Motorola Inc. has leaped headlong into the smart card business, lending further credibility to the burgeoning technology.
The Schaumburg, Ill.-based chip manufacturer said last week that it established a Smartcard Systems Business unit, which will produce a full range of smart card products.
The company for the past 20 years has been supplying semiconductors-the chips that make plastic cards smart-but now it will offer everything from cards and readers to systems integration. Motorola will also help to establish open standards for the industry.
"Over the next five years we expect the smart-card market to explode," said Mark Davies, who will head the new unit. "It's the ideal time for Motorola to enter the market."
The chip maker said it will promote a combination card that can perform transactions either when inserted into a terminal and making contact with a reader, or by radio frequency from as far as two feet from a reading device. The contactless feature is considered an important one for mass transit uses. Industry observers said Motorola, as a leading supplier of chips to current card manufacturers, could be perceived as competing with its customers.
Even so, Joseph Schuler, senior vice president of marketing and sales for smart card manufacturer Schlumberger, said the news is "not a threat at this point. An organization like Motorola coming in is another stamp of approval (for) smart cards." He said his company "looks forward to continuing to work with Motorola."
Motorola will partner with Bull Group, a French card manufacturer, on combination card applications, said Bull spokesman Bill Bradley. Mr. Davies noted the global market could reach $15 billion in sales by the year 2001. "The industry is growing at such a rate that there is a tremendous opportunity for us all," he said.
By combining the expertise in security and radio frequency technology from its wireless telecommunications business with its chip manufacturing prowess, Motorola expects to attract customers from financial, government, health care, and transportation industries as well as the college campus market.
The company intends to support the leading electronic-purse applications-including Visa Cash, Mondex, and Proton-and work with the card associations. Motorola said it will begin shipping the product by the fourth quarter.
While the majority of smart cards today are used in Europe, that balance is expected to shift by the turn of the century with the Americas, Asia, and emerging markets providing potential growth. According to Mentis Corp., global smart card production will expand from 688 million cards in 1995 to two billion by the year 2000.
James Moore, chief executive officer of Mentis, a Durham, N.C.-based research firm, said Motorola's entrance will have little effect on the U.S. smart card-market, which he views as lagging behind the rest of the world.
"The real critical part is winning over" retailers who will accept the cards, he said. "Very few are stepping up to put (smart card) readers on terminals."
