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Aug. 14 (Bloomberg) -- As the technology world buzzes with speculation that the next iPhone will have a fingerprint reader, makers of biometric security devices are bracing for a race among smartphone makers to adopt the technology.
Apple Inc. will unveil a new iPhone next month, according to a person familiar with the plans. ABI Research and KGI Securities Co. are among the industry watchers that say the device will include a fingerprint reader, a prediction bolstered by Apple’s $350 million purchase of fingerprint- sensor maker AuthenTec Inc. last year.
“Apple is giving a strong indication that market leaders see biometrics as part of their roadmap,” said Thomas Marschall, chief executive officer of Precise Biometrics AB, a maker of authentication equipment such as fingerprint sensors in Lund, Sweden. “All competitors are looking for alternatives to match Apple -- it’s the kickoff of a rally in the industry.”
Mobile-device makers are turning to biometrics to make smartphones more secure and quicker for making payments and accessing files, music and video through so-called cloud services. An Apple embrace of fingerprint sensors could give the technology a lift, much like the boost touch screens got after the iPhone’s introduction in 2007. Device makers started paying attention to biometrics, which can replace passwords and signatures, after the AuthenTec acquisition, Marschall said.
Shares of Precise Biometrics have almost doubled since Apple’s AuthenTec deal, on expectation than its technology will see more demand. The stock added 12 percent in Stockholm today for its biggest gain in almost a month. Fingerprint Cards AB, another Swedish maker of biometric security solutions, has risen more than tenfold in the same period and surged 14 percent today.
A fingerprint sensor would provide iPhone users a simpler way to access files via the Internet and make mobile purchases, strengthening Apple in its battle with devices using Google Inc.’s Android operating system, according to Kuo Mingchi, a KGI analyst in Taipei who covers Apple suppliers. An iPhone with the technology would provide “fresh momentum” for fingerprint- sensor suppliers, the analyst said in an Aug. 12 note. Apple declined to comment.
Mobile payments are set to soar as more people transfer money and shop on their smartphones. Total transactions will rise to $721 billion by 2017 from $235 billion this year, according to researcher Gartner Inc. Smartphones are the biggest and fastest-growing part of the mobile-phone market.
Suppliers of secure identification cards with embedded chips are already benefiting from growing adoption of biometric authentication. Companies such as Gemalto NV, Morpho, and Oberthur Technologies have developed fingerprint, retina- scanning and facial recognition technologies for customers such as governments and banks. Now, they say, ID cards and passports with programmable chips that contain biometric information will increasingly be used for transactions such as paying subway fares or online shopping.
“We used to make ID cards and passports,” said Morpho’s founder Bernard Didier, who is also a senior special adviser to the company’s parent, Paris-based aerospace, defense and security group Safran SA. “Today we’re asking: Why not use your ID for transport, social security or even payments?”
Morpho, which issues driver’s licenses for 42 U.S. states and counts governments from Albania to Chile among its clients, has helped customers catch criminals using tattoo recognition and move travelers through airports more quickly thanks to gates equipped with facial-recognition.
“Electronic passports are only the tip of the iceberg,” Olivier Piou, CEO of Gemalto, said in a June interview. “Any chip in an ID card comes loaded with secure software containing some credentials and some empty spots. We can fill those later with all sorts of new applications.”
One Gemalto client, Oman, has loaded parking and speeding tickets as well as tax stamps onto its ID card. Gemalto has forecast sales at its security business, including identification, will grow 10 percent or more this year from 384 million euros ($511 million) in 2012, thanks to issuing secure documents and helping manage the relevant data with software.
Shares of Amsterdam-based Gemalto have jumped 41 percent in the past year and advanced 5.2 percent today to the highest level since at least 2004. Morpho’s parent Safran has gained more than 50 percent and added 0.7 percent today.
Still, even as some laptops and computer keyboards come with fingerprint sensors, biometric identification hasn’t found widespread consumer popularity. Apple, with its record of setting trends in technology, may change that, said Johan Carlstroem, CEO of Fingerprint Cards in Gothenburg, Sweden.
“The use of biometrics in consumer electronics isn’t new,” he said. But if “Apple gets its fingerprint solution to work seamlessly and delivers a great user experience, it will mean a paradigm shift and a milestone for biometrics.”
--Editors: Ville Heiskanen, David Rocks