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| Subject: New Gemplus StrategyOberthur: e-GovernmentHungary | |
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Author: Issue 3, Volume 1,13 Dec2002Schlumberger: About to Exit? |
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Date Posted: 06:12:55 01/11/03 Sat http://www.cardshow.com/esmart/pdf/eSmartWeekly3.pdf Issue 3, Volume 1, 13 December 2002 This week’s news from www.e-smartransaction.com P.2 : The New Gemplus Strategy P.3 : Ryanair to Use V by V • Frost & Sullivan: Smart Cards Cost Too Much • Oberthur: e-Government in Hungary • O’ahu Moving to Smart Cards P.4 : Integrating Biometrics Made Easy • Visa & MasterCard: Working on Contactless • From the Industry e-smartransaction WEEKLY is a weekly highlight of news published on its sister web site, www.esmartransaction. com. •Director of publications: Charles COPIN • Editor: Ivan PANDEV (ipandev@esmartransaction. com) • Contributing Journalists: Bénedicte Rallu, Brigitte Roux, & Jennifer Wilbois Marketing: Mounia Belhaoues (mbelhaoues@wanadoo.fr) • Subscriptions:•Catherine De Curieres (caroline.screve@wanadoo.fr) An Analyses & Syntheses publication : 146 rue Montmartre - 75002 Paris - FRANCE ℡+33 (0)1 53 40 97 00 +33 (0)1 44 76 01 81 www.cardshow.com © Analyses & Synthèses 2002 Schlumberger: About to Exit the Smart Card Market? “When it rains, it pours,” one is tempted to say: After questions on where Gemplus is going which have plagued the news recently, restructuring hits the other of the top two smart card manufacturers. Restructuring which could go as far as to put in question Schlumberger’s involvement in the smart card industry itself! Schlumberger Limited has announced an “updated strategy” for SchlumbergerSema, a new strategy which, doesn’t bode too well for the petrol giant’s high-tech business segment. As is the case with all involved in the high-tech business, present times are far from the ‘tech bubble’, but also hitting Schlumberger is a slow demand in the oilfield services (which account for the great majority of the firm’s operational profits – 99% compared to 73% of the firm’s turnover). What this means is that Schlumberger can no longer ignore, for lack of a better word, the problems in the high-tech markets (and smart card market in particular), backed by its “petrodollars”. Thus, some 1,600 redundancies on an employee base of 80,000 (though, according to company officials, none in the smart card and terminals division) will accompany the firm’s Q4 US$3.17 billion in charges. This is expected to generate some US$250 million in savings, while costing US$77 million after tax (covering redundancies and closing down facilities in Europe and the U.S.). Moreover, Schlumberger has decided to refocus Sema’s activities on its IT Consulting, Systems Integration as well as its Network and Infrastructure solutions, leaving what it call its “volume activities” (i.e. smart cards, POS terminals, payphones, payment systems…) to be administered separately. Continued on p.2 © Analyses & Synthèses 2002 2 Continued from p.1 What does this mean? In a Q&A which can be found accompanying the press release on Schlumberger’s Web site (www.slb.com), the explanation is to “evaluate the options available”, options which are to include the following possibilities: continued management as a separate business segment, looking for third party partnerships to “maximise growth opportunities”, floating them on the market or simply to sell them off. But, according to Mr. Stephen Whittaker, director of communications at Schlumberger Limited, “no decision has been made yet.” There have been rumours for some time now that Schlumberger was looking to rid itself of it’s smart card as well as its POS terminal activities. But, when one is in the top two in a market (in which position depends on how you count things), rumours are bound to fly. For the moment, Schlumberger is officially staying in the game, so, where to now? If we look at R&D, for example, which is a pretty good barometer for a firm’s health, Mr. Whittaker tells us that “R&D spending is maintained”, that the total amount spent by Schlumberger will only be split up differently, reflecting the reorganisation of the firm. So, one can conclude that Schlumberger will continue investing in smart card related R&D. But, what if Schlumberger is to sell its smart card business? Jorgen Rasmussen who heads the card division doesn’t appear to think so, stating that in the current state of the market, not much could be got for Schlumberger’s smart card business… One is tempted to add that in any case, not many firms are in a position to finance such an acquisition. We are left with nothing but rumours… The New Gemplus Strategy… New Gemplus CEO, Alex Mandl, today announces his strategy for Gemplus in a press release titled 2003: REBUILDING DESIGNED TO RESTORE PROFITABLE GROWTH. Herein, we find that the key idea is to cut prices, but where will this leave Gemplus? "This new business model, based on a competitive cost structure, stronger customer relationships, continuing emphasis on innovation and an efficient organization, is designed to put the company back on a path of profitable growth and enable it to offer innovative solutions to its customers,” explains Mr. Mandl. In fact, his strategy is grounded in four key initiatives. The first of which, to no great surprise is “Restoring the company to profitable growth”. To achieve this, further restructuring is to be attached to cost cutting efforts initiated in 2001 and 2002, meaning an extra 1,000 jobs (of which 483 in France) are to be cut. Not quite as bad as the unions expected (i.e. 1,500 jobs cut). As for union fears of the relocation of R&D and production, things shouldn’t be as bad as expected. The “core” of