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Y2K was a dud!
Here's how you can cash in on the Next Great Threat to Humanity!
by Briton Ryle
For all the build-up, for all the apocalyptic predictions and fear of worldwide riots, Y2K certainly turned out be a stinker. If I sound a little sad it's because we at Taipan were all set to do some serious bargain hunting. This was going to be the mother of all blood-in-the-streets plays.
But don't worry. We have a back-up plan to cash in on the next wave of fear that will sweep the country. Because let's face it, people just aren't happy unless there's something to be afraid of. And nothing is more satisfying than being able to allay your own fears by spending money.
Privacy "issues" will be the next great threat to public welfare. And we'll be ready to profit as the masses spend wildly to protect the last shreds of their anonymity, and corporations redirect Y2K IT spending to beefing up network security.
Who are the function creeps?
Throughout the 1990s, your privacy was under attack from "function creeps" on an almost daily basis -- and you may not have even known it!
Take those Social Security numbers you have to give to get your paycheck or a membership to a video club. Or the forms they shove in front of you in hospital emergency rooms. The toll-booth cameras that videotape your license plate for the benefit of speed-traps and the automated toll collectors that became so popular at the end of 1999. Not to mention the "innocent" sweepstakes cards you fill out and drop in boxes and the probing questions you have to answer anytime you register for a website on-line.
Every one of these modes of data collection was created to serve one simple purpose. Giving away those tidbits of info should give you nothing to worry about -- until now. Have you called the IRS lately? No more digging around in file cabinets for your forms. They're smiling, wired, and ready. And there's a reason they can afford to smile.
Because they've got you -- the whole you -- on-line. So do dozens of other government agencies, schlock pushers, scam artists, and undesirables. Thanks to faster computers and mass networks, your most personal information gets swapped across the nation many times every second. And that innocent data you shared years ago creeps into purposes and files not so innocent after all.
The threat to your privacy will only get worse
You see, the more technology encourages us to move around and the less we depend on paper forms of ID and records, the faster this trend will continue to unfold.
The next step? It's called biometrics.
Biometrics literally means the study of biological characteristics. In tech-ese, it's the use of unique characteristics for identification and authorization. The FBI popularized one form of biometrics -- the fingerprint. But you can also be identified by your voice, eye, and even your face.
Some will want to use biometrics against you, to get information about you that you don't want to surrender. Just as much, you'll find yourself using some of these technologies to protect your privacy -- especially where you want to keep out the uninvited.
Biometrics has been around for years, but has always been prohibitively expensive. But now, due to a combination of reduced cost and increasing need, biometrics is ready to emerge as an acceptable, effective solution to privacy/security needs.
Could teenage hackers broadcast your neighbor's bedroom antics on the World Wide Web?
Within the next year to two years, you'll have cheap access to security devices like video cameras in your home. In new homes, it will be standard equipment. That's the good news.
You'll be able to target the cameras where you like. And you'll be able to monitor a live video feed of what's happening all over the house -- back porch, kitchen, your child's crib, garage, anywhere you have the security cameras -- just by logging into a special website with your password in hand.
Convenient but dangerous.
Back in 1999, teenage hackers were breaking into the New York Times website and posting their own lead stories. They cracked C-Span's archives and Microsoft's Hotmail. They broke into AOL and read other people's email. Just for kicks, they even found their way into NASDAQ computers and computers at the Pentagon! If the world's largest and most secretive military complex can't keep these varmints out, will you be any safer?
Imagine the shock when you log onto the web, only to find live-action "home video" from a neighbor's surveillance cameras or your cameras, posted as a pay-per-view feature on a pirate-video website!
If you build it, they will come
They'll come all right. But I'm not talking about customers, I'm talking about criminals. Once there are massive Internet banks and huge corporate purchasing databases, the criminals will come out of the woodwork to steal from the weak. The most sophisticated computer networks are vulnerable to hackers. So far, hackers have been pretty courteous. But it's only a matter of time before the criminal element and the hacker community join forces.
But the biggest application for biometrics will come from businesses. More and more, business will be conducted on-line. I've seen estimates that on-line business spending will top US$1 trillion in the next few years. There's a lot of dough at stake. Security will be a priority.
SafLink, formerly known as The National Registry, has been at the forefront of the biometric industry for years. SafLink has worked with the Department of Defense to create biometric security applications. SafLink was hired by the government to standardize the biometric field. And the company has alliances with all of the biggest players. In other words, SafLink has the name and the contacts to lead the industry.
Now or never
Years of research and refinements in biometrics are about to pay off. The infrastructure is there, the hardware is efficient, there are industry standards, more participants, and more applications. Biometrics has reached critical mass.
Any emerging industry goes through a maturation process. Mobile phones, cable TV, the Internet -- all had to get sophisticated and cheap enough to gain real acceptance. Biometrics has reached the final stage -- acceptance.
The single biggest hurdle to overcome is the paranoia many have to documenting their fingerprints or retinal patterns. To most, fingerprinting is what happens after McGarret says "Book 'em, Dano." People fear they will become part of some giant database that tracks their every move. Well, I have news for them. Too late!
You can't move through cyberspace without leaving a trail. And it's virtually impossible to keep your PC unviolated. The company I work for just installed software to monitor our Internet use. Too much time at Naked Peruvian Co-eds and I'm out on the street. Again.
However unfortunate, convenience does have its costs. Biometric companies are very sensitive to how they are perceived. (Why else do you think SafLink dropped the Orwellian moniker National Registry in favor of SafLink?)
