1 Billion Smart cards Shipped in 2004.

According to IDC, the European smart cards market is continuing to experience robust growth rates. A total of 284 million units were shipped in Europe in 1999, increasing by 44% over the previous year, and card shipments are forecast to top 1 billion by 2004.

While traditional applications such as banking and telecommunications continue to fuel steady growth for smart cards vendors, emerging applications such as mobile commerce and security are about to trigger a new phase of development for the smart cards industry. Although Europe has been the cradle of smart card technology and applications, much higher growth is building up in other regions, and by 2005, Europe will represent less than half of the worldwide smart card market. In anticipation of the coming boom of multi-application cards, vendors from all fronts are seeking to enter the market or broaden their portfolio of products and services. IDC believes the smart card industry will continue to consolidate, but this trend will be offset by the emergence of new players.

Smart Card Market Drivers

The need for secure access and identification in an increasing number of applications, including corporate security, application and data access, as well as secure identification and access to all sensitive applications and transactions based on the Internet, including but not limited to, electronic commerce, is growing.

Acceptance of multi-applications smart cards technology (allowed by the acceptance of Java compatible cards), which is changing the smart card market into a multivendor open environment, is growing. This change, together with the large number of smart cards devices already in operation, is attracting software developers and IT vendors. These factors contribute to a growing acceptance by all parties (card vendors and issuers, IT vendors, and software developers) of smart cards as a cross-industry standard device for secure identification and access, as well as an existing base of devices for value-add mobile applications. As an example, the high penetration of mobile phones in key Western European markets over the past five years has created a large user base, and a significant potential for all secure applications such as mobile ecommerce usage.

Europe continues to be the main market for smart cards, although the development of microprocessor cards in North America and Asia, stemmed by new applications and projects, will lead these regions to much higher growth levels than in the rest of the world, Beyond 2003, the share of the European market will represent less than half of the worldwide market. The Asian market is expected to outperform North America up until 2002, when the latter will start to catch up. Mainland China already appears as the single most promising market for the coming years, both in terms of smart cards production and in terms of applications, and this potential market has attracted a number of the key European card manufacturers.