Florida Today

AuthenTec's sensors added to cell phones

Firm could get millions from Korean deal

September 26, 2004

By Brian Monroe

A local technology company that makes fingerprint-sensor chips restricting access to electronic products struck a deal with a Korean cellular-phone maker that could add millions of dollars in revenues.

Melbourne-based AuthenTec Inc., which employs 55 people locally, said it has broken into the Asian cellular-phone market -- a sector in the tens of billions of dollars -- after Korean-based LG Telecom chose its fingerprint sensors.

Experts say the move is significant for AuthenTec, with Asian consumers buying more-expensive phones with more features more often -- on average about once a year. These deals also help keep employment and revenues growing at AuthenTec, which is hiring for 10 high-paying technology jobs.

AuthenTec's sensors are LG Telecom's first foray into biometrics, which use a person's unique features -- fingerprints, eyes or face -- to secure access to high-tech equipment. LG Telecom is Korea's third-largest service provider and one of the top-five cellular-phone manufacturers in the world.

Officials at AuthenTec also confirmed the company has brokered a deal to have its products put in phones made by Japan-based NTT DoCoMo, which is among the highest-revenue generators for cellular carriers in the world.

AuthenTec President and Chief Executive Scott Moody said its latest deals are the "first phones enabled with a fingerprint sensor anywhere in the world. In the near term, it could mean millions of dollars" in added revenues for his company.

Moody said tapping major cellular markets like Japan and Korea is key for growth because, "if you look at where all of the cell-phone technology originated, it's first in Japan, then other Asian countries, then to the United States. Their phones are much more advanced than ours."

How much more advanced?

Moody said some of the phones his company's chips are in have two cameras -- one for digital pictures, another teleconferencing; can purchase products over the Internet; and can be used the same as a credit or debit card for banking or routine purchases.

One local teen said she can'twait for such features to be sold in the United States.

If a phone with fingerprint-restricted access was available, "I would buy it," said Titusville resident Rachel Horvath, 19.

She said she has two phones and is getting ready to buy a third worth more than $700 that has diamonds in its faceplate. She has been using cell phones since she was 14.

"It's a part of me," she said. "It's an emotional breakdown when you don't have one with you. I have looked into buying phones from Japan because some of the models over there blow us out of the water."

Horvath said fingerprint sensors would be ideal if a phone gets stolen, which happened to her a few years ago. The thieves found her passwords and had tried to access some of her online accounts. She foiled them by freezing the accounts.

"Security is one of my top requirements," she said. "I password-protect everything."

Those who cover biometrics say the relationship between AuthenTec and Asian companies could blossom, with consumers using phones for banking and Internet transactions -- making security a top priority.

The recent moves by AuthenTec are a "big deal. This is very cutting-edge . . . and is where the market is going next, as more and more people try to do business transactions in transit," said Amanda Goltz, a consultant with New York-based International Biometric Group.

Goltz said the biometrics market for Asia and the Pacific Rim, would be about $285 million in 2004, but that would jump to $430.8 million next year. Overall revenues for biometrics worldwide are forecast to nearly quadruple, from $1.2 billion in 2004 to $4.6 billion in 2008, she said.

AuthenTec has been growing rapidly since its founding in 1998 as a spinoff from defense contractor Harris Corp., which also is based in Melbourne. AuthenTec announced last month the company shipped its 3 millionth chip, which it said is the most any company in the industry has shipped.

AuthenTec gets nearly 70 percent of its revenues from Asian markets.

Competition for cellular customers in those regions are fierce, Moody said, with the market nearly "saturated. The same thing will happen here, once all the teenagers stop buying phones. So the only way to make people want to by new phones is to add new features."

As banking by cellular phone has increased in popularity, the level of security for cell phones has been an issue," said Yoon June Weon, chief marketing officer at LG Telecom. Adding AuthenTec chips to his company's products "ensures the protection of the personal information."

Japan alone has more than 80 million cell-phone users, who pay out about $30 to $50 a month for coverage, said Art Stewart, director of market development for AuthenTec.

Customers there also have no qualms about paying for "high-end features, they have more of an appreciation" of pricier options that could enhance security or e-commerce, Stewart said.

"If you look at the trends, there is more high-speed data services connecting phones," he said. As a result, phones now have "more personal and business-critical information that has to be protected. With our fingerprint-sensor feature, these are protected."

Contact Monroe at 242-3655 or bmonroe@flatoday.net

AuthenTec at a glance

Founded: 1998 Headquarters: Melbourne Number of employees: 55 (with plans to hire 10 more) What the company does: AuthenTec designs and manufactures semiconductor-based chips that use a person's fingerprint to restrict access to electronic devices, including computers, cellular phones, personal digital assistants, homes and cars. Sales/profits: The private company doesn't disclose sales and profits figures.