Apple badly Wanted AuthenTec

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AuthenTec, a company that generates an income of about $77million a year mainly through fingerprint sensors, is being bought by Apple for $365 million! Let us see why.

AuthenTec was beginning to focus solely on mobile security and a deal with a rival like Samsung would mean AuthenTec securing Samsung’s Android devices- a threat to Apple as employees are the ones that decide what devices are used in the workplace.
A familiar name in fingerprint scanning technology, AuthenTec didn’t actually have many firms following it on Wall Street. Its recent move towards mobile security threw the equations around a bit:
June 7: Joining with ARM Connected Community.
July 16: AuthenTec’s VPN technology to be used in Samsung’s smartphones and tablets.
July 23: Partnered Alcatel-Lucent to secure Apple and Android devices at Portugal Telecom.

An addition to the Russell 3000 index did further favour AuthenTec’s business as more people shall perhaps see it as an acquisition target. Richard Shannon, analyst with Craig Hallum, said in his research note that AuthenTec might just hit the jackpot with its mobile security business. He observed that AuthenTec derived hardly any revenue from its VPN software, but that it would be critical to Samsung. Apple, on the other hand, isn’t bothered much about the enterprise. In the enterprise, the iPhone numbers have doubled over the past one year. While in many companies, Apple and Android are both replacing Research in Motion. One’s loss is the other’s gain people say; if Android becomes harder to adopt in the enterprise, Apple stands to gain. Apple must also try and bridge the sale of its devices so that the latest models release during the September-October period each year. This is because of the longer product cycles of Apple compared to those of Samsung. In terms of security, the CIO’s are aware of the disadvantage with Android because it has too many versions. Apple’s iOS is just one, and consistent throughout. This is another reason perhaps why Apple is paying so much for AuthenTec.

Further, for AuthenTec to make it big in the mobile security business, its $20 million capital base would have been insufficient. It was inevitable that one or the other partner would have acquired it. Here’s when Apple entered the fray and beat Samsung to it.

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