- Email: [email protected]
Gemplus results down, but on track
news statistics
such as India as well as in Africa and Eastern Europe provides opportunities for growth.
Smart card market leaves doldrums years behind
Contact: Frost & Sullivan, www.smartcards.frost.com
The transition to 3G mobile phones in the telecoms sector, the migration toward using EMV smart cards in the financial world and the increasing use of smart cards as part of national ID projects will help drive the smart card industry forward in 2003, according to new research. Market analyst group Frost & Sullivan claims that this combination of factors should help manufacturers leave the difficult market conditions experienced in 2002 behind them, as long as they are able to select and develop appropriate strategic partnerships and alliances prior to entering new market segments. An upward trend is likely to continue through until 2006 at least, the report claims, by which time total annual smart card shipments will have climbed to 2.54 billion, compared with 1.91 billion in 2002. Notably, revenues will also rise considerably, particularly helped by a shift in demand from memory smart cards (representing 55.7% of sales in 2002) to more expensive microcontroller smart cards (which will hold a 55.5% share by 2006). Regionally speaking, EMEA accounted for the majority of smart card unit shipments in 2002 with a 43.1% market share. It was followed by Asia Pacific and then the Americas. From a company perspective, traditional giants such as Gemplus, Schlumberger and Oberthur Card Systems (OCS) continued to dominate the global market in terms of units shipped. This was despite significant restructuring and falling unit shipments over 2001-2002. Multinationals such as Giesecke & Devrient and smaller companies such as ORGA turned in strong performances, the research noted. A major competitive development was the emergence of more domestic 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, the authors claim. The largest smart card business sector – the telecoms market – is expected to continue to see prices falling in 2003, albeit not as steeply as in 2002 when prices of SIM cards declined by a dramatic 25-30%. Manufacturers are expected to offset price declines through improved product mixes, with the focus expected to be on Java cards as well as on high-end 32k and 64k SIM cards with higher prices and larger memory. Increased penetration of mobile telephony in countries
Gemplus results down, but on track
Card Technology Today September 2003
corporate news
Smart card manufacturer Gemplus International has announced falling year-onyear revenues for the second quarter of 2003, although other areas of its balance sheet looked more positive – including an improved operating loss and continued recovery in its telecoms business unit. For the quarter ended 30 June 2003, Gemplus recorded group revenues of 172.4 million, a fall of 17.8% on the same quarter in 2002, but an 11.8% gain on the first quarter of 2003. Much of this decline was attributed to currency fluctuations, with the weak US dollar impacting results. From this revenue the supplier reported an improved net loss of 82.4 million compared with 123.1 million in the same quarter of 2002. Just over 42 million of this loss, however, came from non-recurring charges related to restructuring charges. (The vendor noted that its December 2002 restructuring plan is on track, with the majority of job cuts expected to be complete in the second half of 2003.) Before restructuring charges were taken into account the company’s operating loss was almost cut in half from 24.2 million in Q2 2002 to 13.9 million at the end of the second quarter of 2003. Gemplus’ CEO Alex Mandl was satisfied with his company’s performance. He said: “As Gemplus continues this year of transition, the business is responding well to the restructuring initiatives we put in place. Returns have improved in the commodity segment of our operations…We have seen steady migration towards higher value cards, further improving our product mix. In addition, the average selling price of wireless cards has increased, helped by our regional and product mix.” Looking at Gemplus’ individual sectors, telecoms revenue by the supplier was reasonably stable year on year, despite persistent pressure on pricing. This business sector generated 124.2 million in the quarter compared with 141.8 million in the second quarter of 2002. More encouraging was the vendor’s second quarter SIM sales which rose 18% on Q2 2002 to more than 42 million. The company also noted that its wireless cards revenue was up 22.3% quarter-on-quarter, after taking currency fluctuations into account.
