Business relationships at several levels

Fingerprints’ business is based on sales of complex biometric systems that combine sophisticated hardware and software. The company forms business relationships with several parties in its supply chain.

The strength of Fingerprints’ business also lies in its close relationship with the end customer (the OEM company), from sales to customer-specific customizations to continued software updates.

SCALABLE BUSINESS MODEL

Fingerprint sensors can be marketed to a number of market segments, of which the smartphone market represents the largest in the short and medium terms. The market is growing and more customer categories are being formed as biometrics are used in more types of devices. The company considers the smartcard market to be the next high-volume market in the short term perspective.

DEDICATED SALES FORCE AND REGIONAL CUSTOMER SUPPORT

Marketing and sales are both handled on a proprietary basis, as well as via distributors and resellers. In addition to direct contact with customers, major global trade fairs are an important channel.
Fingerprints has subsidiaries in Sweden, Denmark, Shanghai, Seoul, Taipei and San José. Fingerprints’ local presence contributes to strengthen its customer relationships and helps the company clarify and satisfy customer requirements.
Several functions are involved in sales and ongoing customer relationships. The sales force works closely with the Customer project department, and the number of sales staff increased substantially in 2016, with several dedicated KAMs (Key Account Managers) out in Fingerprints’ main markets.

BUSINESS MODEL FOR SMARTPHONES/TABLETS

Two-way marketing
Several parties are targets in the smartphone market. Some marketing and sales targets are:
• Smartphone/tablet manufacturers (OEMs and ODMs, the latter, Original Design Manufacturer, produces products sold under other brands) that decide on and specify the units that will
be incorporated into their technical specifications, decisions on which result in a design win. The OEMs also state which modifications must be made to adapt to Fingerprints’ biomet- rics systems.
• Module suppliers, who are able to strengthen their businesses with Fingerprints’ strategic system solutions.
Given that Fingerprints has qualified a biometric system solution for smartphone/tablet manufacturers (OEMs), it is natural for the customer relationship to continue as the manufacturers develop new products. This established partnership with the OEMs’ module suppliers and distributors strengthens Fingerprints’ continued partnerships and relationships.

The module supplier is an important partner for two parties Like many other advanced products, smartphones/tablets are produced by assembling modules from several subsuppliers. In the mobile industry this is largely performed by module suppliers, and every OEM has its preferred module partner. The module supplier is responsible for the assembly and packaging of module components.
Among its many end customer contacts, Fingerprints works closely with a dozen module suppliers, notable among which are CrucialTec and O-film.
The module suppliers may be viewed as both partners and customers, since they set specifications while also being a partner

The distributor – an important link in the delivery chain Distributors are an established link in the electronics industry and they are the party to whom Fingerprints delivers hardware and are then invoiced.

Revenue model – the distributor is the middleman that pays Fingerprints
Fingerprints receives revenues when its hardware – in the form of wafers (sensors in continuous format) or packaged sensors – is delivered to the distributor or module supplier. Software develop- ment is normally part of the contract. Software development/cus- tomization may also be charged to an OEM separately, as part of the software license. Fingerprints only reports one type of revenue in its financial statements.

Sales process for Smartphone

1. The process of selling to a smartphone manufacturer begins with an evaluation of Fingerprints’ solution, which will lead to a design win at the next stage. The next step is
hardware and software customization, which results in delivery of a large array of sensors for production and functionality testing, to be followed by mass production.

2. The commercial life of a smartphone model is 12–18 months with most of the volume sold in the first 12 months. The commercial life of tablets is somewhat longer, about three
years. At the same time, manufacturers of smartphones/tablets maintain a fast pace of development and launching of new models.

BUSINESS MODELS FOR SMART CARDS

Marketing within smart cards is directed towards several parties.
• Smartcard manufacturers such as Oberthur Technologies
• Transaction brokers such as MasterCard, Visa and China
UnionPay, who cooperate with the banks that issue cards Agreements are made directly with the smartcard manufacturer, which integrates Fingerprints smartcard solutions.
The business model for smart cards is more direct, since Fingerprints accounts for distribution of packaged and software customized sensors.