CCM SECTOROPTICS
WITH MICHAEL SONI

SecuritySolutionsWatch.com

Biometrics technology seems to be gaining significant market acceptance now. Several Government programs are underway such as US-VISIT and the enterprise sector is also deploying biometrics to reduce fraud and identity theft. American Express, for example, has implemented biometrics security measures at its corporate headquarters.

Please give us an overview of the biometrics market, today and going into the future.

The Biometrics Sector is an extremely exciting sector and is another example of the line being blurred between science fiction and reality. Everyone has seen the movies where an individual was required to give a voice sample, iris scan, or finger print in order to gain access to some secured area. Biometrics technology has been coming for a long a time and there is an argument to be made that the war on terrorism has created additional momentum when bringing these products to market.

Biometrics involves the use of human identifiers to recognize a person and related personal information/data based on physiological or behavioral characteristics. Biometric features include identifiers such as a person’s facial features, fingerprints/hand geometry, retina/iris scans, and handwriting or voice characteristics.

According to the International Biometrics Group (IBG), the biometric market was estimated at $1.2 billion in 2004 and is expected to be one of the fastest developing sectors, growing by approximately 40% annually to an estimated $4.6 billion by 2008. Of the 2004 total, IBG estimates that fingerprint technology represented nearly half (48%) of the market, followed by face recognition technologies (12%), hand identification (11%), iris technologies (9%), voice recognition (6%) and numerous other technologies.

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In addition to US VISIT - are there other Government Programs underway using biometrics?

Currently, the federal government is driving research and development in the burgeoning industry as it pursues more secure borders and key national security programs. Some initiatives include the following;
1) Enhanced Border Security and Visa Reform Act of 2001, passed shortly after 9/11
2) US-VISIT program with an estimated $400 million budget.
3) The Office of Legislative Counsel, which is the legislative drafting service of the U.S. House of Representatives, has begun deploying biometric authentication software on its computers.
4) U.S. Department of Defense will utilize 600,000 smart cards as part of the Common Access Card program, to be rolled out at 900 sites. The smart cards will be used for personnel identification, electronic signatures, e-commerce, and secure building and system access, and will eventually support more than four million cardholders.

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Which companies in the HSX Index will benefit from biometrics industry growth?

These include;
Identix (IDNX– NASDAQ),
ActivCard (ACTI – NASDAQ)
Viisage Corp (VISG – NASDAQ)

A non-HSX play is;

Cogent Systems (COGT – NASDAQ).

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Radio Frequency Identification (RFID) is a relatively new way to track the movement cargo, assets, and inventory while also reducing theft and counterfeiting. What are the benefits of RFID compared to bar codes?

The logistics of asset movement across the globe is currently experiencing profound change. The advent of bar codes, pioneered by firms such as Zebra Technologies, improved the ability of firms to record and track inventory as it moved along the supply chain. However, the use of bar codes is more labor intensive and only allows the identification of a certain class of inventory - such as a shipment of books from a particular vendor. While clearly useful, a more sophisticated technology entitled radio frequency identification (RFID) is revolutionizing inventory tracking and significantly enhancing the way firms distribute goods, reduce theft and counterfeiting, increase security and inventory turnover, and track the purchase/sale of products.

RFID involves technologies used to identify and track goods using both a reader and ‘smart tag’, or tiny microchip attached to an asset. The technology is similar to bar codes in that information is read; however, bar codes have to be physically ‘scanned’ while radio waves are sent by RFID tags that are read by a passive RF transmitter and receiver. The technology also involves software that links the relationship between reader and smart tag. RFID will prove to have many applications and sophistication, improving inventory management and allowing firms to more aggressively drive sales growth or governments to enhance security.

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What do you see in store for the RFID market growing going forward?

Venture Development Corporation (VDC) estimated the total RFID market at $1.5 billion for full year 2004 and expects it to grow at a compound annual growth rate of just under 50% through 2007. Allied Business intelligence (ABI) expects global RFID spending to reach just over $3.0 billion by 2008 while Frost & Sullivan expects the total global market to reach just under $12.0 billion in size by 2010. Sector growth is in its infancy and expected to accelerate substantially through the end of the decade.

As with a large number of burgeoning technologies that receive initial funding via public security initiatives (such as global positioning systems (GPS); even RFID dates back to WWII as a radar system), the federal government has accelerated RFID research and development as it pursues better ways to track shipping container cargo, reduce counterfeiting, and improve military supply chain management primarily as a result of September 11.

However, RFID is receiving considerable private sector attention as witnessed by Wal-Mart which demanded that its top 100 suppliers utilize RFID for certain shipments. The demand-pull has been primarily retail driven; other firms with RFID mandates include Target, Albertson’s, and British-based retailer Tesco. Indeed, International Data Corp (IDC) estimates that the RFID marketplace for U.S retail chain spending stood at $91.5 million for full year 2003 and projects the market to grow exponentially to over $1.3 billion by 2008.

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Which companies should we be watching in RFID technology?

There are currently a number of cutting-edge publicly traded RFID companies.
These include:

Infosys (INFY – NASDAQ)
Zebra Technologies (ZBRA– NASDAQ)
Symbol Technologies (SBL– NYSE)
I.D. Systems (IDSY – NASDAQ).