Released

4Q 2009

Product Code

VM-CIC-103

Price

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Introduction

ABI Research’s contactless payment market analysis covers only those applications directly related to payments. Although similar products using 13.56 MHz are used for applications such as e-government, e-ID, and access control, these applications lie outside the areas covered in this comparison. Instead, we will examine only the market for contactless payment ICs (Integrated Circuit) used in any form factor, but primarily in cards, fobs, stickers, and those embedded in mobile phones. All of the contactless ICs in this study comply with ISO 14443 or Sony’s FeliCa specification.

ABI Research’s ongoing coverage of this market highlights the changes that have impacted the industry since the previous Vendor Matrix. The latest Vendor Matrix rankings reflect this.

ABI Research has prepared this vendor matrix to give an unbiased rating of leading contactless IC vendors on the basis of each company’s perceived “Innovation” and “Implementation.” Profiled vendors were selected based on our research as well as interviews with and feedback received from industry participants including hardware vendors, integrators, and end-users.

Description of Criteria

Criteria used to develop this vendor matrix are related to product and company characteristics that serve as proxies for vendor performance in the two areas of Innovation and Implementation. Numerical scores are aggregated, weighted, and analyzed to provide overall rankings, which are assigned to each vendor on the Innovation and Implementation axes.

Innovation

The six Innovation scoring criteria and their associated weighting are as follows:

1.     Contactless IC Product Innovation and Offering Mix (25% weighting)

·          Evaluates the development of the product portfolio

·          Evaluates number of specifications supported

·          Additional consideration for awards/recognition for specific offerings

·          Slow product launches or upgrades have negative impact on score

2.     Physical Specifications - Product Feature Sets (20% weighting)

·          Evaluates IC design and functionality

·          Evaluates memory size(s) offered

·          Evaluates form factor sizes and size variety

3.     Applicability to Range of Applications/Devices (5% weight)

·          Evaluates the types of products to which tag(s) can be attached/embedded

4.     Experience/Leadership/Knowledge Transfer (30% weight)

·          Evaluates strength of innovation within the company as shared through industry associations, trial deployments, and standard development

5.     Relevance to Global Market (10% weight)

·          Evaluates the applicability throughout the global marketplace

6.     New Application Enablement (10% weight)

·          Evaluates focus on developing new application areas/enabling new applications through new, innovative products and solutions

·          Evaluates engineering capabilities to enable new applications

·          Evaluates development tools, programs, and value-add solutions/offerings available to partners that can be leveraged to enable new applications

Implementation

The eight Implementation scoring criteria and their associated weighting are as follows:

1.     Overall Market Position, Leadership, Strength, and Experience (20% weight)

·          Evaluates level of market penetration and leadership through subjective and objective considerations, such as:

·          Perceived level of penetration/share

·          Perceived product position in market relative to competition

·          Revenue growth (historical and forecasted)

·          Financial strength, health, and backing

·          Company size

·          Positive word-of-mouth/momentum in industry

·          Evaluates involvement in industry groups/associations (both contactless and application industries)

·          Evaluates participation in contactless education and awareness campaigns

·          Evaluates length of time in contactless space

·          Evaluates perceived level of influence in the space

2.     Marketing Capabilities and Strategy (20% weight)

·          Evaluates involvement in industry groups/associations (both contactless and application industries)

·          Evaluates participation in contactless education and awareness campaigns

·          Evaluates length of time in contactless space

·          Evaluates perceived level of influence in the space

3.     Installed Base/Customer Deployments (25% weight)

·          Evaluates strength of customer base and customer mix

·          Evaluates types of deployments

·          Evaluates typical size of deployments

·          Evaluates visibility in deals/end-user proposals

·          Evaluates involvement in leading trials and deployments

4.     Breadth of Verticals and Applications Targeted/Served (10% weight)

·          Evaluates the number/breadth of vertical and application markets served/targeted

·          Evaluates vendor specialization within verticals and applications

·          Evaluates thought leadership within verticals and applications

5.     Strength within Verticals and Applications Targeted/Served (10% weight)

·          Evaluates strength/leadership position within targeted/served verticals and applications

·          Additional consideration for alliances with key vertically-aligned industry associations, regulatory bodies, etc.

·          Evaluates thought leadership within verticals and applications

6.     Partner Strategy and Approach (5% weight)

·          Evaluates breadth and strength of hardware, VAR (Value-Added Reseller), and integrator partner network/ecosystem

·          Evaluates overall partnering strategy and approach including partner “friendliness” (approachability and receptivity)

·          Evaluates partner collaboration efforts, such as cross marketing and bringing partners into deals

·          Evaluates depth and strength of partner relationships – considerations include vertical and application specialization and synergy among partners

·          Additional consideration of partner/potential partner opinions shared with ABI Research

7.     Global Reach (5% weight)

·          Evaluates overall global reach

·          Evaluates potential for local support globally

·          Evaluates geographic coverage via reseller network – local, national, and regional partner mix

·          Additional consideration of cross-marketing and messaging efforts with channel partners

Scoring

Vendors receive a “rating score” for each ABI Research-defined criterion under Implementation and Innovation. These scores range from 0-9 and are based on available information as well as ABI Research assumptions. Points are awarded in 0.5 point increments. For example, a score of 8.5 is possible within a given criterion.

Each criterion (and its score) is weighted based on ABI Research’s opinion of each criterion’s level of influence on and importance to the overall assessment of Innovation and Implementation. The number of criteria for Implementation and Innovation may vary; however, this does not impact vendor ranking. Vendors receiving higher scores in higher weighted criteria will benefit in terms of a better overall position via higher Innovation and Implementation scores. Lower scores in higher weighted categories will result in a weaker overall placement due to the impact of the weighting.

The rating scores assigned to each criterion are added to determine a “raw total score” for Implementation and Innovation. A mathematical formula is then applied to adjust for the 0-9 rating system and the number of criteria so that vendors can be positioned along the x- and y-axes (with a maximum score of 100 for Implementation and Innovation). The mathematical formula does not impact vendor ranking.

It is ABI Research’s policy not to publicly disclose individual scores for each criterion for each vendor. However, ABI Research will accept requests to discuss a vendor's individual scores with that same vendor.

Rankings

After individual scores are established for Innovation and Implementation using the above criteria, an overall company score is established using the RMS (Root Mean Square) method. The resulting overall scores are then ranked and used for percentile comparisons.

The RMS method, in comparison with a straight summation or average of individual innovation and implementation values, rewards companies for standout performance. For example, using this method, a company with an Innovation score of 9 and an Implementation score of 1 would score considerably higher than a company with a score of 5 in both areas, despite the mean score being the same. ABI Research believes this is appropriate as the goal of these matrices is to highlight those companies that stand out from the others.