Why Smart Card Businesses Are Restructuring And Tapping New Markets
April 9th 2008 08:13
The farewell issue of Card Technoogy Magazine (Nov. 2007) has detailed analysis into why most businesses at the smart card industry are restructuring and tapping low-cost markets to gain or regain profitability. Here's a glimpse of the four top smart card vendors and their major moves in trying to cope with falling prices and profits :
* France-based smart card Gemalto, the world's no.1 smart card vendor, has to cut jobs and implement cost-cutting measures in a drive to bring profitability as they strive to continue it's target goal of 10%- plus operating margin in March 2009. In September 2005, Gemalto merged with another of the industry's heavyweight Gemplus International and Axalto. Gemalto is now shuttering five of the 21 factories Gemplus and Axalto brought into the merger.
* Vendor Oberthur Card Systems of France, Gemalto's rival, is also undertaking restructuring. Oberthur's plans include expanding banking card plant in Vitre, France, and doubling the size of it's Shenzhen, China, SIM plant, making it it's biggest hub.
* Franco-German vendor Sagem Orga cut nearly 300 employees in Europe, closing a plant in India. Vendor already embeds and personalizes 10 million cards per month in India.
* Germany's Giesecke & Devrient, second largest card vendor, moves smart card production from Germany to Slovakia. G & D bought out it's joint venture partner in China, and will make the plant an Asian hub.
Some smart card vendors blame the cause of most of it's profit problems to plunging SIM card prices and the resulting "price war". Others credited the blame on "pricing discipline." Gemalto's CEO, Olivier Piou, said his SIM sales manager won't go below a certain price if it's operating margin, a key indicator of it's performance in the day to day smart card business, are deemed too low. Gemalto's operating margin was reported to have sinked to a new low of 2% last year. All the vendors continue to do SIM business in China, India, Southeast Asia, Africa and other low-cost markets. All the industry's major vendors are trying to create a market beyond cards such as devices as USB tokens and more software and services.
* France-based smart card Gemalto, the world's no.1 smart card vendor, has to cut jobs and implement cost-cutting measures in a drive to bring profitability as they strive to continue it's target goal of 10%- plus operating margin in March 2009. In September 2005, Gemalto merged with another of the industry's heavyweight Gemplus International and Axalto. Gemalto is now shuttering five of the 21 factories Gemplus and Axalto brought into the merger.
* Vendor Oberthur Card Systems of France, Gemalto's rival, is also undertaking restructuring. Oberthur's plans include expanding banking card plant in Vitre, France, and doubling the size of it's Shenzhen, China, SIM plant, making it it's biggest hub.
* Franco-German vendor Sagem Orga cut nearly 300 employees in Europe, closing a plant in India. Vendor already embeds and personalizes 10 million cards per month in India.
* Germany's Giesecke & Devrient, second largest card vendor, moves smart card production from Germany to Slovakia. G & D bought out it's joint venture partner in China, and will make the plant an Asian hub.
Some smart card vendors blame the cause of most of it's profit problems to plunging SIM card prices and the resulting "price war". Others credited the blame on "pricing discipline." Gemalto's CEO, Olivier Piou, said his SIM sales manager won't go below a certain price if it's operating margin, a key indicator of it's performance in the day to day smart card business, are deemed too low. Gemalto's operating margin was reported to have sinked to a new low of 2% last year. All the vendors continue to do SIM business in China, India, Southeast Asia, Africa and other low-cost markets. All the industry's major vendors are trying to create a market beyond cards such as devices as USB tokens and more software and services.
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