Smart card pioneer Gemplus held its annual meeting in Bangkok last Friday against a background of uncertainty about the rate of global growth for the industry.
Sales in Asia were hit last year by the regional financial crisis and there remains no clear idea of when the US market for smartcards, notably their widespread use by banks, will take off.
Interviewed on the eve of the annual get together Gemplus's vice president for marketing, Jacques Seneca, said Gemplus estimated industry growth would be around 20 per cent to 25 per cent a year, not the 38 per cent forecast by Dataquest.
Dataquest also predicts that growth of microprocessor cards for banks and mobile phones could grow even faster, reaching 56 per cent a year. This could drive the overall market to reach close to $6.8 billion by 2002.
For the moment, said Seneca, Gemplus was relying on the European market where its sales last year were ahead 20 per cent at $375 million. The increase was fuelled by runaway demand for cards for mobile phones, now half of Gemplus's total sales in Europe.
Development of health card sales in Germany, Belgium and France was "satisfactory" said Seneca. Gemplus has a quarter of the market, lower than its rival Schlumberger.
Ahead of the announcement of the 1998 results, Gemplus executives went along with analysts predictions of 1998 sales of $732 million with profit in the region of $36 million, a marked improvement on the previous year's $2.5 million.
Gemplus is maintaining a high rate of investment in research and at its 10 plants around the world. There are plans for new units in Russia, China, Brazil and Australia, but its main hopes lie in smartcard technology taking off in the US.
A little more than a year ago, when it signed a cooperation agreement with IBM to strengthen its secure transaction technology for smartcards, Gemplus founder Marc Lassus said the future lay in Internet commerce and providing security.
More recently, Gemplus and IBM announced joint development of smartcards based on Java technology. They aim to create an eight bit Java based smartcard. Customer pilot projects are underway.
"We are on the verge of important technological breakthroughs with the use of Java language and Microsoft's introduction of an operating system," said Frederic Spagniou, number two in the Gemplus hierarchy below Daniel Le Gal, who has taken over the day to day operations from Lassus.
Seneca also added that the future lay with Internet payment cards, but that for the moment only a marginal number of PCs were equipped. "The challenge now is to achieve standardisation and inter-operability. I think banks and others in the US are coming round to see the advantages of advanced smart cards, particularly for loyalty and cross marketing programmes," he said. The Gemplus meeting on Friday was told, however, that for the moment North and South America account for only 20 per cent of sales.
Gemplus refuted French reports that the crisis in Asia, which accounts for 17 per cent of sales, had cost the company regional sales in the region of FRF 400 million ($71 million) last year. The company said the figure was lower, although projects have been halted in Malaysia, Philippines, South Korea and Thailand.
On the plus side, sales have progressed in China where Gemplus has secured markets for public phone booth cards.
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