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August, 1997 |
  
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E-Cash and Smart Card Developments....$2 Billion Secure Transaction Market by 2000The market for secure electronic transactions (SET) may not have exploded the way some predicted a few years ago, in the early stages of runaway World Wide Web growth, but it may be starting to hit its stride. Research firm Michael Killen & Associates predicts the SET market will exceed $2 billion a year by the end of the decade, based on a study the firm did of Hewlett-Packard’s $1.18 billion merger with VeriFone Inc. Killen said the merger, announced in April of this year, will result in "significant opportunities" for HP and, in fact, titled its study: "Hewlett-Packard’s Electronic Commerce Strategy: Tilting the Playing Field." Michael Killen, head of the firm, said the combination of HP and VeriFone is proving to be a particularly potent one: "We believe merging with VeriFone changes the whole playing field, and HP now holds the high ground." He explained that with Visa, MasterCharge and other major credit card vendors pushing to make Internet commerce a reality, the biggest single opportunity lies in supplying hardware and systems. Both are needed before consumers will be able to treat SET purchases with the same confidence they now do a swipe-through card-reader at the grocery store. The Killen forecast calls for SET software sales to grow from $75 million in 1997 to $1.2 billion in 2000, a compound annual growth rate (or CAGR) of 150%. During the same period, predicts Killen, SET computer equipment shipments will jump from $10 million in 1997 to $600 million in 2000, a CAGR of 286%. Add in systems integration and supporting services, says the report, and the total SET market in 2000 passes the $2 billion mark. Said Killen, "With HP buying VeriFone, they get a company that has tremendous relationships already in place with acquiring banks who work with merchants worldwide. Secondly, they get a company that develops software to enable SET over the Internet. Those two things — especially the first one, that tremendous presence with the acquiring banks — give HP a new advantage against companies like DEC, Sun, Tandem, and many others who want to sell SET solutions or computer systems. They’ve changed the whole marketplace." He added: "Before, HP was nothing special, just another vender with hardware and services to sell. Now only IBM is in position to really compete with them. For a SET system solution that encompasses banks and merchants, it’s now a battle of the titans. You need a lot of different kinds of resources to meet all the customers’ needs, and the HP-VeriFone combination can do just that." (Contact: Bob Goodwin, Killen, tel 415-617-6137; E-mail address: bgood@killen.com) TopMultifunction Smart Cards RisingFast becoming a popular payment option in the banking industry through the electronic cash facility, smart cards are also showing great potential for applications such as electronic commerce, mobile communications and health care. Smart cards are usually wallet-size cards that utilize microprocessors to store information. Since a smart card offers different electronic facilities by simply activating the appropriate field, a single card potentially can be deployed for all a user’s access needs, whether for office security or for conducting everyday transactions. In Europe, most notably, smart cards are already deployed for pay phones, vending machines and toll booths. Other envisioned applications include automated airline ticketing and frequent flyer miles tracking, recording and updating of health care procedures and user identification to prevent unauthorized telephone calls. Jonathan Cassell, industry analyst at Dataquest Inc., stressed that smart cards are already evolving from single-purpose devices for use with stand-alone equipment to a multifunction platform for computer and telecommunications networks. Anticipating an explosion in smart card use in the near-term, Siemens Semiconductors, reportedly the leading global supplier of silicon for smart card chips, recently licensed Sun Microsystems’ Java technology for the semiconductor company’s next generation of smart card chips. The new chips will reportedly speed up execution of the instruction set of JavaCard, the application programming interface (API) for embedding Java in smart cards. Industry estimates predict the current market for smart card integrated circuits (ICs), which is currently about US$520 million worldwide, will quadruple to US$2.8 billion by 2001. "Siemens’ next generation of smart card ICs will further increase their industry position with enhanced performance on chip security and increased memory capacity," Chet Silvestri, president of Sun Microelectronics asserted. "Java microelectronics technology will drive down costs to card developers and licensees, encouraging the proliferation of cards in the United States and globally," said Ulrich Hamann, general manager and vice president of Siemens Chip Card ICs and Identsystems ICs. By increasing the memory of smart card chips, the JavaCard instruction set is expected to facilitate development of multiple applications. Dataquest’s Cassell stated, "With its built-in security, multi-application support and network orientation, Java has emerged as the software of choice for this new generation of smart cards. In the future, the most successful smart cards and smart card chips will be those that offer the best performance when running Java applets." One of the Siemens AG group of companies, Siemens Semiconductors is the global smart card silicon chip supplier, with an annual output of more than a half a billion smart card ICs. (Contact: Ellen P. Quijano, Siemens, Inc.; phone +632 814-9863; fax: +632 814-9807)
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