Frost: Security Threats, Government Impetus Drive Corporate Security Market

January 10, 2007 // Published as a news service by IHS

Mounting security threats across the world and the positive spillover effects of smart card use in government identification and other applications continue to drive growth of the global corporate security (physical and logical) smart card market.

According to Frost & Sullivan, successful use in the government sector clearly establishes the potential benefits of smart card systems, leading to improved awareness and adoption levels among the corporate sector.

Recent analysis from Frost & Sullivan of the world corporate security (physical and logical) smart card market found revenues totaled $90.4M in 2005, with estimates to reach $158.5M in 2011.

"The sharp increase in security threats confronting organizations today makes the case for smart card-based access control solutions more compelling than ever," said Frost & Sullivan senior research analyst Michelle Foong.

"Factors stimulating the uptake of smart card-based access control products among corporations include high profile security breaches featured in the media, increasing awareness of access control products, as well as impetus from government initiative in some regions like North America and the Asia Pacific."

Analysts said the increase in mobile and flexi-work options for employees is also providing demand for secure smart card solutions. The use of wireless devices to access company networks creates a need for more secure logical access control. This improves the business case for sophisticated access control systems like smart card-based technologies, which allows the integration of biometrics, two factor authentication and other, more secure methods of identification.

Uptake also increased among entertainment centers and educational institutions which use these cards both as a means to control student entry and as an e-payment option for purchasing items in the vicinity of the campus/institution.

Nevertheless, affordability issues and lack of information technology (IT) infrastructure in less-developed countries in Asia and Latin America continue to restrain overall growth of smart card applications. For many emerging markets, affordability is still a significant barrier to adoption, especially as the technology requires high initial investment on infrastructure-readers, internal systems, application development and smart cards.

Still, analysts believe lesser-developed countries can overcome these challenges over the course of the forecast period.

"In many developing economies, manual controls and cheaper alternatives, such as proximity cards and magnetic swipe cards, are often used in place of sophisticated smart card-based access control methods," said Foong. "Without sufficient IT infrastructure, it is hard to justify the costs of implementing a more expensive access control solution and quantifying the benefits of implementing such a system in the early stages of such rollouts."

To overcome the challenges, analysts said smart card vendors and government agencies need to undertake awareness and education initiatives that help users understand the value of using this technology in corporate security. Over time, improvements in interoperability and increased use of smart cards in other applications will also lower the costs of implementation and increase demand for these products.

Source: Frost & Sullivan.