Overview of Biometric Industry, Devices and Applications

Dr. Virginia KleistDr. Richard Riley

College of Business and EconomicsSeptember 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

Time

Product A (e.g., VHS, QWERTY keyboard)

Product B (e.g., Beta, Dvorak keyboard)

Path Dependency to Technology Dominance (Arthur, 1996)

Biometrics Industry Supply and Demand

Price

Quantity

 

    

Price

 

R1

R2R3

Quantity

Customer Demand Curve

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

• 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

• Fingerprint scan• Facial scan• Iris scan• Retinal scan• Hand geometry• Voice scanning• Signature scanning

• Keystroke dynamics• Odor • Skeleton shape• Gait• DNA• Multimodal

Biometric Performance Characteristics

• 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 (Various sources, incl. Woodward, 2003)

• WVU• Casinos• Credit Unions• Check Cashing Machines• Online banking• Brokerage accounts• Forensics, IAFIS• DoD

• National ID systems • Time and Attendance• Physical access• Customer service,

retail• Computer and network

access

Biometric Standards (Woodward, et al. , 2003)

• ANSI/NIST ITL 1a-1997• X9.84-2001• BioAPI Specification, ver 1.1, 2002• X9.84• Other developments

Social Issues

• Intrusion• Civil liberties• Public defense• System faults• Protection of information• Privacy concerns• Constitutional issues