Your critical lens on the world of biometrically enabled identification solutions

Volume 3, Issue 2


April 2008

Inside this Issue

- Editor's Intro
- The Demise of Pay-by-Touch
- Shake-up at Sequiam
- Outsourcing Enrolment
- L-1: Biometric Medusa or Titan?
- Security Document World & Identity Loop
- Recommended Events
- "The REPS Biometric Directory"


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Just When You Thought You Knew What to Expect

Several recent headlines offer new twists and turns on the road to mainstream biometrics

  • The demise of Pay-by-Touch has received considerable attention from both inside and outside the industry. Yet, many of the conclusions drawn from this company's misfortunes seem to miss the point. Contrary to the mainstream press assessment (see Wall Street Journal, 3/19/2008), this was not yet another failure of biometrics. It was a sketchy business run by a cast of questionable characters and apparently funded by a group of sophisticated investors that did not do their homework.

  • Sequiam's announcement of the abrupt exit of their rather flamboyant CEO, Nick VandenBrekel, was followed shortly by a Chapter 11 filing announcement. Apparently the investor group behind the company - Biometrics Investors LLC - now believes their interests are best served by folding their Sequiam investment into rival bioMETRX. Guess Black and Decker door locks does not a successful business make.

  • The UK has decided that biometric enrolment - one of the most critical, costly, complex, yet largely ignored issues in biometrics - is best left to the private sector. A realistic approach that faces considerable and largely reasonable blow back given the state of commercial (and public sector) data security.

  • L-1 appears to be locking up the US Drivers License business with the acquisition of Digimarc. No doubt this gives the biometrics behemoth an even broader footprint in the human ID market. The question now for L-1: how will this expanding Medusa corral it's asset portfolio to become the virtual Titan of human identity?

    This edition of the eUpdate examines these events and provides Acuity's unique take on how they fit into the broader context of biometrics market development.

    As always, your feedback is welcome. And please feel free to forward your copy of the eUpdate to colleagues and encourage them to subscribe.


    C. Maxine Most


    *For more in-depth analysis and strategic market development expertise, Acuity provides highly targeted custom research and consulting services, and as well as publishing comprehensive biometric and identification solutions market reports and forecasts.


  • C. Maxine Most    
    Acuity Market Intelligence      

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    The Demise of Pay-by-Touch

    Pay-by-Touch's demise represents a "business" failure not a "biometric" failure. The company offered an innovative retail payment processing solution based on the unique capabilities of biometrics. There is no indication that the biometric component of the solution is to blame for the failure of the effective deployment of the solution, nor the company itself

    Far to often, technology is considered the culprit of a failed business enterprise. Pay-by-Touch was a poorly managed company led by an executive team with questionable capabilities and ethics. By all accounts, the biometrics are not to blame. Contrary to what many naysayers predicted, consumer uptake of the Pay-by-Touch biometric payment system was not met with widespread protest or alarm. Quite the opposite was true. Many consumers happily signed up for the service as it offered a convenient, alternative method to purchase groceries.

    Pay-by-Touch broke new ground by offering a service-based transaction model for biometrics. It is not clear that this model, any more than the enabling biometric technology, was responsible for the failure of the company. In fact, this service-based, transaction enabling approach will likely become mainstream over the next ten years (See Acuity's "The Future of Biometrics" report).

    Pay-by-Touch may have had unrealistic goals, squandered investor cash, mismanaged operations, had an untenable revenue model, completed unwise acquisitions, as well as a host of other sins. However, they did attract over 3 million consumers and provide a service that worked.

    There are far too many examples of biometric deployments gone awry where prognosticators, pundits, and protesters proclaim the "failure of biometrics". Time and time again, it is the solution or business model that fails; not the technology.

    Biometrics, like any other technology, has inherent limitations. For the most part, these are well known and have to do with the nature of the technology. Biometrics measure human beings -- imperfect, inconsistent, unpredictable human beings. There never has been and there never will be a 100% accurate biometric. Then again, this is true of all technology. It is simply not possible to be 100% accurate measuring anything, yet everyday we rely on a host of "imperfect" technologies that enable us to operate machinery, run complex computer systems, test DNA, and send human beings into space. The technologies all perform within known limitations and constraints that we have mastered in a way that allows us to confidently perform tasks from the mundane to the life threatening with acceptably levels of uncertainty. Why hold biometrics to a higher standard?

