Last week, Apple announced its intent to acquire AuthenTec for $356 million. AuthenTec is known for its biometric security and authentication solutions. As Karen Strass pointed out in her post, "AuthenTec’s authentication features could be integrated into Apple’s iPads, iPhones and potentially as security measures for other features, like non-mobile computer systems or cloud-based networks or services.” I believe the acquisition provides at least three opportunities for Apple. First, it can advance the U.S. mobile payment market. Second, it creates a secure two-factor identity standard for any type of service. Third, it presents an opportunity to improve usability and preference management for Apple's apps and services.
Mobile commerce has been stalled in the U.S. for several years. NFC, once considered a key technology in the future of payments, has suffered numerous setbacks in the U.S. These setbacks weren't related to NFC technology. The setbacks stem from conflicting business models between financial institutions, device manufacturers, and telecom providers. Numerous companies have tried over the past 3 years to build new mobile commerce models, including Google Wallet, Isis (a joint venture between carriers and financial institutions) and Square. The most successful to date has been Square, which claims it is processing over $4B in transactions per year. It did this by providing cheap simple way for users to process credit card transactions with a small square card reader and an app. Intuit and Paypal quickly followed. Apple already has access to credit card information for approximately 400 million accounts. Apple can marry biometric authentication with information in the new Apple Passbook app to provide numerous concierge and commerce opportunities.
What else could Authentec provide? A solid way of verifying identity remains a major issue for a vast array of activities. Many government documents, such as a driver’s license, can be easily forged. Anyone can have numerous email accounts and Twitter handles. A phone or tablet can be lost or stolen. Authentec offers software, hardware and applications that help people manage their digital identities and enhance the fingerprint sensor user experience at work and home. A combination of factors, such as device, password and biometric authentication is harder to spoof. The future is contextual identity that will be based on multiple factors, including location, device, username/password and possibly biometric authentication. OpenID and OAuth is one step towards usable authentication. By embedding biometric solutions in millions of popular devices, Apple could get us one step closer.
In a previous Lopez Research blog post, I discussed how services will become people-centric, but device and network agnostic. I also claimed that services, not just devices, will be mobile. We've seen this with Xbox and Slingbox. Someday, you'll be able to seamlessly log in to your corporate services at the hotel, the office or your home by using a combination of factors, such as a device, a password and your fingerprint. What if you could access your customized TV guide or all of your music by touching your finger to any iPad in the room? AuthenTec's Web Site states "AuthenTec smart sensors go beyond the security offered by fingerprint authentication to include other touch-based features including personalization, or the ability to associate different functions with different fingers." Fingerprinting recognition in Apple devices could unlock a new age of usability where each user’s preferences and customization could be retrieved by simply pressing a finger on a screen. This could also be combined with the next generation of Siri to enable seamless navigation with voice. The post PC world needs a new set of navigation and identity tools. It's clear that Apple is trying to build this via home grown products and strategic acquisitions.