R&D is to remain in France and production volumes in France should “remain comparable with 2002.” Gemplus management has suggested the convening of a meeting of the firm’s Workers Council to negotiate these redundancies in the most painless way possible (i.e. voluntary departure initiatives and redeployment). Nevertheless, unions are not pleased. “There are other cost-cutting measures that could be more efficient,” complained union leader (USG) Renaud Laffont. As for counter measures, there will be a union protest on the day of the next general assembly – this would be the second such union action of Gemplus’ history, only weeks after its first strike, a one-day walk out staged at the end of last month. The second initiative calls for a strengthening of Gemplus’ regional presence (hence, the aforementioned redeployment), bringing it closer, both in geographical and commercial terms, to its clients. Next, the plan calls for leveraging the firm’s R&D capabilities, eying the potential growth markets of software and services in wireless, ID, corporate security and WLAN. One point of interest here, is that these markets, are interesting potential growth markets, the bulk of Gemplus’ business remains – for the time being – grounded in the classic telecom and financial businesses. Interestingly enough though, Mr. Mandl, doesn’t appear to consider EMV as having a noteworthy effect (noteworthy enough to get as much of his presentation [conference call on 12/09/2002] as other areas). In the classic markets, he’s aiming at turning Gemplus into “the low-cost provider”. Lastly, Mr. Mandl wants to streamline the firm’s organisation by better defining missions and responsibilities, improving decision cycles and accelerating time-to-market. All of this is part of the “redefin[ing of] a strategy that fits this changed [market] environment. Will this be sufficient to turn Gemplus around and move it back to profitability? Maybe, but one must not expect immediate effects: “Today, we are starting to take the right steps towards rebuilding the company during 2003,” states Mr. Mandl. “The full benefit of this initiative is expected to be seen in 2004." But some still do not feel quite comfortable yet. Mr. Yann Lazennec, founder of a group of minority shareholders is was quoted by our colleagues at Bloomberg, comparing Alex Mandl to a commercial airline pilot, whereas, he thinks Gemplus needs more of a “fighter pilot” at the controls. Of course, the smart card market is one © Analyses & Synthèses 2002 3 in which little reaction time to market evolution can be afforded, the thing for which we will have to wait and see is whether or not Mr. Mandl has such reactivity to lead Gemplus out of its actual woes and back into the light. But things may not be that simple: more trouble on the Board may loom ahead. Though Marc Lassus will (in all probability) resign from his seat on the Board (maybe even before the next General Assembly to be held on Dec. 19th), this will probably not put an end to the ongoing squabbling therein. Board member and ex-interim COE, Ronald Mackintosh – who founded Differentis with a 50-some% participation of TPG, which had been awarded a €3 million contract with Gemplus, details of which have been reported in our pages – could be excluded from the board. As happened to Marc Lassus and Ziad Takiedinne, a motion was voted calling for his exclusion from the Gemplus board. Also added to the agenda of the next Gemplus general assembly (which will need some extensive rewriting), a new report which is to cover the question of alleged conflicts of interest. Can this be attributed to the entry of Sagem into Gemplus’ capital? Difficult to say, moreover, rumours of an entry of Thales into Gemplus capital doesn’t get a denial from Alex Mandl… The next shareholder general assembly (Dec. 19th) should be quite interesting, indeed! Ryanair to Use V by V Low-cost airline, Ryanair, is to join Barclaycard Merchant Services and Visa in offering the Verified by Visa (V by V) to secure its online transactions. With the use of V by V, Ryanair hopes to cut online fraud on its sites by 80%, an important figure since 90% of the airline’s reservations are done online. “By adopting Verified by Visa,” explains Ryanair’s Ray Hernan, “Ryanair guarantees its clients the most secure online payment method available.” Moreover, this step taken by Ryanair is an extra boost for Visa’s V by V in the UK, where the banks which handle some 90% of online transactions have opted for V by V, making the UK portion of the World Wide Web more secure for online purchases. Frost & Sullivan: Smart Cards Cost Too Much Frost & Sullivan blames costs for slow smart card uptake. “The High cost of upgrading legacy payments infrastructures is acting as significant restraint to optimal growth,” according to Frost & Sullivan analyst, Anoop Ubhey, consequently dampening “the pace of smart card growth in the banking sector.” Though there are numerous incentive programs out there, in some markets, that just isn’t enough. In the case of the UK, fraud reduction is justification enough for a migration to EMV, but, the opposite is the U.S. case (though EPI reports that 6% of active credit cards in the US are smart cards), where there isn’t even a migration deadline (the infamous “liability shift”), the costs of implementing a smart bank card program are prohibitive. Oberthur: e-Government in Hungary Oberthur Card Systems and the Hungarian Inland Revenue Service offer a smart card-based digital signature solution for online filing of tax returns. Thanks to this new system, tax returns can safely be filled online, which greatly reduces processing time. Since October last, Hungary’s “Fortune 500” firms are required to fill their tax returns online. To this effect, the Hungarian