European Smart Card Market
Fecha Martes, octubre 08 @ 11:41:53
Tema Internacional :: International
| According to new research published by IDC, the European smart card market has been strongly impacted by the major downturn in the mobile market. In 2001, microprocessor smart card shipments grew by less than 5%, with 316 million units sold. The mobile segment will remain the key market throughout the period under review and is expected to return to positive growth in 2002.
European Smart Card Market Hit by Downturn in However, major growth potential is now expected in fast-growing market segments (corporate and network access, government ID), and outside Western Europe. Although in decline, Western Europe’s share will still account for 26% of the total worldwide microprocessor smart card market in 2006
Western Europe will maintain a major share due to microprocessor smart card developments in key applications, with almost full mobile phone penetration rates and the proliferation of microprocessor bank cards in all countries.
Asia/Pacific is the most dynamic area because of the market size and the high growth rate of applications such as mobile communications and mass transit applications. Despite its initial focus on low volume applications (corporate and network access), North America will catch up relatively slowly until the middle of the period reviewed although financial cards Blue Card and Visa USA Smart Program are gaining audience. IDC expects above-average growth from 2005, as consumers will be more accustomed to microprocessor smart cards.
The European smart card market was affected by the fall in cellular handset sales in 2001, with mobile operators and handset vendors seemingly overestimating the extension of the installed base on a market already considered very mature — thus accumulating large stocks in 2000.
The combination of several factors led to fast erosion in the market:
-The slow growth of mobile subscribers’ installed base in most Western European countries
-The decrease in net additions of mobile subscribers, the first sign of a decline in the number of handsets sold
-Evidence of a slowdown in mobile phone replacement rates, as in highly penetrated markets IDC noted the majority of new wireless net adds are less likely to replace handsets given their demographic segmentation
IDC expects a return to growth for smart card shipments in the mobile segment in 2002, with a net acceleration in 2003. This return to dynamic growth will be driven by the migration of mobile subscribers towards 2.5G and 3G services and further handset innovation. IDC estimates that GPRS and UMTS technology will represent 9% of mobile handset sales in 2003. Furthermore, there will be a growing installed base of new mobile platforms that will be used for mobile data applications and with embedded SIM cards. IDC also believes that replacement demand through 2001 and 2002 will result in a base of older handsets ripe for replacement as the economy rebounds.
EMV Standard Will Boost Already-Mature Financial Segment
Led by the customary EMV migration from magnetic cards or less standardized smart cards to microprocessor cards for Europe until 2005, the banking segment will remain the second application (about 25% of the total market) thanks to already scheduled rollouts for major countries. Apart from mobile and banking, government ID and corporate/network access appear to be the two most dynamic applications (with a CAGR of 79% and 70% respectively between 2000 and 2006) because of the need to secure access to building and to IT networks. IDC believes authentication functions performed by microprocessor cards are key to B2B and B2C transactions’ secure development. Electronic ID is also a promising use of microprocessor cards but its prospects are dependent on long-term government decision cycles. IDC believes that in Western Europe significant potential will not be achieved before 2004.
Is There a Critical Size for Success in the Market?
With the microprocessor smart card market now a mass market for the two leading applications — mobile communications and banking — major industry vendors must be able to sell large volumes of cards worldwide for banks and mobile telco issuers while customizing their products to their specific needs. Despite industry consolidation in the last three years, IDC believes there is still room for a more focused approach to the market through specialization, especially for growing applications such as corporate and network access, electronic identification and egovernment, which require proximity to be in a better position to adapt to the needs of corporate and public customers.
The other key to success in the market is the vendor’s position on the value chain. Beyond the disposal of large manufacturing capacities, smart card vendors are required by their customers to develop software tools and integration services to provide them with innovative solutions based on smart cards to gain new end users and retain existing users. In this context, IDC believes positioning of vendors in the software and integration parts of the smart card value chain is key to generating higher margins and thus long-term capacity to compete in the market. The industry is highly concentrated, especially in the microprocessor segment, but IDC believes further alliances and joint ventures are likely — first, to help issuers implement and manage CRM, and, second, to produce more-affordable cards supporting public key infrastructure (PKI), which IDC has identified a strong need for in the security field.
Source: IDC http://www.idc.com
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