Ovum: Multi-applications key to smart card growth

Ovum: Multi-applications key to smart card growth
March 4, 2002

LONDON -- A report from Ovum suggests that multiple applications are the key to the continued growth in the smart card marketplace.

According to the report, entitled "Smart Card Systems: Multi-application Technologies and Strategies," Ovum anticipates that the number of multi-application smart cards will increase from 7 percent of cards shipped this year to 30 percent by the year 2004.

Duncan Brown, a senior analyst at Ovum, and co-author of the report with Sarah Webber, said that "multi-application smart card systems are mandatory."

Brown said single application systems typically offer a low return on investment and are costly to implement. With no multi-application capabilities, such systems also offer a weak value proposition to the cardholder.

According to the report, organizations looking to benefit from multi- application smart card systems need to address both technology issues and business challenges.

Brown notes that the smart card is only a small part of the wider system infrastructure. "Smart cards require both implementers and suppliers to take a system-wide view to address the interoperability of devices, applications and other smart card technologies," he said. "Suppliers must also provide their products in the context of the entire smart card delivery channel."

Ovum anticipates that, by the year 2004, 17 percent of all smart card interface devices will be able to process multiple smart card applications -- up from 1 percent in 1999.

Despite this growth potential, the report concludes that transforming existing business models to the new smart card model is complex. Brown said the adoption of multi-application smart cards has been hampered by organizations intent on protecting their brand equity before entering the smart card market.

"These organizations must resolve their branding issues before developing collaborative partnerships to ensure the success of their multi-application system implementations," Brown said.