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World Smart Card Markets
Frost & Sullivan, Dec 2007, Pages: 88
This Frost & Sullivan research service titled World Smart Card Markets provides an overview of the market while outlining some of the important trends coupled with the major challenges and threats market participants can expect to face in the short-to-medium term. In this research, Frost & Sullivan's expert analysts thoroughly examine the following segments: memory cards and microcontroller cards.
Market Sectors
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
- Memory cards
- Microcontroller cards
Technologies
The following technologies are covered in this research:
- Contactless Technologies
- SIM
- EMV
- NFC
- 3G
Market Overview
Emerging Applications to Bail out the Smart Cards Market
Participants in the smart card market will be looking to pull out all the stops to arrest the market’s slide into commodity status. They will find relief from price wars with the emergence of new applications such as subscriber identification module (SIM), Europay, Mastercard and Visa (EMV) and e-passports. As escalating security consciousness all over the world has raised the demand for security-related projects, smart cards have found greater application in e-government projects, access control (physical and logical) and large-scale National ID projects. The market has also got a move on with the concept of contactless payment catching on in North America and Japan, and now seeping into the Europe, Middle East and Africa (EMEA) region.
Smart card manufacturers will also be looking to tap into the immense potential of high-capacity SIM cards and near field communication (NFC) to alleviate pricing pressures. They could persuade mobile operators to consider high-capacity SIM cards since the greater card memory will enable mobile phone users to download additional applications (ring tones, movie/video clips). Having arrived at a standard for high-speed protocol, high-capacity SIM cards are expected to slowly increase its market spread through small shipment. This gradual dissemination of technology could cause the average selling prices in the SIM arena to stabilise or even increase. Since these SIM smart cards have no concrete cost structure, early movers will have an advantage. They can generate healthy revenue growth rates before the market attains ‘mass market’ status and prices stabilise.
Constantly Changing Dynamics Make Astute Strategizing Imperative in the Smart Card Market
Ceaseless changes in the competitive structure of the smart cards market have compounded established participants’ issues of competition from the Asia Pacific. They also have to deal with semiconductor manufacturers’ constant insistence that they consider other technology options and form factors. The recent merger of the two largest smart card manufacturers has intensified the price competition in the market. However, the decreased market share of the resultant company could benefit the other established smart card manufacturers. 'Yet another challenge facing participants is to remain flexible enough to change with the conditions and demands of the market,' say the analysts of this research. 'With prices continually falling at a rate far higher than expected, profit margins are low, and in some cases, non-existent.'
New entrants, even if they do not offer the same products, could also challenge the market by changing the dynamic structure of the competitive landscape. The rapid pace of change will make it difficult for companies to strategize for more than nine to twelve months at a time. Therefore, it is vital to constantly monitor the smart card market as well as its suppliers and consider possible technology substitutes. 'This will also give smart card manufacturers some insight into new form factors and the success of such form factors,' note the analysts. 'At the same time, there is also a strategic opportunity to redefine some aspects of the market and bring in new customers.'
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