International Business Machines Corp. has announced an alliance with Gemplus Group that the companies said will help bring smart cards to the consumer market.
The biggest banking technology vendor and the leading chip card manufacturer sealed their agreement last month in Paris for joint marketing, sales, and development of smart card applications.
It is the latest in what Forrester Research analyst Karen Epper termed "an alliance frenzy."
"Vendors are doing a square dance of partnering," she said, particularly when smart cards and Internet commerce - two seemingly interrelated phenomena - are involved.
IBM will contribute its skills in systems implementation and integration, helping Gemplus increase market share by concentrating on its core manufacturing competency. "Over 10 years there have been a lot of false starts, and no one wants to miss the boat" when the "boom starts in smart cards," said Ms. Epper, who is based in Cambridge, Mass.
IBM, which has taken an aggressive approach in many aspects of electronic commerce, formed a smart card solutions division in 1995. It has also had a minimal involvement with an undisclosed vendor producing smart cards, said Jeremy Davis, a spokesman for the Armonk, N.Y., systems giant.
The smart card production field has grown increasingly crowded despite the U.S. market's halting acceptance of the technology. Motorola Inc. surprised the industry in March when it announced it would start making chip cards, readers, and related systems.
IBM's alliance with Gemplus may allay speculation that IBM had designs on competing in card manufacturing.
Ms. Epper said IBM has been very active in the computer systems security market. The alliance with Gemplus, she said, may foreshadow a future reliance on Gemplus to make cards for IBM's corporate security business.
"This alliance is important for the industry more than for the individual players," said Dominique Trempont, president of Gemplus Americas. "IBM has about 70% of the corporate data in its systems, and it is going to establish smart cards in the corporate market and in the service industry market."
The alliance, he added, "is about leveraging smart card technology in the marketplace and putting it in the hands of everyone."
Gerald L. Smith, market opportunity manager, North America, for IBM in Charlotte, N.C., said the alliance was one of "mutual interest" that plays to Gemplus' and IBM's respective strengths.
"Gemplus is the leading smart card supplier," Mr. Smith said, and "from IBM's point of view, the focus is on core business, which is end-to-end solutions, system integration, and application development and consulting."
In recent months the smart card industry has seen alliances between IBM and Siemens-Nixdorf, Hewlett-Packard Co. and Gemplus, and Netscape Communications Corp. and a number of prominent data security vendors.
Ms. Epper said there has been "a lot of intra-industry development between consumer technology companies and the conventional smart card market," and this will be necessary to get smart cards "into consumer hands."
Other experts said an alliance with IBM would promote open standards for smart cards, which to date have been run on a largely proprietary or ad hoc technical basis.
"Gemplus may figure IBM can help institute standards and have them be accepted," said Jeff Baxter, principal, S.J. Baxter & Associates, Forest Hill, Md. "IBM has a good reputation with corporate customers that will be players in the smart card industry."
