Market Drivers Some of the major drivers for the APAC SIM smart card market is given below. M ov e t o 6 4 k S I M Ca r d s D r i v e s t h e M a r k e t F o r wa r d The bulk of the SIM cards currently remain at 32K, although major smart card vendors are observing the increase in the proportion of demand for 64K cards. As this region remains very diverse, the developed countries have been ordering SIMs with capacities over 128K for several years now; hence, the low-end SIMs are generally prevalent with developing economies. Vo l u m e i n I n d i a E x p l o d i n g a s C h i n a C o o l s O f f Although countries like China have begun to show saturation in major cities, India is still showing very high growth in new subscribers. In mid 2008, the country was generating over 8 million new subscribers per month. The country had over 300 million mobile phone subscribers in early 2008 and is still far from saturation in most cities. This continues to be a booming market with a fairly competitive mobile communication market. S I M - b a s e d S o l u t i o n s I n c r e a s e Va l u e o f S I M With the increase in mobile-based transactions, including further developments in NFC and other related mobile payment initiatives, the role of SIM is increasingly being explored for hosting and controlling access to each additional application being added on the handset. In several countries, SIM-based solutions are being explored resulting in more applications available in the SIM like access control, payment and mass transit applications. In some instances, a SIM with a contactless interface (contactless SIM) is being used therefore enabling addition applications on the SIM to be used. I n c r e a s i n g U s e O f O v e r - t h e - a i r ( O TA ) F a c i l i t i e s The OTA facilities are currently being used by more mobile operators and these are reaping the benefits of more efficient administration and life cycle management of the SIM cards that are already distributed. This has been even more beneficial for mobile operators serving large and dispersed group of subscribers like China. Some of these OTA services are being provided by either SIM vendors themselves or other third-party providers.
Market Restraints Some of the major restraints for the APAC SIM smart card market is given below. L ow - e n d S I M s S l ow d ow n R e v e n u e G r ow t h For countries like India, China and other developing economies, the use of SIM is still fairly basic, and most cards being ordered are cheaper, low-end SIMs. This is a tough market particularly when SIM vendors have faced severe price pressures in the lower end market. The slowdown of prices is not very severe in 2008 but is considered very low by many smart card vendors. S a t u r a t i o n i n M a j o r C i t i e s S t u n s t h e M a r k e t The enormous growth over the past 2 to 3 years in new subscriber growth driving the SIM demand has started to slowdown in some large cities like China as these regions approach saturation. This slowdown is slightly being balanced by expansion into the rural areas by mobile operators but will still have an impact on the growth rate, resulting in a gradual slowdown of growth in these countries as a whole. C o n v e r g e n c e R a i s e s B u s i n e s s Mo d e l I s s u e s a n d P u s h e s t h e M a r k e t F o r wa r d Currently, there is much promise raised in emerging initiatives like NFC, mobile payments, convergence and multi-application. However, apart from a few cases in Japan and South Korea, which have been successful in some of these areas, the most part of Asia Pacific is still working on equitable and compelling business models for each of these new technologies and applications. This is not considered a restraint in the long term rather it is believed to be a transitory challenge that needs to be solved before these new services can take place and see mass roll outs. Perhaps in the next 2 years, current business model issues can be solved through pilots, trials and ongoing discussions among stakeholders; this can move these services to the next level to see mass adoption.
C o n t a c t l e s s M o b i l e Tr a n s a c t i o n s C o n t i n u e t o R i s e S t e a d i l y The adoption of mobile payments and ticketing continue to rise in countries like Japan, South Korea and Taiwan. Additionally, more countries like Thailand, Singapore and the Philippines are finding ways to move their pilots to more commercial rollouts. Various types of technologies like the contactless SIM, Near Field Communication and SMS-based transactions are being used. Meanwhile, Near Field Communication, which is most popular emerging technology, is witnessing more pilots than commercial rollout at this stage as business models issues and availability of handsets are being resolved.
