Source: Frost & Sullivan
The largest potential growth in the smart card readers and chipsets market over the short term has to come in the form of migration to next-generation payment technology. EMV migration in Europe, Asia Pacific and Latin America along with contactless payment in the United States is the most important application supporting the growth in the readers and chipsets market.
E-passports, national ID, driver's licenses and transit are also large markets for smart card readers in the medium term. The market opportunities from the government projects will grow tremendously in the medium term, which opens up numerous lucrative market opportunities.
New analysis from Frost & Sullivan World Smart Card Readers and Chipsets Markets, reveals that the market generated 6.9 million on units in 2004 and estimates to reach 33.0 million in 2010.
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"With banks shifting their business model to online banking, the rate of growth in the smart card readers segment will be decided by whether the banks adopt PC-link readers or USB keys for user authentication," said Frost & Sullivan Industry Manager Anoop Ubhey.
There are better cryptographic algorithms available that make online authentication secure. EMV payment cards can be configured to contain digital signatures and keys for online authentication. It is more economical for banks to migrate to online banking than continue with the 'brick and click' model. In addition, with most enterprises and government agencies going in for logical access to their networks, the smart card reader infrastructure will become commonplace, making the transition easier.
"USB dongles and USB keys are giving fierce competition for smart card readers in the logical access market," says Frost & Sullivan Research Analyst Alejandra Etcharran. "With this market dominated by many small manufacturers, if the authentication market does not adopt smart card readers as a standard then the larger manufacturers will lose market share in this sector."
To overcome or stop any real threat coming from the smaller manufacturers, a careful monitoring of the logical access control market must be put in place. Taking on the smaller manufacturers on the price front would be difficult but they can be countered through volumes and innovative product offerings. Offering value adds in terms of software and service to issuers is another one which might prove to be more successful in the medium term. Using such tactics will allow you more time to dampen the approach from these companies.