The number one player in the smart card industry, Gemalto, recently confirmed its status with higher than expected first-quarter sales. This positive trend is noticeable in all of the company’s business units (mobile, payment, security). The firm expects double-digit growth in profit in 2013. According to Gemalto, revenue growth will come from high end SIMs deployed for LTE and NFC features, but also by mobile payment development and EMV migration. From a regional perspective, sales growth will be driven by Asia Pacific and the United States.
Oberthur, the second player in terms of market share, has announced a 3-year strategic plan that it hopes will result in revenue from services and software growing from 28 per cent to 40 per cent of the total. The strategy is similar to that of Gemalto, and is based on the expected explosion of LTE and NFC technologies. After his departure from ST-Ericsson, Didier Lamouche joined Oberthur as CEO this week, replacing Xavier Drilhon. Mr Lamouche will have to accelerate the strategy in order to be ready for the market evolution.
On the other hand, Giesecke & Devrient (G&D) announced last week that it would cut 400 jobs in its European mobile security unit; including around 125 jobs in its Munich headquarter. High levels of price competition started a few years ago; the SIM market was the first to be impacted, but the payment cards sector is also affected. This competitive market has placed significant pressure on G&D business units, forcing them to optimize investments and to minimize the attached risk. The German firm appears to be preparing for the next wave of smart card competition by resizing its teams and fine tuning the overall company strategy.
The smart card industry’s leading players continue to jostle for position. Each is aiming to be perfectly positioned in each vertical, with the perfect product, the right timing and the correct team in terms of size and capability. As always, price will be a key determinant of success. We await the final winner.
Jean-Noel Georges is a Global Program Director for ICT in Financial Services.