in brief • INSIDE Contactless, FASVER and IER have partnered to develop IFI, an RFIDbased authentication solution for official documents, such as passports, visas and identity cards. IFI (Intelligent Film for Identification) secures documents through the combined integration of a secured film with an embedded serigraphied antenna, a radio frequency chip, and the use of radio frequency readers. The technology takes advantage of an electromagnetic coupling technique, which avoids fragile electrical connections. This could be crucial in guaranteeing the required life-time for official documents. • Ingenico has landed its largest ever contract as Barclaycard said it would spend around £60 million (US$96 million) on upgrading its eftpos terminal infrastructure to handle chip and PIN payments using smart cards. The five-year deal will include the Scottish company’s I3300 PIN pads, its I7700 and I7770 portable terminals and as well as its I15100 countertop solutions. • Schlumberger Smart Cards & Terminals has announced that its development methodology for testing the security of Java Card products has been evaluated and validated for Common Criteria Evaluation Assurance Level 7 (EAL7). EAL7 is used for certification of Java Card virtual machines and is the highest level of certification possible. The evaluation and validation was performed by the French group DCSSI (Central Administration for Information Systems Security). • One of North America’s leading ski resorts has announced it will further develop its smart card capabilities. The Park City Mountain Resort in Utah said that a system originally supplied by Rapidtron will now be expanded. The company offers a Fast Tracks Pass, which allows full-season pass holders and multi-day ticket purchasers access to an express lane on four of the resort’s most popular lifts. In addition to increasing the number of hands-free turnstiles per lift, Park City Resort will also use Rapidtron’s Thermo Smart and Bar Code reader to issue single and multi-day smart passes. • Schlumberger Smart Cards & Terminals is to supply Zhejiang Unicom, a subsidiary of China Unicom, with Simgo, a Java-based Over-The-Air (OTA) service management solution.
3
news
in brief • A users’ guide has been released to give software developers a set of guidelines to follow when writing applications for devices supporting GPD/STIP (GlobalPlatform Device Committee/ Small Terminal Interoperability Platform Consortium) technology. GPD/STIP technology is based on an API, which allows the same on-device code to run on a wide range of card acceptance devices. The ultimate impact of the guide, say the authors, will be to increase the number of developers with the knowledge and ability required to produce applications that are interoperable across all types of small devices, including mobile phones, EFT-POS terminals, PC-connected secure readers, payphones, parking meters, vending machines and PDAs. • Emosyn, the fabless semiconductor division of ATMI, has launched a new smart card chip, the Theseus Platinum 100. This chip is aimed at high security identification projects and for mobile telecommunications applications. The chip has advanced flash memory, which the supplier claims can lower costs by allowing smart card vendors to configure SIMs at the personalization stage as well as ‘over-the-air’, once in the subscriber’s handset. The chip also has a new memory management unit, which isolates executable applications from each other. • British prime minister Tony Blair has dampened expectations for a smart card-based ID card, claiming there are huge logistical and cost issues to be resolved. Although in principle Blair favours such a card, which could help control illegal immigration and benefits fraud, he said the technology would not provide a “quick fix” for current problems. • US retailing giant Target has begun the rollout of its Smart Coupons loyalty programme. Electronic coupons can be downloaded onto customers’ Target Visa smart cards at in-store kiosks or via a reader when visiting Target’s web site. The Smart Coupons will be redeemed when the cardholder purchases qualifying merchandise and pays for it with the card. • Smart card manufacturer Gemplus has announced the delivery of its three billionth phone card, the first in the industry to reach this milestone, the company claims. The card was delivered to Telmex, Gemplus’ biggest client in this field. According to a recent study by Gartner Dataquest Gemplus has shipped more public telephony smart cards than anyone else for the last 15 years, with over 350 million phone cards distributed worldwide in 2002.
4
In particular, Gemplus reported success in the US telecoms market, where a growing number of operators are switching their networks to GSM. It now has contracts with three of the four largest operators, including AT&T. Elsewhere in its business portfolio, Gemplus reported revenue of 48.2 million for its banking, ID and other cards sectors, a drop of almost 30% from 2002. However, Gemplus reported a doubling in EMV card shipments compared with the first quarter of 2003, and a tripling in sales compared with the second quarter last year. These sales were primarily driven by the UK market, where it has supplied 15 million EMV cards, although these were supported by sales in South America and Asia. The company also noted its second major ID contract win since October 2002 – in association with Sagem to supply over two million cards to the United Arab Emirates. Contact: Martin Crocker at Gemplus, Tel: +33 4 42 36 3046, email: [email protected]
company. He is replaced by Oliver Jaster, a former member of Orga’s Advisory Council. The restructuring and consolidation efforts at Orga also seem to be moving into calmer waters following an agreement between management and the workers’ council at the company’s Flintbek facility. The facility saw 123 employees leave in August, while a further 63 jobs could go if defined sales objectives are not met between August and October. Due to the continuing market weakness, Orga said it will not be able to achieve its original sales forecasts for 2003, and has scaled backed its estimates by 31 million to 160 million. However, the company is positive about its future direction, particularly in healthcare, telecommunications and banking, where it believes its tenders for future business are strong contenders. Contact: Frank Büttner at Orga, Tel: +49 52 51 889 2753, Fax: +49 0 52 51 889 1842, Email: [email protected]
