SCM Microsystems to Focus on Fast Growing Contactless Market

SCM Microsystems, Inc. (NASDAQ: SCMM, Prime Standard: SMY), a leading provider of solutions that open the Digital World, announced today the company plans to focus on the fast growing contactless technology market, an important extension to their current strategy. Last week the company announced its first major contactless initiative ?a Memorandum of Understanding with Sony Corporation to supply contactless FeliCa?physical access control terminals for the international enterprise market; additional products for the international mobile and banking markets are under discussion between the two companies.
SCM will also develop technology to support Near Field Communication (NFC) in its readers and terminals, including its FeliCa products. NFC is a short-range wireless connectivity technology that enables contactless payment and information exchange with mobile phones and other consumer devices. NFC is designed to support existing contactless payment standards, so that contactless infrastructures being installed today will work with NFC-enabled mobile phones in the future. SCM announced its first NFC-enabled product, a USB dongle for mobile payment applications, in April of this year.

The use of contactless technology is expanding rapidly across several sectors and regions, creating significant new demand for contactless reader and terminal solutions,?said Felix Marx, chief executive officer from SCM Microsystems. argeting contactless technology plays on SCM strengths and expands the potential market we can reach.

FC is one contactless technology with the potential to satisfy the broad-based requirements for connectivity between devices as new networking continues to reshape a broad range of consumer and business transactions and communications,?said Louis Bianchin, senior analyst and program manager, RFID with technology research firm Venture Development Corporation. his market, while embryonic today, should be around $1 billion by 2012, and should benefit from the supply of contactless readers and terminals solutions integrating ISO 14443, FeliCa and fully supporting NFC functionality.?

The Sony announcement is a good example of how significant the contactless opportunity is for SCM. Japan is the most developed contactless market in the world, with more than 250 million electronic payment cards and FeliCa-enabled mobile phones in circulation today. There is a large and growing demand for readers and payment terminals that work with the FeliCa de facto standard.

Contactless technology is already broadly used in the government, financial and enterprise sectors, and new programs are continually being rolled out. For example, many countries are now issuing new electronic passports that include contactless technology for added security. Transit operators worldwide are moving to contactless fare payment, and in Japan, the United States and many other countries bankcard issuers and merchants are implementing contactless interface technology to help speed up payment transactions for consumers.

SCM plans to address the market as it always has, by creating a broad range of high-quality readers and terminals that support the different contactless standards demanded by customers. In some cases, SCM will also combine multiple standards into a single device to make it more universally useful and solve compatibility or conflicting standards issues between vendors or regions. he timing for entering the contactless market is optimum for SCM, because the standards are now well defined and many programs are now underway. The focus is moving toward growing the acceptance base, which always creates demand for a variety of different devices very similar to those SCM has traditionally manufactured,?said Marx. e are extremely well positioned to play a significant role in this emerging market, with a broad range of contactless solutions already deployed worldwide and a highly experienced team with extensive know-how in contactless technology.

SCM Dated: 2008-06-04