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| Subject: Re: With its stock acquisition into Proton World International American Express 1998 | |
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Author: The Java versus MULTOS Question |
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Date Posted: 01:16:19 12/28/02 Sat In reply to: Proton Prisma BP implements VISA and MasterCard requirements 's message, "Proton Prisma BP implements VISA and MasterCard requirementsOctober 31, 2002 Oerthur" on 01:09:59 12/28/02 Sat Analysis: American Express, Banksys, and Visa International Create Proton World International Mountain View, California July 30, 1998 Without any real surprise, the smart card industry continues its expected path of consolidation with Visa International and American Express joining with Banksys to create Proton World International Each party had problems that the others could ideally solve in order to survive the next years of immense difficulty for the smart card industry. At the end of the day, what Proton World International will do is the following: Inject life back into the Banksys/Proton camp who was struggling with lack of enough capital funds; Ensure that American Express remains a key player in chip card developments, just as industry observers were beginning to doubt American Express' continued strength in this arena, and; Intensify and improve Visa's positioning against Mondex/MasterCard, particularly in the battle of Java versus MULTOS. What Will Banksys/Proton Get Out of the Deal? Unlike other country-specific programs like Finland's Avant or Australia's Transcard, the Banksys/Proton system was the only "small player" to have maintained a strong position against larger players such as Visa and MasterCard. Proton had issued the most cards (26 million) and was able to implement full-scale roll-outs in Belgium, the Netherlands, and Australia. Even so, the future of Banksys/Proton did not look promising: not only did the Belgian player seemed to have lacked the funds for the next years of the big dry spell in the chip card industry, but the Proton system lacked a technology roadmap to go beyond its present status as "just a stored-value card". With the backing of two major bank card associations, however, Banksys/Proton will certainly receive the capital injection it needs to breathe easy again. Moreover, Visa's push to have Proton support the Java API (application program interface) and the Visa Open Platform will assist in Proton's movement to scale the Proton system beyond its stored-value status. Moreover, American Express will bring significant knowledge to Proton on multiapplication systems because of American Express' multiapplication card system trials with Hilton Hotels and Continental Airlines. What Will American Express Get Out of the Deal? American Express brings to the table the power of its bank-card image, capital, and multiapplication card system trials experience. The company has been known, however, among the analysts as the quiet player in the market. Following a more cautious strategy than either Visa or MasterCard regarding chip card technology, American Express had so far only invested minimally in chip card technology. As such, what American Express lacked in the market were two points: a serious chip card system image and a higher rate of chip card issuance. Industry analysts had almost written off American Express as a serious chip card player. American Express, however, has played a good hand in the game: it allowed other players to pay for the up-front investment for market development, all the while knowing that it could jump in with full force when it wanted. With its stock acquisition into Proton World International, American Express will not only "buy" the necessary learning and experience curves for chip card implementation, but it also quietly shows the industry that the American Express cannot be counted out. What Will Visa International Get Out of the Deal? Certainly what Visa brings to the table with Proton World International is a strong brand image, capital, and commitment to a long-term vision on chip cards. In terms of project pilot launches, Visa far outruns its competitors. What Visa lacked, however, are two things that Proton will be able to supply: full-scale roll-out experience and another Java platform supporter. The Java versus MULTOS Question One of the major coups for Visa is that it has secured the third major smart card system player Proton as a supporter of the Java API. The race between Java and MULTOS (the operating system of Mondex/MasterCard) has been a hot topic of speculation thus far in the industry. Now it would seem that Visa is leaping ahead of Mondex/MasterCard. Even so, the commercial viability of both the Java Card and the MULTOS card has not been proven. Trials for both cards will take place in late 1998 and beyond, but the business case of the cards have not been proven. As Andy Grove of Intel once commented, "The technology disappears within the application." In the same way, the major issues facing end users has very little to do with whether Java or MULTOS technology is better -- the end users are concerned with more fundamental questions regarding card co-branding and real estate ownership as well as responsibilities for lost or damaged cards. Even so, to look beyond the horizon, it is very unlikely that either Java or MULTOS will be the final answer to multiapplication cards. Java and MULTOS, however, do both point to the paradigm shift that is about to strike the industry, namely that proprietary operating systems such as Gemplus' MPCOS or Giesecke & Devrient's STARCOS will cease to exist within the decade. In the replacement of these proprietary operating systems will come the rise of the open platform systems on top of which applications will be written. The future generation open operating system will likely not be anything like today's Java Cards or MULTOS cards. Comments Frost & Sullivan's Smart Cards Industry Analyst, Alyxia T. Do, "The Proton World International announcement places the smart cards industry where the personal computer operating systems were positioned in the early 1980s. Up until then, the computer market had seen CPM, which was an 8-bit operating system running on the old Commodore and Epson computers, and analogous to proprietary card operating systems like Gemplus' MPCOS. In 1980, the major players in the market were the Apple Macintosh and MS-DOS on the IBM PC. Everyone thought the Apple Macintosh was to be the winner because of its superior graphical interface. Who would have foreseen the rise of Microsoft Windows 3.0, which debuted in 1988, which became so successful that now in 1998 the United States Department of Justice has to investigate MS Windows for market monopolization? The smart card industry is at the Apple Macintosh position in the early 1980s. Who will be the Microsoft Windows of the smart card world? It's simply too early to tell." by Alyxia T. Do, Guest Analyst - Frost & Sullivan For more information, visit our Web site at: www.frost.com [ Next Thread | Previous Thread | Next Message | Previous Message ] |
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| Re:The Killer application is transit. | The Killer application is transit. | 01:32:34 12/28/02 Sat |
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