payment transport/company news
Orga drives ahead The UK’s Driver and Vehicle Licensing Agency (DVLA) has placed an order for some two million high-end smart cards that will be issued to truck drivers in order to comply with European Union safety directives. The EU directive requires that all new trucks and buses be equipped with a digital tachograph by August 2004. The UK is one of the first countries that will implement the technology. The order was won by UK-based Security Printing Systems, which has contracted its former sister company Orga Kartensysteme to supply the card modules. Meanwhile, Bundesdruckerei is producing the card blank. The smart cards will be issued to truck drivers who will authenticate themselves via a system of digital certificates by inserting their cards into the digital tachographs. The system is designed to alert officials if the trucker has driven too many hours on a particular day or whether they have broken the national speed limit. As well as embedding the chip module, Orga will contribute the operating system and a specially formulated tachograph application that meets the relevant EU specifications. This deal for Orga comes as the company tries its best to emerge from a period of boardroom and balance sheet turbulence. The company has now completed its management team with the addition of a new chief executive officer, Juan Carlos Garcia. Meanwhile, as planned Matthias Eickhoff is handing over his responsibilities as chief financial officer and is leaving the
AMEX expands Phoenix trial American Express has announced a major expansion to its contactless payment trial in Phoenix, offering the product to anyone living in the area with a major credit card. The ExpressPay product is free and is designed as a key fob powered by radio frequency technology. American Express began piloting the technology last summer with its employees in Phoenix, but following some additional smallscale trials, the company has rolled out the system to more than 175 merchant locations in the greater Phoenix area. ExpressPay is an alternative to cash for making purchases at merchants where speed and convenience are important – such as quick serve restaurants, supermarkets, drug stores, gas stations and corporate cafeterias. To use the system users hold the ExpressPay key fob next to a companion reader at the checkout to make purchases. Payment is typically authorised in seconds and no signature is required. The card links directly to an existing credit, charge or debit card to fund the purchase. According to David Bonalle, vice president and general manager of Advanced Payments, American Express: “We have found in testing that consumers prefer using their ExpressPay key fob rather than fumbling for their wallets, while merchants enjoy the benefits of their customers’ increased spending and reduced time at the checkout counter.”
Card Technology Today September 2003
such as India as well as in Africa and Eastern Europe provides opportunities for growth.
Smart card market leaves doldrums years behind
Contact: Frost & Sullivan, www.smartcards.frost.com
The transition to 3G mobile phones in the telecoms sector, the migration toward using EMV smart cards in the financial world and the increasing use of smart cards as part of national ID projects will help drive the smart card industry forward in 2003, according to new research. Market analyst group Frost & Sullivan claims that this combination of factors should help manufacturers leave the difficult market conditions experienced in 2002 behind them, as long as they are able to select and develop appropriate strategic partnerships and alliances prior to entering new market segments. An upward trend is likely to continue through until 2006 at least, the report claims, by which time total annual smart card shipments will have climbed to 2.54 billion, compared with 1.91 billion in 2002. Notably, revenues will also rise considerably, particularly helped by a shift in demand from memory smart cards (representing 55.7% of sales in 2002) to more expensive microcontroller smart cards (which will hold a 55.5% share by 2006). Regionally speaking, EMEA accounted for the majority of smart card unit shipments in 2002 with a 43.1% market share. It was followed by Asia Pacific and then the Americas. From a company perspective, traditional giants such as Gemplus, Schlumberger and Oberthur Card Systems (OCS) continued to dominate the global market in terms of units shipped. This was despite significant restructuring and falling unit shipments over 2001-2002. Multinationals such as Giesecke & Devrient and smaller companies such as ORGA turned in strong performances, the research noted. A major competitive development was the emergence of more domestic 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, the authors claim. The largest smart card business sector – the telecoms market – is expected to continue to see prices falling in 2003, albeit not as steeply as in 2002 when prices of SIM cards declined by a dramatic 25-30%. Manufacturers are expected to offset price declines through improved product mixes, with the focus expected to be on Java cards as well as on high-end 32k and 64k SIM cards with higher prices and larger memory. Increased penetration of mobile telephony in countries
Gemplus results down, but on track
Card Technology Today September 2003
corporate news
