Good results in the industry
Both of them have posted extremely positive results with Gemalto posting an increase of 40% of its operating income, and Oberthur posting an increase of 120% of its operating income. It is interesting to notice that Gemalto sales level is slightly decreasing (-4%) whereas Oberthur sales grew by only 14%, demonstrating the leaders, the traditional European industrialists, combined market share is decreasing. Both Gemalto and Oberthur claim they have been able to control the ASP (Average Selling Price) decline within acceptable limits, and both companies had to restructure their activities, and to move an increasing share of their production to low cost areas. For instance, Oberthur Technologies now manufactures 81% of its SIM card volumes in Asia.
Both Gemalto and Oberthur announce optimistic outlooks for 2008, seemingly being unaffected by the global financial crisis. Olivier Piou, Gemalto CEO said: "We currently see no evidence of the global financial turmoil impacting our activities, aside from the evolution in the average exchange rates between the Euro and other currencies." The smart card industry claims it is not affected by the economic downturn. The most important market segment for our industry is mobile communication, in which most of the growth is coming from emerging countries, where the ratio of prepaid subscribers to post paid subscribers is higher than in more mature economies. Prepaid subscribers generate more churn, thus more SIM cards consumption. Also, according to Olivier Piou, "If banks face difficulties on their market activities, they will have to concentrate on retail activities, which are our actual customers".
Now the next issue is to be the ranking between industry leaders. Since Gemplus and Axalto merger, positioning Gemalto as undisputed #1 in the industry, Giesecke and Devrient proclaimed itself as #2 in and was not challenged on this assertion. Now, Oberthur Technologies is currently in the process of acquiring the activities of XPonCard (cf. Smart Insights #08-08), and claims this will make it the #2. At the same time, Giesecke & Devrient is in the process of taking control of 75% of Bundesdruckerei (cf. SI #08-11), which will undoubtedly affect the ranking between major vendors again.