acquisition of VeriFone
this year has created a major player in
, a new report concludes.
In "Hewlett-Packard's Electronic Commerce Strategy: Tilting the Playing
Field," Killen & Associates said the
acquisition will stimulate competition to supply the complex technology
needed for merchants and financial institutions to adopt the Secure
Electronic Transactions protocol for secure payment card purchases over the
Net. Visa and MasterCard developed the SET
In one of the first forecasts of SET market size, Killen, a telecommunications,
financial services, and technology consulting firm, estimates the
market for SET hardware, software, systems integration, and supporting
services will top $2 billion in the year 2000. The lion's share will be in
SET software sales, $1.2 billion in 2000, up from $75 million this year.
Computer hardware shipments for SET, projected at just $10 million in 1997,
will grow to $600 million in 2000, Killen said.
Among HP competitors, only IBM
(IBM) is positioned as well as HP-VeriFone to provide a one-stop
Bob Goodwin, senior vice president at Killen.
In June, HP closed its $1.29 billion acquisition of VeriFone in a stock
swap announced April 23. With 1996 revenues of $472 million, VeriFone was
already a giant among early players on the Internet, although by far the
biggest part of its revenue comes from hardware and services in the
physical world, not the Net.
VeriFone acquired its Internet expertise in August 1995 when it bought
a consulting firm called Enterprise Integration Technologies.
The Killen firm predicts SET technology vendors will scramble to rework
their strategies. Those vendors include: Digital
Equipment, EDS, IBM, Intuit, Microsoft, Motorola, NCR, Netscape, and
Indeed shortly after the acquisition, Microsoft, HP, and VeriFone announced
they would jointly offer turnkey SET systems for banks and merchants,
although that deal had been under discussion prior to the VeriFone-HP
merger. The offering will include HP's hardware, VeriFone's Internet
payments software, and Microsoft's Web storefront software.
The combined HP and VeriFone also offer new options for SET-hungry
financial players, according to Killen.