Smart card manufacturer Gemplus International has announced falling year-onyear revenues for the second quarter of 2003, although other areas of its balance sheet looked more positive – including an improved operating loss and continued recovery in its telecoms business unit. For the quarter ended 30 June 2003, Gemplus recorded group revenues of 172.4 million, a fall of 17.8% on the same quarter in 2002, but an 11.8% gain on the first quarter of 2003. Much of this decline was attributed to currency fluctuations, with the weak US dollar impacting results. From this revenue the supplier reported an improved net loss of 82.4 million compared with 123.1 million in the same quarter of 2002. Just over 42 million of this loss, however, came from non-recurring charges related to restructuring charges. (The vendor noted that its December 2002 restructuring plan is on track, with the majority of job cuts expected to be complete in the second half of 2003.) Before restructuring charges were taken into account the company’s operating loss was almost cut in half from 24.2 million in Q2 2002 to 13.9 million at the end of the second quarter of 2003. Gemplus’ CEO Alex Mandl was satisfied with his company’s performance. He said: “As Gemplus continues this year of transition, the business is responding well to the restructuring initiatives we put in place. Returns have improved in the commodity segment of our operations…We have seen steady migration towards higher value cards, further improving our product mix. In addition, the average selling price of wireless cards has increased, helped by our regional and product mix.” Looking at Gemplus’ individual sectors, telecoms revenue by the supplier was reasonably stable year on year, despite persistent pressure on pricing. This business sector generated 124.2 million in the quarter compared with 141.8 million in the second quarter of 2002. More encouraging was the vendor’s second quarter SIM sales which rose 18% on Q2 2002 to more than 42 million. The company also noted that its wireless cards revenue was up 22.3% quarter-on-quarter, after taking currency fluctuations into account.
in brief • INSIDE Contactless, FASVER and IER have partnered to develop IFI, an RFIDbased authentication solution for official documents, such as passports, visas and identity cards. IFI (Intelligent Film for Identification) secures documents through the combined integration of a secured film with an embedded serigraphied antenna, a radio frequency chip, and the use of radio frequency readers. The technology takes advantage of an electromagnetic coupling technique, which avoids fragile electrical connections. This could be crucial in guaranteeing the required life-time for official documents. • Ingenico has landed its largest ever contract as Barclaycard said it would spend around £60 million (US$96 million) on upgrading its eftpos terminal infrastructure to handle chip and PIN payments using smart cards. The five-year deal will include the Scottish company’s I3300 PIN pads, its I7700 and I7770 portable terminals and as well as its I15100 countertop solutions. • Schlumberger Smart Cards & Terminals has announced that its development methodology for testing the security of Java Card products has been evaluated and validated for Common Criteria Evaluation Assurance Level 7 (EAL7). EAL7 is used for certification of Java Card virtual machines and is the highest level of certification possible. The evaluation and validation was performed by the French group DCSSI (Central Administration for Information Systems Security). • One of North America’s leading ski resorts has announced it will further develop its smart card capabilities. The Park City Mountain Resort in Utah said that a system originally supplied by Rapidtron will now be expanded. The company offers a Fast Tracks Pass, which allows full-season pass holders and multi-day ticket purchasers access to an express lane on four of the resort’s most popular lifts. In addition to increasing the number of hands-free turnstiles per lift, Park City Resort will also use Rapidtron’s Thermo Smart and Bar Code reader to issue single and multi-day smart passes. • Schlumberger Smart Cards & Terminals is to supply Zhejiang Unicom, a subsidiary of China Unicom, with Simgo, a Java-based Over-The-Air (OTA) service management solution.
3
news
in brief • A users’ guide has been released to give software developers a set of guidelines to follow when writing applications for devices supporting GPD/STIP (GlobalPlatform Device Committee/ Small Terminal Interoperability Platform Consortium) technology. GPD/STIP technology is based on an API, which allows the same on-device code to run on a wide range of card acceptance devices. The ultimate impact of the guide, say the authors, will be to increase the number of developers with the knowledge and ability required to produce applications that are interoperable across all types of small devices, including mobile phones, EFT-POS terminals, PC-connected secure readers, payphones, parking meters, vending machines and PDAs. • Emosyn, the fabless semiconductor division of ATMI, has launched a new smart card chip, the Theseus Platinum 100. This chip is aimed at high security identification projects and for mobile telecommunications applications. The chip has advanced flash memory, which the supplier claims can lower costs by allowing smart card vendors to configure SIMs at the personalization stage as well as ‘over-the-air’, once in the subscriber’s handset. The chip also has a new memory management unit, which isolates executable applications from each other. • British prime minister Tony Blair has dampened expectations for a smart card-based ID card, claiming there are huge logistical and cost issues to be resolved. Although in principle Blair favours such a card, which could help control illegal immigration and benefits fraud, he said the technology would not provide a “quick fix” for current problems. • US retailing giant Target has begun the rollout of its Smart Coupons loyalty programme. Electronic coupons can be downloaded onto customers’ Target Visa smart cards at in-store kiosks or via a reader when visiting Target’s web site. The Smart Coupons will be redeemed when the cardholder purchases qualifying merchandise and pays for it with the card. • Smart card manufacturer Gemplus has announced the delivery of its three billionth phone card, the first in the industry to reach this milestone, the company claims. The card was delivered to Telmex, Gemplus’ biggest client in this field. According to a recent study by Gartner Dataquest Gemplus has shipped more public telephony smart cards than anyone else for the last 15 years, with over 350 million phone cards distributed worldwide in 2002.
