In an article written by Kirk Ladendorf of the American Statesman, he talks about Gemalto's preference to do away with the magnetic stripe. Most of Europe has already converted from magstripe to Chip and PIN, as has Australia and Canada...along with many other parts of the world. The USA is the last vestibule for Gemalto, and they believe America will convert to EMV in the next 5 to 6 years. At least one analyst does anyway.
"The world's largest smart-card supplier shipped 1.2 billion of its cards last year and has more than 1 billion users around the world. It recorded sales last year of 1.6 billion euros (about $2.2 billion U.S.). The company says its growth this year is running about 10 percent in the face of a weakening economy.
Now, the Amsterdam, Netherlands-based company is looking for new worlds to conquer, including the United States, which traditionally has been a smart-card laggard. The company is relying on its 150-person marketing and engineering team in Austin to develop products, services and business alliances that help keep its revenue growing.
North America is a comparatively undeveloped market for Gemalto in part because many of the big banks here remain wedded to old-fashioned "magnetic stripe" bank credit cards and debit cards, rather than to smart cards, which predominate in Europe and other parts of the world.
Despite some reports of increased fraud cases involving magnetic stripe cards, many U.S. banks are hesitant to change because of their heavy investment in the technology, said analyst Ed Kountz with Jupiter Research.
"Our (banks') willingness to make a change is somewhere between kicking and screaming on the payment side of things," Kountz said.
Smart cards can contain 1,000 times as much information as a magstripe card and can contain multiple software applications that enable them to handle more functions. More data and more software translates into more security and more functionality, Gemalto says.
As the rest of the banking world adopts smart cards, the analyst expects U.S. banks will eventually follow in the next five or six years.
If the banks are slow to move, other U.S. customers, including the federal departments of Defense and State, have moved faster. Gemalto is one of two main suppliers of smart cards that go into the State Department's new e-passports, which began in 2006. It has also won over big security-conscious corporate customers including Boeing Co., Chevron Corp. and drugmaker Pfizer Inc..
Some of those companies have begun using a new Austin-developed product, the Smart Enterprise Guardian, that can be used to authorize user access to computer networks, the secure transport of stored digital files and digital signatures for e-mail documents to make an official record.
Pfizer is using the "digital signature" feature to reduce the logistical requirements, money and time involved in creating an official record for its complex drug development process.
The SEG was developed to work with Microsoft Corp.'s Windows operating system.Gemalto's technical team in Austin keeps close ties to Microsoft's operating system developers.
"Microsoft is a huge supporter of Gemalto because we are the largest provider of secure devices in the world," said Paul Beverly, who heads the company's North American operations and also serves as the global company's executive vice president for marketing. "What we are seeing is, we are in a position where things are evolving in our direction. The pressure is coming from various mandates for increased security, and there is a lowering of the technical barriers to adoption."
Microsoft founder Bill Gates has said that one of the major points of vulnerability to computer networks lies in its heavy dependence on passwords as the main form of authorization for users. Passwords can be stolen or lost, and they can create an administrative burden to manage.
Gemalto says it offers a way around the problem.
"We all realize that we can make the world more secure and more convenient if we can get rid of the damned password," Beverly said. "That is our mission, to get rid of the password, because it creates so many problems" for computer systems administrators...
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