IRS is supplied with the Oberthur AuthentIC Web Pack – including Java cards, software and card readers – which will permit strong authentication, digital signatures and, the dematerialisation of corporate tax forms. This is the first widespread use of digital signatures in Hungary. “The new system,” explains Hungarian IRS spokesperson, Kyràly Làslo György, “offers three advantages: simplicity, security and rapidity.” Moreover, the system now offered is world class, which comforts Oberthur’s positioning in this segment. Mr. György continues: “We now offer our principal taxpayers a highly secure and world class filing system.” O’ahu Moving to Smart Cards City officials in O’ahu (Hawaii) are considering contactless smart cards for mass transit. This proposed card scheme is part of a bigger technological overhaul of the O’ahu mass transit system. The O’ahu Transit Services has stated looking for tech partners for installing card readers on all the city’s 525 buses. The O’ahu bus system has in excess of 200,000 boardings per day, and a smart card-based system can but streamline the entire mass transit experience. The card themselves are to cover both monthly passes as well as act as stored value cards for occasional travellers. City officials expect to have some bus runs covered by the system as soon as next June. © Analyses & Synthèses 2002 Integrating Biometrics Made Easy When one thinks of securing one’s logical access with biometrics, the trouble of adding biometric scanners can be somewhat of a headache, but some products out there just ease such an integration. Just launched in North America, a combined mouse/fingerprint reader and a keyboard/fingerprint reader, using the bioLock, SAP certified biometric access and function control software. Distributed through realtime North America, the bioLock mouse includes a biometric fingerprint reader to log-on, and is otherwise used as a standard mouse. According to realtime COO, Thomas Neudenberger, this is a “must-have” solution: “It is so much quicker and more secure to put your finger on a sensor than trying to remember the correct password!” Thus, in combination with the Siemens ID mouse or with the Cherry keyboard, one can easily set up a biometric access solution: “The combination of realtime’s SAP-certified software solutions with technology available from Siemens and Cherry,” explains Mr. Neudenberger, “not only makes SAP systems much more secure, but it also makes the administration of security much simpler and more cost effective.” Moreover, for the more style-concerned, Cherry has just launched a new keyboard/fingerprint reader (which can also include a smart card reader for greater security) in black, the latest preferred colour for PCs (after “cream” and “grey”): the FingerTIP ID Board. Thus, with its 513 dpi fingerprint reader and Omnikey smart card reader, you can obtain even greater security (since the fingerprint template resides and is verified on the smart card itself), moreover, the keyboard is fully USB compatible, using the USB port as an interface with the PC. These new offers show how far we’ve come in but a few years, from biometrics as near-science fiction to “plug and play”. Of course, though biometrics aren’t entirely foolproof, when combined with a smart card, you obtain very strong authentication indeed, far better than the classic (one is tempted to say “old-fashioned”) username and password. Visa & MasterCard: Working on Contactless Both MasterCard International and Visa International are in the process of certifying a contactless smart card to run their debit and credit applications. This will be a first. Contactless is not the preferred interface when it come to credit/debit applications, but both big credit associations are working on dual interface (contact and contactless) cards. Of course, one has come to expect contactless for some transactions, notably in mass transportation, but for financial applications? Here’s what will be a first! Using a Java Card-based chip (to be precise, the JCOP 30 by Philips) which is priced at a maximum of US$3.90 (we’re far from the 99-cent cards!), regardless of quantities ordered, this new contactless Visa will probably be premiered in South Korea, where the two leading cell phone operators plan to add contacless payments to the SIM cards in their phones. Other outlets for contactless payments could be the fast food outlets and coffee shops, where speeding up payments are of the essence. Not to be outdone by the competition, MasterCard International promises that their Multos multiapplication cards will soon be available in dual interface form as well. The dual interface MasterCards are expected in March from Australian Keycorp, prices at “under US5$.” FROM THE INDUSTRY… (the latest press releases, which can be found in full on www.e-smartransaction.com) Blackstone Technology Corporation Announces RFID Smart Label Manufacturing Breakthrough Travelers Express/MoneyGram Selects the Ingenico e(N)-Touch 3000 as its Next Generation POS terminal Setec to Supply Estonia’s Leading Banks with EMV Cards Trintech and IBM to Deploy Secure, Chip- Enabled PIN Pad Infrastructure to Ireland's Post Office Network Nationally ParthusCeva and ARM Collaborate to Create Common Development Environment for Hybrid CPU/DSP-Based System-on-Chip Cyota Announces Availability of MasterCard* SecureCode* Global Hosted Services Critical Path Selects Digiquant’s IMS Solution Trintech and IBM to Deploy Secure, Chip- Enabled PINPad Infrastructure to Ireland's Post Office Network Nationally Holiday Fraud Advisory: Guide to Smart and Safe Online Shopping During The Holiday Season Internet plc To Launch Pioneering Star Trek SmartFlash Smart Card Products [ Next Thread | Previous Thread | Next Message | Previous Message ] |