Apple Acquisition of AuthenTec Provides Significant Opportunity

Apple’s acquisition of AuthenTec for $8 per share or about $356 million brings a value purchase of fingerprint and security technology. On the surface, the acquisition provides Apple with biometric fingerprint technology to imbed in their mobile devices. While that is significant news, there is more, much more to the story…read on…

First off, $356 million is a bargain for the potential the acquisition could bring. Between the core biometric fingerprint technology and cache of intellectual property (IP), the potential is significant enough. However, there is significantly more potential here.

Value of Mobile Biometric Scanners

Integrated fingerprint scanners in mobile devices are not new. HP was the first to introduce biometric security to a PDA in 2002 with their iPAQ 5450. IBM introduced an integrated fingerprint scanner to a laptop in 2004 with their ThinkPad T42 model. Adding biometric security addresses some of the concerns that come with management of corporate data and near field communications (NFC) for payment processing.

Impact of RIM Blackberry

There most definitely is a relationship between the current state of RIM (makers of Blackberry) and Apple. I wrote a post ‘Learning From The Blackberry Monkey Wrench’ outlining some of my thoughts. There are three core components to the Blackberry service: 1) The hardware devices, 2) The software running on the devices and servers and 3) the RIM operations that manage all Blackberry traffic. This third one is most often missed and one of significant concern. If RIM collapses and the three components go to different companies, what happens to the data center operations that secure and manage the Blackberry system? I’m certain it will create pause for many corporate entities that currently rely on Blackberry solutions.

Apple has the software and hardware solution. However, they do not rise to the level of security Blackberry affords. The acquisition of AuthenTec technology could provide just the boost they need.

Creation of Security Ecosystem

It is unclear as to the entire portfolio of IP AuthenTec brings. One thing is for certain, the potential for upstream and downstream security integration is strong. And with that integration, Apple has the potential to bring a solution to market similar to Blackberry that addresses the data security concerns coming from BYOD and CoIT.

Bottom Line: Considering the acquisition potential beyond the obvious, $356m seems like a steal. Of course, Apple still needs to execute to prove the true value.

Further Reading:

http://www.sec.gov/Archives/edgar/data/1138830/000119312512318086/d384083d8k.htm

http://www.reuters.com/finance/stocks/AAPL.O/key-developments/article/2580569