Gemplus Americas, the biggest smart card maker's U.S. outpost, has made personnel changes that some observers have interpreted as a shift of emphasis from banks.
The president of the Redwood City, Calif., unit, Dominique Trempont, described the moves as a mere "tweaking of the organization" and a tilt toward sales and marketing.
Mr. Trempont is putting his stamp on an organization he joined last June. But in the process, several employees involved in Gemplus' relationships with banks were dismissed this month from an office in Montgomeryville, Pa., sources told American Banker.
The firings were said to have affected as many as seven out of nine employees providing sales support. Mr. Trempont did not dispute the report but pointed out it amounted to less than 1% of the company.
Mr. Trempont said Gemplus has concluded that the U.S. smart card revolution is unlikely to start with the banking industry.
He also denied there is any lessening of the French company's commitment to the U.S. market or the Americas generally. Gemplus has increased its presence during the last year, anticipating a rapid spread of its technology in banking, telecommunications, and other industries.
Part of that effort was the hiring of Mr. Trempont, formerly of Next Software Inc., and the consolidation under him of all North American and Latin American activities. Gemplus recently opened an office for its emerging markets division in Bethesda, Md.
In a telephone interview, Mr. Trempont said the job cuts had been in the business division and some people were moved into sales, marketing, and technical posts.
In effect, he said, Gemplus is giving more attention to sales and marketing and less to the development of specific smart card products in the debit and credit areas.
"As opposed to being in the back office and wondering where the business is going to come from, I said, 'Go find the business,'" Mr. Trempont said.
Three months ago he hired Michael Crosno to be executive vice president of sales. Mr. Crosno, former general manager and vice president of business imaging systems at Eastman Kodak Co., is responsible for all revenue- generating activities in North America.
Software industry veteran Donna Jeker was brought in to be vice president of marketing and strategic alliances for the Americas.
Mr. Crosno, Ms. Jeker, and Bertrand Moussel, president of Gemplus South America, worked with Mr. Trempont on a strategic plan for the hemisphere.
"We were overinvested in trying to put smart card credit cards and smart card debit cards in the marketplace, but that's not where the bacon is," Mr. Trempont said.
He added that he has talked to many bankers in the last six months and most want to be involved in smart card programs in nonbanking areas like telecommunications, transportation, and health care.
Smart card consultant Jerome Svigals said he sees Gemplus' assessment as pragmatic because smart credit and debit cards are still years in the future for the United States.
Mr. Svigals, head of Jerome Svigals Inc., Redwood City, has accused the MasterCard and Visa organizations of not pushing chips on existing cards because it would reduce demand for their authorization and settlement networks.
The authorization for a smart card transaction takes place off-line, between the card and a terminal device.
In France, Mr. Svigals said, where banks have issued 25 million smart cards, on-line authorizations are down by 90%.
Smaller banks might find chip card economics attractive, Mr. Svigals said. But "the large banks are reluctant to go to the smart card because it technically obsoletes their investments and makes it very easy for anybody to get into the credit card business."
In the United States, "there is no time line for smart card credit or debit cards," said Mr. Svigals. "There is no pilot under way that I know of, there are no studies being presented, and the latest reports are that it will probably be another 10 years before we get to it."
Mr. Trempont said he does not want to look at banking as a discrete category. He hopes to expose banks to specialty markets such as transportation or telecommunications, where they can participate in multiple-application programs.
"The telecommunications area represents a growing business opportunity where companies like Gemplus and Schlumberger have a pretty good foothold," said Joseph Schuler of Santa Rosa, Calif.-based Pathways Group.
Mr. Schuler, senior vice president of business development, who has worked for both Gemplus and French rival Schlumberger, said health care may be more difficult because the United States' infrastructure is more fragmented than much of Europe's.
"Every citizen in France and Germany is carrying a smart health-care card," Mr. Schuler said.
Mr. Svigals said other card makers are under the same pressures as Gemplus to alter their strategies. Schlumberger has been diversifying for a long time, he said, and runs an "electronic transactions" business, as opposed to a banking or credit card business.
Mr. Trempont said he sees a lot of promise in electronic commerce. Gemplus Group's multimedia and information technology units report to him, and they anticipate demand for smart cards as digital identification and authentication devices.
"It's separate from trying to get banks to put chips on their cards," Mr. Trempont said, "but it is an important effort and one of the reasons I joined the company."
He also sees the future of technology in Java-based and open platform systems, which would accommodate both Visa's and MasterCard's smart card strategies that go beyond banking and financial uses.
