Transcript Progress Report: Business Case for Biometric Devices

Overview of Biometric Industry,
Devices and Applications
Dr. Virginia Kleist
Dr. Richard Riley
College of Business and Economics
September 12, 2003
• Research Funded by Center for Identification
Technologies (CITeR) at West Virginia University
• CITeR is the first National Science Foundation
(NSF) / Industry University Cooperative Research
Center focusing on serving its membership in the
rapidly growing area of Biometric Identification
Technology
Business Issues for Corporate
Users, Government Users, and
Vendors
• What variables drive customers to use
biometrics?
• What are the vendors thinking about?
• What are the costs and benefits from a
buyer and vendor perspective?
• Overview of technologies of biometrics
• Performance metrics of biometrics
• Sample applications in real world
How Do Academics Understand
the Biometrics Industry?
• Positive network externalities, tipping point,
increasing returns to scale
• Embedded base, large government purchases
• Production economics
• Open source code issues and standards
development
• Information industries and dominant firms, new
technology market behaviors
• Transactions cost theory
• Substitution goods
Path Dependency to Technology
Dominance
(Arthur, 1996)
Product A (e.g.,
VHS, QWERTY
keyboard)
Time
Product B (e.g.,
Beta, Dvorak
keyboard)
Biometrics Industry Supply and
Demand
Price
Quantity
Customer Demand Curve
Price
R2
R3
R1
Quantity
Vendor Manufacturing Issues
• How well can we make the device work?
• How cheaply can we make the device?
• Can we manipulate the market to help reduce our
production costs?
• Are we getting more cost effective as we sell these
devices over time?
• How much more should we spend on our product
development?
Vendor Marketing Issues
• Within market and across market issues
• Market share of device type, market share of
vendor
• What’s the “buzz” ?
• Standards vs. proprietary systems
• Number of competitors within niche
• Does the government like you?
• Can you lose money on your product in the short
run?
Customer Demand for Biometrics
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Customer risk profile
Perceptions of value of biometric
Substitute goods
Customer sophistication with technology
Vendor sales relationship
Customer organizational structure
Utility value to customer
Effect of deployment of multiple devices
Customer’s Users and Biometrics
• Biometrics system user perceptions
• Intrusiveness, ease of use, accuracy of
device
• Prior knowledge and familiarity with
biometric
• Customer culture
• Short and long run perceptions of customer
Strategic Biometrics Industry Issues
• What are the underlying customer cost/benefit
incentives for purchasing biometric investments?
• Why do customers choose one product over
another? What do they say about these decisions?
• Will the larger vendors have lower cost per unit
manufacturing costs, and therefore be better able
to under price the smaller vendors?
• Will embedded base databases drive future
product choices?
• Will government purchases drive the market for
non-government biometrics choices?
Strategic Issues of Interest, cont.
• Should vendors use a low price or free strategy to
build market share?
• How important is education and knowledge in
customer choice? In user acceptance?
• How relevant is customer risk in customer choice?
• What are the effects of alternatives to biometrics?
– Legal infrastructure?
– Insurance coverage?
• Can standards coexist with quality of product?
• Will customers substitute non-biometric products,
cheaper products or multimodal solutions over
more expensive, but perhaps higher quality
products?
US Market Structure
(Nanavati, et al., 2002)
• Fingerprints at nearly 50 percent market
share, not including FBI
• Followed by facial scan, hand scan, iris
scan, voice scan
• US market has increased in size by factor of
4 times from 1999 to 2003
• Biometric revenues expected to hit $2 B by
2005.
Biometric Devices
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Fingerprint scan
Facial scan
Iris scan
Retinal scan
Hand geometry
Voice scanning
Signature scanning
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Keystroke dynamics
Odor
Skeleton shape
Gait
DNA
Multimodal
Biometric Performance
Characteristics
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False Acceptance Rate (FAR)
False Rejection Rate (FRR)
Equal Error Rate (EER)
Speed of Processing
Intrusiveness, perceptions of intrusion
Systems scalability
Ease of enrollment
Biometrics testing
Biometric Examples
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WVU
Casinos
Credit Unions
Check Cashing
Machines
Online banking
Brokerage accounts
Forensics, IAFIS
DoD
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(Various sources, incl. Woodward, 2003)
National ID systems
Time and Attendance
Physical access
Customer service,
retail
• Computer and network
access
Biometric Standards
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(Woodward, et al. , 2003)
ANSI/NIST ITL 1a-1997
X9.84-2001
BioAPI Specification, ver 1.1, 2002
X9.84
Other developments
Social Issues
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Intrusion
Civil liberties
Public defense
System faults
Protection of information
Privacy concerns
Constitutional issues