Annual Report 2010

This is Precise Biometrics

Partners – and competitors

Because the biometric sector affects so many different types of industries, the competitive situation is very complex. Precise Biometrics, for example, has competitors in the licensing of technology for smart cards, the development of algorithms, and the production of hardware.

In that the Company works with partners in some segments on different projects, it is not unusual for it to cooperate occasionally with companies that would be considered as competitors in other procurement situations.

Competitors within segments

Precise Biometrics is active in several different market segments (see section for Business areas). The complexity of the competition in these segments varies from case to case. Precise Biometrics is a market leader in several markets with a roll-out of far more installations that its competitors, while other markets are relatively new to the Company.

Competitors in the different segments consist not only of other biometrics suppliers, but can also include other types of technologies.

Consolidation of the industry

The biometric industry has continued to consolidate during the past year. Several smaller biometric suppliers have been taken over by the larger players. The Safran Group, for example, has been acquired by L-1 Identity Solutions, while their competitor Cogent has been acquired by 3M. Both L-1 Identity Solutions and Cogent have offered different types of biometric systems, which above all have focused on AFIS systems, and only a small part of their operations have been in competition with Precise Biometrics .

The world’s two largest sensor manufacturers UPEK and AuthenTec have also merged together during the year. Precise Biometrics has cooperated with both manufacturers previously and this cooperation has continued seamlessly after the merger.

The consolidation in the market is indicative of the maturity of the technology.

Competitors in Match-on-Card

Precise Biometrics is a dominant player in the Match-on-Card sector. There are, however, several competitors in this expanding market, the French-based, Sagem to name one, even though Match-on-Card only consists of a small part of Sagem's product range.

There are also several other companies who offer Match-on-Card on a smaller scale, Siemens and ID3, for example, although none of these companies have achieved a significant deployment of the technology.

The majority of the competitor’s Match-on-Card solutions must be combined with specific smart cards or hardware, which limits the options of end-customers. Precise Biometrics’ technology is independent of smart card platforms and can also be used together with most of the fingerprint readers in the market.

Hardware

Precise Biometrics is one of the few companies that offers combined smart card and fingerprint readers. These readers are well established in the market and a large number of units have been installed.

During the year Precise Biometrics has invested in the development of a new hardware family – Precise Sense™ – which focuses on cost-efficiency and a user-friendly design for customers. The readers are mainly intended for volume sales to the banking and corporate segments and will expand the Company’s product range in relation to new industries. Precise Biometrics has focused on a modular solution, which means that the readers are available in several different models to suit customer requirements. The family will include a total of six models, of which three were launched in the beginning of 2011.

Hardware sales constitute a major part of the Company’s overall revenue.

How do we respond to our competitors?

Precise Biometrics, which is a world-leader in Match-on-Card, is a dominant biometric player in the market. Through attractive offers to end-customers and partners, the Company has the most users of Match-on-Card and it leverages this position to penetrate new markets. Reference customers, where the technology is well-tested in large projects where security is essential, are critical for credibility and the further development of the Company's operations.

Flexibility is the key

Precise Biometrics’ technology stands out from what its competitors have to offer, primarily because of its interoperability and flexibility.

For example, the Match-on-Card technology is compatible with most fingerprint readers, security applications and smart cards, which give end-customers great freedom to choose or replace components

themselves according to their specific conditions and requirements.

User-friendly products

The unique experience of the Company having large multi-year deployments within the industry means it can offer products that are user-friendly, both from the perspective of end users and end customers.

Networks, events and media

Precise Biometrics influences and monitors the market and competitors through its continuous presence in the industry’s key organizations, events, news channels and networks.