Apple acquires fingerprint scanner

Apple has snapped up AuthenTec, a Delaware-based company that specializes in security systems such as fingerprint scanners. Under the deal, which was made public by a SEC filing on Thursday, AuthenTec will become a wholly owned subsidiary of Apple, at a price of $8 per share. The agreement is, of course, pending regulatory approval.

The merger document covers a couple specific areas of interest. Firstly, intellectual property: The two companies have entered into an agreement on IP that gives Apple the right to acquire “non-exclusive licenses and other rights” on AuthenTec hardware, software, and patents. For that, Apple will hands over $20 million, after which it has 270 days to license certain technologies for up to $115 million.

Second, and perhaps more interestingly, is a development agreement, which states that AuthenTec “will perform certain non-recurring engineering services for [Apple] for product development and will receive payment of a total of up to $7.5 million for performance of the development work.” Any intellectual property that comes out of that work will, of course, be owned by Apple. However, AuthenTec will act as an independent contractor for the development agreement.

So what does Apple want with AuthenTec? Are we about to see fingerprint scanners embedded in all our MacBooks? My guess is not so much on that front. But AuthenTec makes security-related products for other platforms, too. For example, the company has helped develop a system for Android devices where a fingerprint scanner is used in conjunction with mobile wallet functionality, as a way to secure payments.

Rumors over Apple’s entry into the mobile payment space have been around for a while now, mostly recently sparked by the company’s announcement at this year’s WWDC of an iOS 6 feature called Passbook. While Passbook is currently designed to collect discount cards, boarding passes, and other tickets, there would seem to be a natural progression to payment-based functionality. During Apple’s financial call earlier this week, CEO Tim Cook dodged a question from an analyst about Passbook’s potential for mobile payments, saying only that it was “an important feature of iOS 6” and he “wouldn’t want to speculate about where it might take us.” But AuthenTec’s acquisition might suggest that Apple is looking to enter this market at some point in the future, and is investing in technology that would help make such a feature safe and secure for consumers.

Google, meanwhile, has been pushing its own mobile payment system, Google Wallet, though it has yet to catch on here in the U.S. Mobile payments are more common in other parts of the world, such as Japan and some places in Europe.

Among AuthenTec’s other important technologies is a digital rights management system, which is used by customers such as HBO in its HBO Go iOS app. It’s possible that Apple might be interested in acquiring this technology, though the company’s has long had its own DRM scheme called FairPlay.

Apple does tend to acquire small companies from time to time, usually in areas that it wants to control. For example, the company acquired a number of mapping firms that formed the basis of its iOS 6 mapping technology, bought up chip-maker PA Semi so it could design its own processor, and purchased Siri to make, well, Siri. In all of those cases, there was some lag time between the acquisition of the firm and the revelation of exactly what Apple was doing with the technology; if that holds true in this case, then a year or so from now, we’ll probably have the answer.

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Jim Love, Chief Content Officer, IT World Canada

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