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  Commoditisation of physical smart cards and the progressive digitalisation of services motivate strategic re-think.

LONDON — 9 April, 2013 — Smart card vendors continue to move from provisioning of physical cards to the delivery of smart card-related software and services. The commoditisation of physical smart cards and the progressive digitalisation of services have forced smart card vendors to re-think their strategies and focus on the services side of their business.

New analysis from Frost & Sullivan (http://www.smartcards.frost.com ), Global Smart Card Forecaster – Core Industry Shipment/ Revenue Outlook, finds that the smart card market covering SIM, banking, government and transportation verticals across Asia-Pacific, Africa, the Middle East, Europe, Latin America and North America, earned approximately $6,907.2 million in 2012. The market revenue is estimated to reach $9,551.6 million in 2018. Unit shipments are anticipated to expand from 7,119.8 million to 10,906.8 million units over the same time period.

The hitherto dominant SIM card market is approaching maturity. With both unit shipment and revenue growth rates expected to will slow, focusing on the high-end SIM cards segment can protect smart card vendors from intense price competition of the mid-range and low-end SIM card segments in the short-term. However, price competition will, at some point, affect the high-end segments as well.

“It is advisable, therefore, for smart card vendors to evaluate providing SIM-related services and solutions in the field of mobile payments and device management,” noted Frost & Sullivan’s ICT Global Program Director Jean-Noël Georges. “Smart card vendors should also consider engaging in M&A; activity to build economies of scale, and thus, withstand the slow growth of the SIM card market and its decreasing revenue potential.”

Embedded SIMs for mobile communications could start being commercialised within the forecast period. The shift from physical SIM cards to embedded SIMs will be largely driven by smartphone manufacturers.

“The move to embedded SIM cards poses a challenge for smart card vendors as the traditional value chain will be altered,” cautioned Georges. “Vendors need to work closely with smartphone manufacturers and semiconductor vendors to gain a better understanding of consumers needs and develop software and services accordingly.”

Migration to the EMV standard in emerging countries and the United States will sustain overall market growth. Card issuers in the Americas and Asia-Pacific continue the shift from magnetic stripe cards to chip cards. China and the United States are expected to boost smart card shipments in the banking and payment vertical.

At the same time, governments worldwide are persisting with the digitalisation of public services. Countries like Brazil, India, Indonesia, Germany, Japan, Nigeria, Poland, Russia and Turkey are, or will soon be, implementing either e-ID, e-Health, or multi-purpose card programmes.

“e-ID and e-Health cards will be the segments within the smart card government and ID market that will grow rapidly over the forecast period,” concluded Georges. “Partnerships with registration and data centralisation service providers could be valuable to winning tenders.”

If you are interested in more information on this research, please send an e-mail to Joanna Lewandowska, Corporate Communications, at [email protected] , with your full contact details.

Global Smart Card Forecaster – Core Industry Shipment/ Revenue Outlook (M8E0-33) is part of the Smart Cards Growth Partnership Service programme. All research services included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.

About Frost & Sullivan

Frost & Sullivan, the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today’s market participants.

Our “Growth Partnership” supports clients by addressing these opportunities and incorporating two key elements driving visionary innovation: The Integrated Value Proposition and The Partnership Infrastructure.

· The Integrated Value Proposition provides support to our clients throughout all phases of their journey to visionary innovation including: research, analysis, strategy, vision, innovation and implementation.

· The Partnership Infrastructure is entirely unique as it constructs the foundation upon which visionary innovation becomes possible. This includes our 360 degree research, comprehensive industry coverage, career best practices as well as our global footprint of more than 40 offices.

For more than 50 years, we have been developing growth strategies for the global 1000, emerging businesses, the public sector and the investment community. Is your organisation prepared for the next profound wave of industry convergence, disruptive technologies, increasing competitive intensity, Mega Trends, breakthrough best practices, changing customer dynamics and emerging economies?

 
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