The dreaded acorn
Nothing's ever just born big. The market cap for the entire biometric sector is just US$470 million. Total revenues in 1998 were just US$290 million. From 1998 to 1999, outside investment from investment banks, venture capitalists, and the like, grew from US$87 million to US$216 million, nearly a 150% increase in one year. Clearly someone is betting on a bright future.
I've seen some pretty wild estimates for growth in the biometric sector. IDC reports that, between 1997 and 1998, security software in general grew 43% from US$2.2 billion to US$3.2 billion. If that trend continues, security software sales will hit US$6.2 billion in 2001.
For biometrics alone, Lehman Brothers sees US$400 million in sales by 2004. I like Soloman Smith Barney's estimate of US$1billion in sales by 2001 much better. The disparity only proves that no one has any idea. And that's why we have this opportunity. Taking action while others take naps is the key to making fantastic gains off emerging technology.
Fingerprints and software
SafLink began to create biometric devices and make them work. Now they concentrate on making them work. The money is in the software, as Bill Gates has proven. All the nifty gizmos in the world don't do you much good if your computer can't talk to them. And the profit margins on software are huge.
SafLink's flagship software package, SAF2000, is an out-of-the-box solution for running retinal scan, face scan, voice recognition and fingerprint hardware. The SAF2000 is designed for use the world's most used network infrastructure: Microsoft Windows, Novell NetWare and Computer Associates Unicenter.
SAF2000 also includes Public Key Infrastructure (PKI), the preferred method for securing on-line transactions. PKI ability comes through an alliance with security giant Entrust. SAF2000 is the first product on the market to combine biometrics with PKI and smart card capabilities.
Voice recognition technology comes via SafLink's long standing relationship with leading voice recognition company Lernout & Hauspie. A software package called SAFtyLatch is for voice-recognition only, and includes an inexpensive microphone. This makes an immediate investment in hardware unnecessary. SAFtyLatch has great potential in the consumer market.
However, voice recognition is the least reliable. For the height of security, you will want fingerprint recognition. And SafLink is partnered with a company called SecuGen that makes a mouse with a print recognition device built in. So you don't even have to pause to activate some extra device. You just click and the mouse reads the print and access is either accepted or denied.
SAF2000 is priced at US$199.95 for the basic package. Companies can add users at US$49.95 a head. SAF2000 is a cost-effective security measure for the consumer and corporate customer. The special mouse lists for underUS$100. Of course, large purchases come with a sizable discount to the retail price.
Two to Tango
Microsoft became a giant by convincing computer manufacturers to install Windows on their new machines. Getting the operating system along with the computer is a value-added selling point -- it makes the computer more useful and, therefore, more desirable. This type of partnership is key to getting your software distributed on a massive scale.
At a time when virtually no computer came with biometric software, SafLink managed to get a deal with the Home Shopping Network. From the deal's inception in April of 1999 through July, 25,000 computers were sold through HSN, generating significant revenues. Clearly, more licensing agreements like this one are crucial to SafLink's success.
Competition in the PC market is fierce. Manufacturers already seek ways to make their own products more valuable to the consumer. A logical step is to include biometric security software as standard equipment.
SafLink is working hard to market its biometric solutions software. An exclusive marketing rights deal with Triton Resources for Australia contains a guaranteed minimum quarterly revenue clause. Triton wanted the rights badly enough to guarantee money, even if there are no sales. I look for more partnerships and a deal with a major manufacturer over the next few months.
Banking on acceptance
Of the business applications for biometrics, banking probably stands out as the most obvious. PIN numbers can be hacked relatively easily. On-line banks will need to guarantee a secure environment to their customers.
A recent Dataquest report estimates the number of on-line banking customers at more than 24 million by 2004. Add in a good percentage of people who will pay their bills on-line and you can see that just the on-line financial needs could be huge.
Anticipating this future source of demand, SafLink, along with partner SecuGen and Internet bank ING direct Canada, teamed up to offer secure on-line banking using fingerprint identification. This is the first test of biometrics in connection with on-line banking. Success will no doubt pave the way for many of the other on-line banks to offer similar security to their own customers.
The on-line banking application will no doubt increase the odds that biometrics becomes a profitable and respectable industry. If biometrics gains mainstream acceptance, SafLink will be one of the leaders. The company's products have won numerous awards, from the likes of PC World and Forbes.
I believe the first quarter of 2000 will be a pivotal time for biometrics. The federal government has already approved US$15 million for the implementation of biometric security. Look for other large organizations to make similar announcements.
All indications tell me that biometrics is going to be a successful security solution. And if it is going to be a success, we'll know soon. Many sources feel that, after Y2K, security is the next issue confronting corporate America. If biometrics doesn't gain a share of security spending early in 2000, it probably means biometrics is doomed to a life of obscurity. And when you're a public company with a responsibility to shareholder value, obscurity is not a good place to be.
I think risk in the biometrics sector is more than mitigated by SafLink's bargain-basement stock price. The potential rewards are such that having some position in SafLink is recommended, even encouraged. I consider SafLink a strong speculative buy under US$2. Failure of biometrics to gain acceptance could well mean bankruptcy for Saflink. Success of the industry could mean a US$6 price tag for SafLink by the end of 2000. You can contact SafLink at: 2502 Rocky Point Dr., Suite 100, Tampa, FL 33607; tel. 813-636-0099; on the Web: SafLink Investor Relations.
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