Asia Pacific SIM Outlook
Asia Pacific SIM Outlook Peering into Trends of SIM Presented By Anne-Corinne Bell Director Consulting and Business Development Frost and Sullivan, Hong Kong Prepared By Jafizwaty Haji Ishahak Research Manager, Smart Cards, ICT Practise Asia Pacific
Focus Points <ul><li>Global Smart Cards Overview </li></ul><ul><ul><li>Snapshot </li></ul></ul><ul><ul><li>Percentage Split by Region </li></ul></ul><ul><li>Asia Pacific Market Dynamics </li></ul><ul><ul><li>Asia Pacific (APAC) Smart Card Overview </li></ul></ul><ul><ul><li>SIM: Key Market Drivers & Restraints in APAC </li></ul></ul><ul><ul><li>APAC SIM Market Size and Forecast </li></ul></ul><ul><ul><li>Direction and Technology Trends </li></ul></ul>
Global Smart Cards Overview: Snapshot <ul><li>In 2008 approximately over 4.6 billion smart cards were shipped worldwide </li></ul><ul><li>By 2015- expected to grow to over 7 billion units with CAGR of 6.4 percent </li></ul><ul><li>Decrease in Memory and an increase in MCU </li></ul><ul><li>Applications such as SIM, Banking and payment, Government ID, Transportation are key contributors to the total global smart card revenue. </li></ul><ul><li>Europe and parts of Asia have been the technological leaders in smart card application over the years. In both these regions, there are catalysts in various fields, pushing the boundaries of smart card usage year on year. </li></ul><ul><li>France, Germany and UK are among the more progressive nations in Europe, with adoption in all key applications today. </li></ul><ul><li>Asia Pacific houses the most progressive markets like Japan and South Korea and potential volumes from China and India. However at the same time, a large part of this region, in contrast, is extremely nascent , if not underdeveloped. </li></ul><ul><li>Asia Pacific currently consumes over 49% of smart cards shipped globally. </li></ul><ul><li>North America – contactless gaining healthy growth via payment application </li></ul><ul><li>MCU cards gaining Momentum </li></ul>
Global Smart Cards Overview: Percentage Split by Region Source: Frost & Sullivan Percentage Split by Region (Units) • LA Latin America (LA) 4.3% Europe Middle East Africa (EMEA) 39.4% Asia Pacific (APAC) 44.8% Infancy Early Growth Late Growth Maturity Segment Life Cycle Stage Smart Cards Life Cycle by Region, 2007 Source: Frost & Sullivan Percentage Split by Region (Units) • LA Latin America (LA) 9.5% Europe Middle East Africa (EMEA) 35.7% Asia Pacific (APAC) 49.3% Infancy Early Growth Late Growth Maturity Segment Life Cycle Stage North America 11.5% North America 5.4% Smart Cards Life Cycle by Region, 2008 North America 11.5%
APAC Market Dynamics Source: Frost & Sullivan High population. India = 1.1 billion China = 1.3 billion New technology acceptance levels high Eg: Japan, Korea Rising Income Levels. Improvement in standards of living Manufacturing Hub of the world. Densely populated regions. Majority of markets far from saturation Minimal legacy systems in Tier 3 countries
APAC Smart Cards Overview: Estimated Market Size Mobile Communication Government ID Mass Transit APAC Key Smart Card Applications Corporate Security Banking/ Loyalty Others Source: Frost & Sullivan 2008 APAC total smart card shipments = over 2 billion units (to grow to over 3 billion by 2015 ) In 2008, SIM was still the key application with approximately 70% of total smart card volume in the region Source: Frost & Sullivan
APAC SIM Market: Key Market Drivers Source: Frost & Sullivan Increasing use Of Over The Air (OTA) facilities Moves to 64K SIM drives Market Forward SIM Based Solutions increase value of SIM Volume in India exploding As China cools off
APAC SIM Market: Key Market Restraints Source: Frost & Sullivan Convergence raises business model issues & push market forward Saturation in major cities stuns the market Low end SIM slows down revenue growth
SIM Market in APAC: Estimated Market size and forecast <ul><li>In 2008 approximately over 1.6 billion SIM cards were shipped in APAC </li></ul><ul><li>With CAGR of 5-6 % in the next 6-7 years </li></ul><ul><li>Contributes to growth of MCU card shipments </li></ul>Source: Frost & Sullivan
Mobile subscription: Current State Total number of mobile subscribers Growth in new mobile subscribers M’sia South Korea Philippines China India Japan Saturation Volume growth in SIM Opportunities: Differentiation in saturated market - increase revenues per user. Source: Frost & Sullivan
Trends in SIM adoption SIM Capacity & ASPs 16K 32K 64K 128K Above 128K Contactless Mobile Transactions Continue to Rise Steadily Maturity of mobile phone/services adoption Source: Frost & Sullivan
New Developments : HDSC Making In-Roads <ul><li>HDSC is expected to be an important leap for SC </li></ul><ul><li>Key Features/benefit of HDSC over a SC:- </li></ul><ul><ul><li>Higher Memory/Card Storage </li></ul></ul><ul><ul><li>Better interface speed & processing </li></ul></ul><ul><ul><li>Improved Security </li></ul></ul><ul><ul><li>Candidate for Data Rights Management </li></ul></ul>High Density Smart Cards (HDSC) Price , Cheaper Options & Standards Lack Business Case Source: Frost & Sullivan Momentous Leap For Smart Cards Nascent Stage
New Developments: SIM Market-Opportunities Source: Frost & Sullivan APAC SIM Market Opportunities Emerging Markets Mature Sophisticated markets Volume Growth Ripe for advanced capabilities such as contactless SIM and NFC to take off Cheaper lower end SIM cards More expensive higher end cards APAC as a whole still holds vast opportunities for mobile operators and SIM vendors . It is a high growth market and the mobile communication market is still evolving in a way that presents exciting opportunities for vendors in the smart card scene.