    To be fair, the biometrics industry bears some of the blame. The legacy of over-promising and under-delivering of biometrics technology is undeniable. Overreaching performance claims need to be legitimately challenged. Acceptable operating failure constraints need to be understood and managed, especially when the assertion or denial of specific rights, privileges, and civil liberties are at stake. However, throwing the proverbial "baby out with the bathwater" is an overreaction. It will not lead to a constructive process of evaluating the true and unique capabilities of biometrics and leveraging them, as and where appropriate, to enable convenient, secure transactions or a host of other applications where who we are matters.

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    Shake-up at Sequiam

    Here is the official "skinny" from Sequiam

      Biometric device manufacturer Sequiam Corp. filed for voluntary Chapter 11 bankruptcy reorganization on March 15. The Orlando-based company intends to conduct business as usual while it resolves operational and liquidity issues and develops a reorganization plan. The company has accumulated $30 million in debt developing its technologies over the past six years with projected revenues of $6.5 million in 2008 and $30 million in 2009. Sequiam claims its financial woes are in large part due to the failure of Biometrics Investors LLC to honor a March 2007 agreement that would have advanced the company $800,000. Sequiam's stock price is down to 2 cents per share in spite of its high profile licensing agreement with Black & Decker's Kwikset division for biometric door locks. It's founder and chief executive officer, Nick VandenBrekel, recently resigned for personal reasons.

    The reality is that Sequiam's lead investor -- New York-based Biometrics Investors LLC (which the company accuses of reneging on as much as $3 million in promised financing) -- has jumped ship for Sequiam's lead rival -- bioMETRX. This "jump" involves the takeover of Sequiam and the sale of its assets to bioMETRX.

    Both companies have bet their futures on the imminent adoption of consumer biometrics including residential security -- door locks, garage door openers, etc. -- and personal electronics -- mobile phone, laptops, PDAs, etc. And, while there has been progress on this front and both companies claim to be on the verge of major sales breakthroughs, the financial results tell a different story.

    There is no doubt that some interesting shenanigans are at work behind the scenes. Yet these events are quite a departure from Sequiam's hullabaloo about the Black and Decker deal and the bravado of former CEO Nick VandenBrekel.

    bioMETRIX believes Sequiam cannot salvage their business and is working with Crestview Capital -- majority owner of Biometrics Investors LLC -- to find a way to amicably consolidate the two companies. Meanwhile, Sequiam expects to file suit against Biometrics Investors LLC for engaging in "a series of tortious acts designed to transfer (it's) assets to its competitor".

    Is it just me, or does there seem to be an unusually high level of drama -- often personality based --in the biometrics market?

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    Outsourcing Enrolment

    In an effort to drive down program costs, the UK Home Secretary has announced that it will rely on the private sector to collect biometrics for the National ID card.

    The prospect of commercial entities vying for citizens' biometric enrolment business is somehow disconcerting. Yet, this is the likely scenario for future biometric enrolment. (FYI: I serve as an advisor to a company working on a commercial enrollment model. But this is the result of, rather than the reason for my belief in the inevitability of this approach. )

    It actually makes fiscal sense and potentially provides greater security to have independent government certified commercial entities collecting biometric data for both government and commercial applications.

    • Developing independent enrolment solutions for every biometrically enabled program or application is not practical. It is cost prohibitive and too cumbersome for citizens and consumers.
    • The biometric enrolment process is simply too costly to justify unique enrolment for every program and application in which citizens or consumers must, or choose to, participate.
    • The notion that biometric data will be as freely available to hackers and ID thieves tomorrow, as the rest of our personal and financial information is today, is unacceptable to citizens/consumers and should be to governments as well.

