Biometrics industry stocks this week

The Detroit International Auto Show is underway this week in Motown. Reflected in the line-up are signs of the epic, once-in-history shift in the fundamental nature of the auto industry. Today, of course, Detroit steel is merging with Silicon Valley digital tech as a new era of automated vehicles (AV) is dawning. Even two years ago the idea of self-driving cars as an imminent consumer item would seem nuts, recent predictions have been that a true self-driving car would not hit the road until 2050. But all of a sudden the conventional wisdom is shifting- the AV era seems to be arriving much faster than many thought.

Where all this activity is going is also on display in Detroit this week. The auto show has expanded its dedicated technology show area, Automobili-D. The title of the show is a play on the words ‘autos’ and ‘mobility,’ is another sign as to how it is the AV sector will emerge.

These days, of course, OEM executives have taken to calling their organizations ‘mobility providers’ rather than car companies. The shift in terminology reflects the idea that the industry is evolving away from a model in which the OEMs build a car and then sell that vehicle to a single owner. The new thinking is that early AVs are going to be expensive, at least $400,000. An important technology allowing cars to see is light-based radar, or LiDAR, which is still expensive. Because AVs will be too expensive for the average person to buy, the OEMs will set up rideshare fleets in urban centers that will offer people access to mobility rather than ownership of a single car. Providing a rideshare fleet will allow OEMs to reach millennials who are no longer buying cars as older generations did. Fleet-based AVs would also be able to ‘work’ 24/7. Having a vehicle generate cash at that rate will make the roll out of expensive AVs possible. GM executives recently announced they expect they could actually make more money per car with a fleet-based, ride-share mobility model rather than sticking with the old individual-ownership model. Those in the industry today talk about now metrics such as ‘cost per mile’ rather than ‘number of cars sold.’ If an AV in a fleet owned by GM can generate ten cents per mile, that will be more profitable than one sale in which the OEM makes a profit of, say, $1500. It goes without saying that as the auto market undergoes these tectonic, fundamentals shifts vast new market opportunities are opening up for biometrics-based products.

Examples of how biometric technology will be rolled into the emerging AV sector could be found at both CES and the Detroit auto show. One example is a Ford AV that the company used this summer in a test program in Ann Arbor, Michigan.

The company created a one-of-a-kind AV pizza delivery vehicle. The company randomly chose Domino’s customers and then sent the self-driving Ford Fusion to deliver the pie. The cars were outfitted with a special compartment on the back designed to keep a pizza warm. The compartment had a keypad on it. When the car arrived the customer came outside and keyed in the pre-agreed-upon code to get their pizza. According to a report in the business press Ford was particularly interested in studying how it was, “… people would behave in a transaction between customer and AV.” Consider another product shown off this winter. Biometric company HYPR showed off a demo of a decentralized authentication system at CES. A biometric ATM that utilizes tech from Diebold-Nixdorf to allow biometric authentication on a mobile device could be used to access an ATM without any need for a banking card. That is, no data has to be handed over. Authentication is contactless. Data stays on the clients phone. These are the products that are going to allow fleet AVs and ‘cooler size’ sidewalk-based delivery robots (of the type currently being tested in San Francisco and Estonia) to provide safe and secure functioning.

Other uses of biometrics in the AV sphere on display this winter include a Nissan SUV that uses a fingerprint reader instead of a key fob to unlock the doors. The car also adjusts the displays and infotainment system according to biometrically-detected gestures and eye movements. Others talk about using biometrics to detect when drivers are tired or hungry, and then use that info to bring up rest stops and nearby restaurants on the HUD-enabled windshield. That there will be big profits in all this stuff explains why there are so many deals under way right now.

Events are motoring along at a rapid pace in the AV sector. According to reports in the business press Nuance Communications is under pressure from activist investors who want the company to spin out its auto unit. Nuance is already said to be working with an investment bank, Evercore, on the sale. As it is, the automotive business at Nuance is in the mobile division. The auto division accounts for more than 60 percent of the unit’s revenue. That revenue is said to be growing at a “double-digit rate.” Estimates are that the sale could bring $1.5 billion onto the bottom line at Nuance. Willing buyers seem to be popping up all over.