New Developments: Contactless Gaining Momentum <ul><li>Debit/Credit cards </li></ul><ul><li>Loyalty </li></ul><ul><li>Prepaid/Stored Value </li></ul><ul><li>Micropayment </li></ul>Contactless SC Technology Key Applications Mass Transit Payment/ Banking Access Control Government Multi-Application <ul><li>Driving License </li></ul><ul><li>E-Passport </li></ul><ul><li>Welfare </li></ul><ul><li>National ID </li></ul><ul><li>AFC </li></ul><ul><li>ETC </li></ul><ul><li>Public Parking </li></ul><ul><li>Physical Access </li></ul><ul><li>Logical Access </li></ul><ul><li>Dual access </li></ul>Source: Frost & Sullivan
New Developments: Integrated Smart cards with Other Auto ID- RFID <ul><li>Similarities </li></ul>Differences
New Developments: Various Single /Common Form Factors STANDARD PLASTIC CARDS USB DEVICES MOBILE NFC DEVICES TOKENS PASSPORTS MINICARDS HIGH POTENTIAL STANDARD FORM NICHE MARKET NOVELTY WRISTBANDS & WATCHES Source: Frost & Sullivan
New Developments: Various Single /Common Form Factors –Novelties (Contd.) USED FOR Commemorations Marketing Gimmick Market Exploration (Trial Runs) Sponsorship and Advertising SUCH AS Plush Toys Accessories – Pendants, Necklaces and so forth Watches & Wristbands KeyChains, KeyFobs and so on Source: Frost & Sullivan
New Developments: Mobile NFC 5 FAR EAST: MOBILE NFC INFRASTRUCURE IMPLEMENTED POTENTIAL COUNTRIES FOR MOBILE NFC INFRASTRUCTURE THE REST OF ASIA; YET TO ADAPT SUCH TECHNOLOGY Combination with existing technology Taps into the mobile network Consolidation of different services Content & credit management Source: Frost & Sullivan
APAC: Market and Technology Trends in APAC – NFC (Near Field Communication) TSM and support service for multi-apps Current State Future State: Mass Deployment Outstanding key factors Source: Frost & Sullivan 2006 & 07: trials, acceptance testing &standards setting Using Contactless SC technology – mobile devices Convergence of contactless SC apps on 1 platform APAC: South Korea and Japan leads way with highest usage of contactless Availability of handsets Equitable business model Interoperability & standards Contactless smart card infrastructure
Asia Pacific Takes the lead in Smart Card Shipment Key Applications –SIM, Government, Transport & Banking Convergence of smart card applications on SIM - mass transit, payment, access control, etc –on various forms & integration with other auto-ID technologies SIM Market Continues to Grow with Promises from Contactless & NFC Telcos - Focus on more value added services that bring in higher revenue per user in more saturated markets. Opportunities for mobile phones to serve the financial needs of un-banked population in developing countries through mobile transactions. Present Market Conditions Future Market Conditions APAC: Direction & Technology Trends
Highlights of 2009 GLOBAL Smart Card Research NOTE: 1- ME : Market Engineering 2- MI: Market Insight ME World PayTV Market Type of Service Research Titles ME World Smart Card Management Systems ME World Corporate security (inc Smart USB) ME World M2M ME World Readers & Chipsets ME World Contactless Smart Card ME World Smart Card IC Market MI World Smart Cards for Transportation MI World Smart Cards for Government MI World Smart Cards for Banking MI World Smart Card SIM ME World Smart Card Market MI Draft Smart Card Market size
Highlights of 2009 ASIA PACIFIC Smart Card Research NOTE: 1- ME : Market Engineering 2- MI: Market Insight 3- Analyst Briefing MI Near Field Communication Type of Service Research Titles ME Profiles of local Companies: Smart Card Value Chain MI APAC Smart Card Printers MI APAC Smart Card Outlook 2009 ME APAC Smart Card Management System ME MI ME MI MI Asia Pacific Smart Card IC on Different Form Factors Asia Best practices/Cases for Contactless Convergence South Korea Smart cards Market Chip & PIN in Asia (banking/payment) Smart Card Third Party Testing
Global : Smart Card Research Subscription- 2008 Highlights of GLOBAL Smart Card Research NOTE: 1- ME : Market Engineering
Highlights of ASIA PACIFIC Smart Card Research NOTE: 1- ME : Market Engineering 2- MI: Market Insight Asia Pacific : Smart Card Research Subscription - 2008