Apple iPhone Touch ID Lights a Fingerprint Scanner Fire

Technology has huge potential for mobile payments

   
Apple iPhone Touch ID Lights a Fingerprint Scanner Fire

AppleRAI Apple iPhone Touch ID Lights a Fingerprint Scanner FireReception to the new Apple (AAPL) iPhone 5S was somewhat guarded — the usual reaction when an Apple iPhone is released that simply adds an “S” to the end.

But one of the new features for the Apple iPhone 5S meant to help it stand out from the competition and last year’s iPhone 5 was the Touch ID fingerprint sensor. And while AAPL’s biometric security play didn’t seem like much more than a novelty at first blush (reviewers had mixed feelings, security concerns were raised and competitors dismissed it as a marketing gimmick), Touch ID may have just kicked off the latest smartphone craze.

Down on its luck HTC has just released the One Max, equipped with a fingerprint sensor, and word is that Samsung (SSNLF) is prepping fingerprint scanning too.

So is AAPL on the bleeding edge of the smartphone’s next must-have feature: fingerprint scanners?

Apple iPhone: Just the Beginning

Well, it sure hasn’t been a good year for HTC. Despite great reviews for its One flagship smartphone, sales of the device have been poor. And its high profile “Facebook Phone,” showcased onstage by Facebook (FB) CEO Mark Zuckerburg was a flop.

On top of that, HTC has suffered high rates of employee turnover and dropped out of the global top 10 smartphone manufacturers. Meanwhile, profits are down big-time and its CEO is increasingly under fire.

So when HTC released the One Max and included a fingerprint sensor on the device, the move — in and of itself — was simply an attempt to sell smartphones by stealing some of the AAPL spotlight.

But at the same time, a second flagship smartphone might just mark the start of a coming wave of biometric sensor-equipped mobile devices.

The Touch ID sensor on the Apple iPhone 5S was hardly a surprise. Ever since Apple spent $356 million for biometric security firm AuthenTec in 2012, the question hasn’t been whether the iPhone would gain a fingerprint scanner, but when.

Meanwhile, HTC’s move to include a fingerprint scanner on The One Max has met with mixed reactions. The scanner’s placement on the back of the device makes its use as a security feature “awkward.”  But reviewers see potential in HTC’s implementation that assigns different apps to different fingers, making single-touch app launches a possibility.

HTC’s version of fingerprint sensor technology seems a little half-baked, as though it were hurriedly tacked on to the device so it could take advantage of the attention the Apple iPhone was sure to enjoy. At the same time, though, all signs are pointing toward a wave of coming fingerprint sensors from the Android camp.

Samsung has reportedly been working with third-party security vendors on fingerprint scanning for its Galaxy mobile devices. Smart Company claims a fingerprint scanner almost made it on the recently released Galaxy Note 3 but was pulled at the last minute after failing reliability tests. Expect fingerprint sensors to show up on Samsung products possibly by the end of this year.

Meanwhile, another South Korean smartphone maker — Pantech — not only has a smartphone out with a fingerprint sensor, but it’s beaten Apple to the punch by rolling out a mobile payment system based on fingerprint security.

Big-Time Scanning Potential

While easier device security is one key advantage of fingerprint scanners, mobile payment is considered by many to be the real prize in the deployment of biometric scanners on smartphones.

The company that scores a hit here has a chance at breaking the logjam on mobile payment standards (where security remains a stumbling block) and becoming a major part of what promises to be a very profitable service — if it ever takes off.

It’s worth mentioning the reaction of Google’s (GOOG) Motorola division to the Apple iPhone Touch ID sensor. The company publicly mocked the iPhone 5S — despite the fact that it actually beat Apple to the punch with 2011 Atrix 4G, which was equipped with a fingerprint scanner for security.

The Atrix 4G was hardly a success, which could explain the sour grapes. If fingerprint scanners do take off as a standard feature on smartphones, expect Motorola to change tact and follow suit, this time playing up its role as a biometric pioneer.

As for HTC, its fingerprint gambit seems likely to backfire as a result of hurried and poor execution rather than slow its slide.

Look for Samsung and other Android competitors to continue their pattern of swooping in with a slicker implementation, locking up even more of the Android market. And expect a pitched battle between Apple and Android as fingerprint technology improves and moves into the next logical phase: the security powering mobile payments.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/2013/10/apple-iphone-aapl/.

©2014 InvestorPlace Media, LLC

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