although it is starting in Japan, Singapore and is underway in Malaysia and Latin America… but not yet in the United States. That transition will go on for the next four to six years.
The third segment is the identity and security market, and that is simply the reality of the current environment, where in the post 9-11 setting, security has become a growth business. Various forms of physical security--wearing identity badges for physical access into buildings, countries, airplanes--is very much a growth business. That segment is possibly the fastest growing segment in our business. We think that this business will triple over the next three years, worldwide.
How much headway do you see Gemplus making in biometrics and e-passports?
We've acquired Setec, which will further strengthen our capabilities in this business in the security environment, and in the ePassport environment, where we won business in Singapore. We believe we can leverage that e-passport experience into other parts of the world.
That part of the business will also be an important growth driver--very different from the SIM card and bank business, and [revolves] around providing chip technologies into various ID forms that will address security concerns that the world has today.
| At the end of the day, you cannot have 10 different standards in the e-passport environment. |
There is no doubt, that over time, some form of e-passport will be developing, most likely set by standards that the U.S. will have some influence over. There are lots of activity between Europe, the U.S. and Singapore, to make sure there's a sense of commonality and standards, because at the end of the day, you cannot have 10 different standards in the e-passport environment.
It's taking longer and there've been some postponements, and I think it's logical. That's the right thing to do because the standards that are required on a global basis have not been fully agreed to. Therefore, it is appropriate to take some more time to make sure that the global set of standards will be developed [properly], agreed to and implemented. I think over the next five years and beyond, the e-passport deployment will be a very active and important part of the ID business.
Some critics have claimed smart chip and PIN technology have not stemmed the ID theft problem. What are your thoughts?
Our approach is that it is a requirement and a standard that's been set by Visa, MasterCard and Eurocard, and it is driven mostly by fraud.
When you read about the identity theft in the U.S. and the consequences of that, [you will appreciate that] having a more secured card makes all the difference in the world. The fact is, with the magnetic strip in the U.S., when you use a credit card, the machine or the network does not know who is using that card. If you have a chip-based card, and you put in a code, the odds are dramatically higher that you're the proper owner of that card, because the combination of the card and knowing the code just reduces the likelihood of theft and fraud by a very significant factor.
People continue to debate this fraud situation, but the fact is, the standards that have been set by Visa and MasterCard are designed to reduce that fraud, and it is doing that. If you look at the U.K., where the transition has taken place, the improvement in the fraud case is very significant.
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