    I strenuously object to the introduction of large centralized registries where biometric and personal data are intermingled. However, I do believe that creating non-networked vaults that store biometric records independently of other personally identifying information, and where these records are controlled by the individual who owns them is a viable approach. From these vaults, expirable biometric templates could be distributed and authorized, or revoked, for commercial or public sector purposes based on the expressed wishes of the owners of the data.

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    L-1: Biometric Medusa or Titan?

    L-1 continues to make news and history by becoming the single largest independent multi-biometrics player in the industry. The latest acquisition of Digimarc adds breadth to their portfolio, fuels their Real-ID prospects, and furthers a sense of uneasy hope across the marketplace. Many small and/or struggling biometrics players are not sure whether to flirt and flaunt to attract similar attention, or to lay low and benefit from related market growth while avoiding a buy-out offer they might not be able to refuse.

    L-1's rapid acquisition strategy has easily propelled them to rock star status. By many accounts, L-1 is the defacto industry leader. Their success in effectively leveraging the acquisitions to build business and investor value is yet to be determined. Their biggest challenge may very well be negotiating marketplace position vis--vis the government integrators that are sometimes their partners and sometimes their competition.

    L-1 is in a unique position to establish clear leadership in human ID solutions development providing unparalleled expertise in bridging the "human-machine identity gap". Can they accomplish this Titanic feat? Time will tell if they can transform their many-headed organization into the premier market master.

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    The REPS Biometric Directory

    The Definitive Resource Guide to Biometrics Industry Players

    ... shameless self promotion time...

    In association with REPS Consulting Services, Acuity Market Intelligence is pleased to present The REPS Biometrics Directory ... the only interactive industry directory available in the market today.

    This online reference tool is built on a dynamic searchable database that is continually updated to provide accurate, reliable, and comprehensive information on over 650 biometrics industry players worldwide. An annual subscription provides unlimited access to the interactive, online database.

    Special introductory price of $59.95 for an annual subscription.

    Standard individual subscription pricing is $129.00 per year. Multi-user and enterprise wide subscriptions are also available.

    More information available at the Acuity website.

    Subscribe today for the latest information about biometric organizations.

    Preview The REPS Biometrics Directory.

    Acuity Market Intelligence is the exclusive marketing representative for The REPS Biometrics Directory - a product of Recruitment and Engineering Products and Services (REPS) an IT security and data protection consultantcy based in Winter Park, Florida.

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    Security Document World 2008 and Identity Loop 2008

    Science Media Partners is delighted to announce its keynotes and full programme for Security Document World 2008 and Identity Loop 2008.

    With more than 50 expert presenters from around the world, covering key issues including ePassport/eVisa developments, Extended Access Control, Advances in security document technology, the e-ID landscape and infrastructure, as well as a full day session on Registered Traveller schemes, Security Document World and Identity Loop 2008 promises to be the leading ePassport, e-ID, security document, border control and government identification event this year.

    Alongside the conference is a world-class exhibition with over 50 exhibitors from every part of the industry, including companies involved in the manufacture and supply of ePassports, eVisas, national ID cards, drivers' licenses and health cards, multi-biometrics, smart card and RFID technologies used in registered traveller schemes, border control, law enforcement, large-scale identity programmes and door-to-desktop physical and logical access control solutions, and much more.

    The event is to be held on 22-23 April 2008 in the heart of London's vibrant Covent Garden district. Download the full conference programme or sign up to visit the exhibition.

    For general information contact: Mark Lockie, Event Director, Tel: +44 (0) 29 20 560458

    For exhibition/sponsorship contact: Pam Chattin, Exhibition Manager, Tel: +44 (0) 1322 663006

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    Acuity Presentations & Recommended Events

    Want more from Acuity up-close and personal? Acuity's Principal, C. Maxine Most, will be speaking at the Voice Biometrics Conference in New York City in May and may be found wandering the conference sessions and exhibit hall at the Identity Loop and Security Document World conferences in London in April. See you then!

    Acuity and the eUpdate are proud sponsors of the following events:

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    Additional Services

    For custom research, analysis or strategic market development consulting, visit Acuity Market Intelligence or call +1 303 449 1897



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