forecasts this balance will reverse by 2006 with microcontroller smart card units capturing 55.5 percent share of the total 2,541.3 million smart card shipments predicted that year.

With a 43.1 per cent market share, EMEA accounted for the majority of smart card unit shipments in 2002. The region led in both memory and microcontroller unit shipments, followed by Asia Pacific and then the Americas.

Competition was fierce across all regional markets with price wars affecting every market player.

Despite painful restructuring and falling unit shipments over 2001-2002, traditional giants such as Gemplus, Schlumberger and Oberthur Card Systems (OCS) continued to hold sway over the global market. Multinationals such as Giesecke & Devrient and smaller companies such as ORGA also turned in strong performances.

The major competitive development last year was the emergence of local players especially in the Asian region such as Ming Wah, Eastcompeace, Tianjin and AMS. This trend is likely to put a further squeeze on short-term profits while intensifying competition, Frost & Sullivan forecasts.

Frost & Sullivan smart card analyst Shalini Chowdhary concludes: "Selecting and developing strategic partnerships and alliances prior to entering a new market segment will be critical for smart card vendors. Specifically, vendors need to make the right partnerships to take advantage of the enormous potential of the ID and security market segments."

Frost & Sullivan latest study of the smart card market, which costs $5,500, can be purchased from its smart card market microsite. ®

Related Stories

Smart cards, ID cards, nice, nasty, inevitable?
US names the day for biometric passports
Smart credit on UK cards. Will it cut fraud?
Latest addition to hacker toolkits - a light bulb
Research signals safer smart cards

Protecting users from Firesheep and other Sidejacking attacks with SSL

More from The Register

next story
Spies would need SUPER POWERS to tap undersea cables
Why mess with armoured 10kV cables when land-based, and legal, snoop tools are easier?
Early result from Scots indyref vote? NAW, Jimmy - it's a SCAM
Anyone claiming to know before tomorrow is telling porkies
Jihadi terrorists DIDN'T encrypt their comms 'cos of Snowden leaks
Intel bods' analysis concludes 'no significant change' after whistle was blown
Israeli spies rebel over mass-snooping on innocent Palestinians
'Disciplinary treatment will be sharp and clear' vow spy-chiefs
TOR users become FBI's No.1 hacking target after legal power grab
Be afeared, me hearties, these scoundrels be spying our signals
Hackers pop Brazil newspaper to root home routers
Step One: try default passwords. Step Two: Repeat Step One until success
China hacked US Army transport orgs TWENTY TIMES in ONE YEAR
FBI et al knew of nine hacks - but didn't tell TRANSCOM
Microsoft to patch ASP.NET mess even if you don't
We know what's good for you, because we made the mess says Redmond
NORKS ban Wi-Fi and satellite internet at embassies
Crackdown on tardy diplomatic sysadmins providing accidental unfiltered internet access
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
Protecting users from Firesheep and other Sidejacking attacks with SSL
Discussing the vulnerabilities inherent in Wi-Fi networks, and how using TLS/SSL for your entire site will assure security.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.