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Crisis? What crisis?

Week 04, 2008

All stakeholders in the secure transactions industry are hit: Ingenico has lost 24% since January 1st, Verifone 29%, Hypercom 27%, Nokia 19%, Infineon 26%, ST Microelectronics 19%, …

The ongoing crisis may affect our industry for several years. Globally, in a crisis situation, decision makers are overcautious and reluctant to launch any innovation. Restrictions in credit will limit the need for credit and debit cards, and impact the smart card payment segment development. Consumers' difficulties will limit their will to purchase new mobile handsets, or to simply take a first subscription to mobile communication services, thus affecting the mobile communication segment. ID projects are government driven rather than consumer driven, but governments may be tempted to spend more in economy support measures, and to delay their investment in large ID projects. Transport projects, and enterprise security projects will slow down too; as generally, a short return on investment cannot be demonstrated. In a crisis context, few players will be willing to invest in new technologies, such as NFC, where there is still the need to perform some trials before a global rollout can be considered.

As we, as an industry, have pushed for smart cards to be in many places of the global economy over the last few years, this global crisis will mean a slowdown for our industry as all our customer segments will be affected.

When a global crisis is combined with company-level issues such as the ones with Verifone (cf. Smart Insights #07-49) or with ERG (cf. SI #07-48 and 08-02), the survival of the companies may be at stake.

John F. Kennedy said: "When written in Chinese the word "crisis" is composed of two characters - one represents danger and the other represents opportunity." We can all see the danger. Let's see who will take advantage of the opportunity.

Thierry Spanjaard
Chief Editor
Smart Insights