Also reported this week is the creation of a new investment fund controlled by a consortium of OEMs including Renault, Nissan and Mitsubishi. The three automakers announced they are setting up a venture capital fund that plans to invest $1 billion over five years in AV-related startups. As well, the massive auto parts maker Delphi (a company that was once part of General Motors) recently spun out its AV unit into a company called Aptiv, which will focus on producing parts for self-driving cars. Aptiv partnered with Uber competitor Lyft to offer free autonomous robo-taxi rides around CES. And so it seems as if deals and partnerships are being announced weekly now. Some of the other news from the shows this winter:

– Canadian smartphone and software maker BlackBerry had a booth in Detroit. Not many realize that a key acquisition by Blackberry, QNX, sees the company’s software now running behind the scenes on millions of cars already on the road. But last Monday Blackberry launched new software which “identifies vulnerabilities in programs used in self-driving cars.” The tool is called Jarvis will be marketed to automakers as an anti auto-hacking product. Said Blackberry CEO John Chen at the motor city launch of Jarvis, “Autonomous vehicles require some of the most complex software ever developed.”

– Fingerprint Cards and Gentex announced an exclusive partnership agreement to bring iris-scanning technology to the automotive industry. Locating an iris authentication system in or around the mirror would allow auto manufacturers to offer the solution in varying vehicle trim packages, without requiring substantial redesign of the vehicle’s interior. For auto manufacturers that use key fobs, or car sharing providers that leverage phone apps to identify the driver, iris recognition could act as a second layer of security.

– Ford announced it is partnering with Qualcomm to develop a technology to connect cars to each other through C-V2X (cellular vehicle-to-everything). Connecting cars to each other and to devices like stoplights will allow real improvements to traffic flow.

– Chipmaker Nvidia, which gained early fame for producing chips for the gaming industry, has taken a lead in the AV space. The company’s “Drive” series of chips have just been announced as a way, “… for car makers to eliminate a trunk full of computers in their self-driving cars.” The company also announced a partnership with ride-sharing firm Uber, which is also developing self-driving cars. That company has selected Nvidia as its, “… artificial intelligence and autonomous driving technology provider.” Nvidia also recently announced a deal with construction machine mater Komatsu, which is interesting. How many biometric security systems might be needed on a construction site full of automated machines? A lot. No wonder stock in Nvidia has been an outstanding performer over the last two years. After CEO Jensen Huang gave the first speech at CES this year the stock moved up another three percent to over $222 a share.

Another recent announcement comes from VOXX International Corporation, a manufacturer and distributor of automotive and consumer technologies. The company announced last week that it had appointed a new CEO to its biometrics-focused subsidiary, EyeLock LLC. Jeff Carter, formerly CTO of EyeLock, will become the CEO. The company is working on iris authentication. According to a press release the company’s IP portfolio includes more than 100 patents. The subsidiary is one of an assortment of auto-focused companies in the VOXX portfolio, including brand names like Jensen, Klipsch, Prestige, RCA, 808 Audio, Audiovox, Hirschman and Schwaiger. VOXX just reported its most recent quarterly earnings. Earnings rose to USD $8.6 million, much higher than the $5.8 million in the same quarter last year. In the wake of the announcement stock in VOXX was up to $7 a share from $5.55 a couple days previous. The interest in the stock is certainly attributable to the increase in earnings. but investors also seem to be interested in AVs and biometrics today. And no wonder.

A recently published report forecasts that the biometrics market for connected cars is a substantial $969 million, with a predicted compounded annual growth rate of 96 percent over the next six years. According to the report, “Major auto-brands like BMW, Mercedes-Benz, Ford and Volkswagen are working on this technology and finding innovative ways to strengthen vehicles safety and security system. The need for increasing efficiency and accurate and high protection are encouraging organizations to use biometric vehicle access system. Biometrics-based vehicle access system refers to numerous versions such as fingerprint recognition, voice recognition and others.

Factors such as growing demand for authentication and high security are moving the market towards adoption of biometric vehicle access system.” Or, as Chrysler CEO, Sergio Marchionne, put it in an address this past week: “Carmakers have less than a decade to reinvent themselves or risk being commoditized amid a seismic shift in how vehicles are powered, driven and purchased… Developing technologies like electrification, self-driving software and ride-sharing will alter consumers’ car-buying decisions… It’s going to be a very interesting time.”

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