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Gemalto results shed light on current industry issues

Week 06, 2007

Being in this position has made Gemalto the primary target of its competitors as well as of its customers. When in the situation of a call for tender, customers have now more bargaining power to drive the prices down. The market took advantage of the individual uncertainties of Gemalto staff during the merger period to drive prices down. Now that the merger is completed, multi source customers have easy arguments to use price or customershare pressure to drive prices down. The merger has made other traditional card manufacturers at the same time hungrier for business and in a better bargaining position with their customers as they can develop arguments presenting Gemalto super power as a threat.

This price war has had an adverse effect on Gemalto results as well as has market dynamics. Mobile Communication remains the largest market, but may no longer be the essential source of income for the industry. The market becomes more balanced between mobile communication, payment (thanks to EMV and contactless cards deployments) and strong growth segments such as Identity and Security. Convergence (mobile payment applications) may take some time before becoming a major industry segment.

Gemalto still has some ground to cover before it reaches the goal set by its CEO Olivier Piou: "establishing Gemalto as a global leader in Digital Security ".

The industry may also evolve under mergers and acquisitions, we all know the industry landscape is not stabilized yet, and under the pressure of new entrants, or the development of existing industrialists from emerging countries.

Thierry Spanjaard
Chief Editor
Smart Insights