The Yawning Gap Between Smart Cards And Personal Computers

Logical access using smart cards and readers is growing, but it's not yet commonplace


Quick Read
PC Makers offer smart card readers as an option on many laptop and desktop machines, and in some cases it's standard equipment on PCs geared for large companies and government agencies. Shipments of standalone and built-in smart card readers are growing, but it still represents a small portion of the PC market. Some hold out hope that a new wireless technology will bridge the gap between chip cards and home PCs.

When the U.S. Department of the Interior buys updated computers, their keyboards come embedded with smart card readers. It's a move that can increase efficiency-no additional parts to plug in, no wires to worry about. And it saves money, since the built-in readers come at no extra charge, whereas standalone readers can cost between $40 and $60 each, says Bob Donelson, a senior property specialist who helps oversee computer purchasing for the agency, which maintains national parks.

"There's no additional cost when you buy them as part of a tech refresh," he says, adding that he's experienced few problems with the readers besides normal wear-and-tear.

A big customer like the Department of Interior can get built-in smart card readers free with its PCs because the cost to PC manufacturers of embedded readers has dropped to less than $10, according to some observers. That is low enough that some PC manufacturers will throw in the reader for orders of thousands of units.

This drop in reader cost bodes well for built-in smart card readers, a PC add-on that, according to analysts, has yet to meet expectations. Though the smart card industry-and some industry heavyweights such as Microsoft-have been urging PC manufacturers for years to build in smart card readers to desktops and laptops, the number of computers with embedded readers remains relatively low, according to Tim Gower, an analyst with UK-based consulting firm Datamonitor. Neither he nor other analysts could estimate the number of computers in use with smart card readers, however.

More Cards, More Readers
As more projects roll out that require the use of smart cards with computers there appears to be some growth in the demand for equipping computers with chip card readers. Certainly, smart card project managers are much in favor of more PCs coming with built-in readers.

"If all new PCs are equipped with embedded card readers, it will give a real kick to smart card usage," says JĂĽri Voore, project manager for Estonia-based AS Sertifitseerimiskeskus, a company involved in that country's national ID program.

From today's perspective, that is wishful thinking. But the distribution of smart cards is growing, as more governments, health care systems and corporations, driven largely by security concerns, move toward chip-based ID cards. The demand for built-in readers could grow along with it.

Enterprises bought about 67 million such cards in 2003, according to Datamonitor, with the number expected to increase to 141 million in 2006. Also, some financial institutions worried about fraud are encouraging online banking through smart cards (Card Technology, March 2005).

Big Growth Ahead?
The market for smart card readers, though small, is swelling, with an estimated 35.5 million units expected to ship in 2008, up from 9.4 million in 2003, according to U.S.-based research firm Frost & Sullivan.

France-based Gemplus remains the top shipper of readers, according to Frost & Sullivan. U.S.-based SCM Microsystems and Germany-based Omnikey are other major suppliers. Vendors say most readers being shipped are standalone units that connect to the USB ports of personal computers, with a smaller number being embedded in PCs.

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