4
In particular, Gemplus reported success in the US telecoms market, where a growing number of operators are switching their networks to GSM. It now has contracts with three of the four largest operators, including AT&T. Elsewhere in its business portfolio, Gemplus reported revenue of 48.2 million for its banking, ID and other cards sectors, a drop of almost 30% from 2002. However, Gemplus reported a doubling in EMV card shipments compared with the first quarter of 2003, and a tripling in sales compared with the second quarter last year. These sales were primarily driven by the UK market, where it has supplied 15 million EMV cards, although these were supported by sales in South America and Asia. The company also noted its second major ID contract win since October 2002 – in association with Sagem to supply over two million cards to the United Arab Emirates. Contact: Martin Crocker at Gemplus, Tel: +33 4 42 36 3046, email: [email protected]
company. He is replaced by Oliver Jaster, a former member of Orga’s Advisory Council. The restructuring and consolidation efforts at Orga also seem to be moving into calmer waters following an agreement between management and the workers’ council at the company’s Flintbek facility. The facility saw 123 employees leave in August, while a further 63 jobs could go if defined sales objectives are not met between August and October. Due to the continuing market weakness, Orga said it will not be able to achieve its original sales forecasts for 2003, and has scaled backed its estimates by 31 million to 160 million. However, the company is positive about its future direction, particularly in healthcare, telecommunications and banking, where it believes its tenders for future business are strong contenders. Contact: Frank Büttner at Orga, Tel: +49 52 51 889 2753, Fax: +49 0 52 51 889 1842, Email: [email protected]
payment transport/company news
Orga drives ahead The UK’s Driver and Vehicle Licensing Agency (DVLA) has placed an order for some two million high-end smart cards that will be issued to truck drivers in order to comply with European Union safety directives. The EU directive requires that all new trucks and buses be equipped with a digital tachograph by August 2004. The UK is one of the first countries that will implement the technology. The order was won by UK-based Security Printing Systems, which has contracted its former sister company Orga Kartensysteme to supply the card modules. Meanwhile, Bundesdruckerei is producing the card blank. The smart cards will be issued to truck drivers who will authenticate themselves via a system of digital certificates by inserting their cards into the digital tachographs. The system is designed to alert officials if the trucker has driven too many hours on a particular day or whether they have broken the national speed limit. As well as embedding the chip module, Orga will contribute the operating system and a specially formulated tachograph application that meets the relevant EU specifications. This deal for Orga comes as the company tries its best to emerge from a period of boardroom and balance sheet turbulence. The company has now completed its management team with the addition of a new chief executive officer, Juan Carlos Garcia. Meanwhile, as planned Matthias Eickhoff is handing over his responsibilities as chief financial officer and is leaving the
AMEX expands Phoenix trial American Express has announced a major expansion to its contactless payment trial in Phoenix, offering the product to anyone living in the area with a major credit card. The ExpressPay product is free and is designed as a key fob powered by radio frequency technology. American Express began piloting the technology last summer with its employees in Phoenix, but following some additional smallscale trials, the company has rolled out the system to more than 175 merchant locations in the greater Phoenix area. ExpressPay is an alternative to cash for making purchases at merchants where speed and convenience are important – such as quick serve restaurants, supermarkets, drug stores, gas stations and corporate cafeterias. To use the system users hold the ExpressPay key fob next to a companion reader at the checkout to make purchases. Payment is typically authorised in seconds and no signature is required. The card links directly to an existing credit, charge or debit card to fund the purchase. According to David Bonalle, vice president and general manager of Advanced Payments, American Express: “We have found in testing that consumers prefer using their ExpressPay key fob rather than fumbling for their wallets, while merchants enjoy the benefits of their customers’ increased spending and reduced time at the checkout counter.”
Card Technology Today September 2003