North American and European Biometrics Market - Investment Analysis

Frost & Sullivan, September 2008, Pages: 43

This Frost & Sullivan research service titled North American and European Biometrics Market - Investment Analysis provides the growth monitor, sector scorecard, venture capital scorecard, asset management scorecard, segment analysis, and investment themes. In this research, Frost & Sullivan's expert analysts thoroughly examine the following technologies: automated fingerprint indemnification system (AFIS), non-AFIS, face recognition, iris recognition, signature verification, and voice verification.

Market Overview

Rising Concerns over Identity Theft Increase Biometrics Adoption

The proliferation of electronic applications has had many ramifications, a significant one being a spurt in faceless electronic transactions and therefore, fraudulent activities such as identity thefts. Illustrating the extent of damage caused by e-crimes, Frost & Sullivan estimates that U.S. businesses and consumers ran up losses of approximately $80.0 billion in 2007. So far, New York, California, Nevada, Arizona, Washington, and Texas have been identified as the states with the most victims, and nearly 91.0 percent of the victims expect a heavy increase in victimization. The sophistication of these crimes has necessitated a like response, throwing biometrics technology into prominence. Biometrics is gradually breaking the confines of identity-related applications as well as cost barriers to find use in non-governmental sectors for a multitude of issues that cannot be solved by video surveillance techniques alone. "For instance, the financial vertical is expected to be one of the fastest growing verticals for biometric technology, especially finger-scan techniques," says the analyst of this research. "Voice verification is also used commonly for remote access authenticating solutions."

Biometrics will have to stay at the cutting edge of technology to sustain end-user interest due to the severity and increasing complexity of the threats. To accomplish this, vendors must make heavy and sustained investments in R&D to not only cater to market demand, but also pip the competition. Currently, only a handful of participants have achieved high profit margins, while the majority is still awaiting a significant breakthrough. Nevertheless, the speed and quality of product development should hearten the vendors. They will be hoping to please end users of face recognition technologies by offering enhanced performance and accuracy in the wake of improvements in 3D technologies and refinement of 2D and 3D products. Biometric vendors have also got a huge boost from the development of higher resolution cameras that capture images better. A wide range of applications has benefited from these frequent technology innovations and many more are increasingly buying in to this technology. A case in point, the palm and vein recognition technology, has become a hit in automated teller machine (ATM) kiosks. Biometrics has gained another push from the Health Insurance Portability and Accountability Act (HIPAA) of 1996, which mandates stringent security measures to safeguard patient records and maintain uniform security standards for the transmission of health information. Although this Act does not order the use of biometrics, it has certainly helped end users realize that it is the tool best suited to achieve such high levels of security.

While these external factors do go a long way in boosting the biometrics market, participants should make efforts to create uniformity of standards to achieve further success. Although there has already been significant focus on standards, a lot of ground is yet to be covered. "Technical and industry-driven standards should be standardized to ensure effective interoperability among disparate systems globally," notes the analyst. "For standards to be effective across borders, wider participation is required from vendors globally." Vendors can ensure that a biometric product conforms to a standard by conducting conformance testing, while increased live scenario testing can confirm the interoperability of products. Interoperability and integration of multiple technologies are likely to be the buzzwords of the biometrics market, considering it is fast heading toward multi modality applications. Manufacturers across biometric technologies stand to gain tremendously from this trend of multi modality. A significant use of multimodal biometrics is its application in border control systems. "Over and above the reliability and the robustness of the technology, it is also considered a tamper-proof mechanism because it is extremely difficult to counterfeit several modalities simultaneously," observes the analyst. "This type of biometrics is slowly finding its way into the e-passports program, creating a substantial revenue opportunity."

The following technologies are covered in this research:

- AFIS
- Non-AFIS
- Face recognition
- Iris recognition
- Signature verification
- Voice verification

1 EXECUTIVE SUMMARY

2 INTRODUCTION AND METHODOLOGY
- Introduction
-- Methodology

3 INVESTMENT ANALYSIS
- Market Fundementals
-- Industry Fundamentals
-- Segment Analysis
- Investment Framework
-- Investment Themes
-- Growth Monitor

4 FINANCIAL ANALYSIS
- Financial Overview
-- Margin Analysis
-- Operating Expense Analysis
-- Working Capital Management
-- Free Cash Flow Analysis
- Sector Analysis
-- Sector Scorecard
-- Outlook for Mergers and Acquisitions
-- Venture Capital Attractiveness
-- Asset Management Attractiveness Scorecard
- Final Thoughts
-- Conclusions

List of figures

Chapter 3

- Biometrics Market: Growth Monitor (North America and Europe), 2007

Chapter 4

- Biometrics Market: Sector Scorecard (North America and Europe), 2007
- Biometrics Market: Top 20 Venture Capital Investors (North America and Europe), 2007
- Biometrics Market: Asset Management Scorecard (North America and Europe), 2007

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