The anticipated explosion in mobile Internet usage and the arrival of electronic ticketing will spur on more growth for the Smart Card market, according to a Frost & Sullivan report. Leading the market right now are five European companies, Gemplus, Schlumberger, Giesecke & Devrient and ORGA Kartensysteme, and Oberthur Card Systems (OCS), who have come together to form an industry consortium.
Not surprisingly, spearheading the global smart cards market right now is the European market, accounting for 60% of world-wide sale.
The report believes that shipment of smart cards across Europe will rise from 794.6 million in 1999 to 2.05 billion in 2006, underpinned by revenues leaping from $1.2 billion to $4.2 billion during the same timeframe.
Increased application of smart cards has also triggered growth in the GSM and financial markets, bringing vibrancy to the over-all market.
Anoop Ubhey, Industry Analyst at Frost & Sullivan, expects multi-application cards, which are becoming evermore cost effective, to be a runaway success over the next three years, offering opportunities and putting a fresh perspective on the industry.
Deployment of multi-application, open platform smart cards is expected to be very rapid.
Anoop Ubhey observes: "The emergence of Java platforms and Windows for smart cards, the program platform based on the Windows for Smart Cards Operating System, is a real boon for the industry and is redefining the smart card."
On the other hand, Biometric technology is still too costly and complex to challenge smart card technology. However, as end user acceptance of technology rises, more sophisticated smart cards laden with security features can be expected. In this sense, biometric technology such as fingerprinting can be considered as complementing technology.
Furthermore, increasing uptake of smart card technology by the leisure industry is also expected to be a driving force behind the market.
"In addition to contact-less technology being used in the payphone market, Europeans may soon see contact-less cards issued by local governments for citizen identification, and trials are underway of contact-less e-purse cards. However, contact-less cards have so far been relatively slow to take off, with access control and transportation being the only applications to fully commit to them."
The study believes that cost, speed and security factors currently hamper the prospering of contact-less technology. However, costs for contact-less smart cards and readers are expected to fall to the same level as contact smart cards over the next two years.
Gemplus and Schlumberger are the two major players on the global smart card scene, accounting for more than two-thirds of this business. Gemplus, provider of smart card based solutions for security, wireless and e-business applications, is leading for now, dislodging Schlumberger from the top spot. The competition is intense, however, with only a percentage point in market share separating the two rivals.
As competition heightens, vendors have also begun expanding the spectrum of their offerings and redefined themselves as providers of "one-stop-shops" for services and software. This trend will attract a rash of new entrants.
"More emphasis is being placed on software issues and in the wake of dwindling profit margins, vendors must provide a total solution to survive," the study warns.
Meanwhile, the five leading global smart card manufacturers, Gemplus, Schlumberger, Giesecke & Devrient and ORGA Kartensysteme, along with the most recent addition of the French firm Oberthur Card Systems (OCS), have joined forces to form SIMalliance.
The consortium's primary goal is the promotion of open and interoperable SIM standards. Further objectives include the creation of open specifications that will facilitate mass-market penetration of new SIM-based applications and services.
The Asian smart card market will soar to new heights, especially in China where the technology is expected to penetrate a slew of applications. Another rising star in the fast-moving Asian market is Japan, displaying enormous potential for growth.
The source of much of this region's dramatic growth is the advent of contact-less smart card technology. Nippon Telegraph and Telephone (NTT), for example, have already made major forays into the contact-less pre-paid phone card world.
The dynamism of Asian markets will be unleashing intense competitive pressures on the more established national markets such as North America and Europe.
While the European market enters the initial stages of its maturity phase and is therefore beginning to plateau, the Latin American and Asian Pacific markets continue to boom, driving the market aggressively on a global scale.
These findings are detailed in a new subscription-based service by Frost & Sullivan, the international marketing consulting company.