Resilience in a cautious market environment

• 2009 was marked by a cautious market environment. Some customers delayed innovative projects, weighing on the revenue and the average selling price.
• Gemalto continued to secure new wins in software platforms and operated services contracts. Software and services revenue was up 15% at constant exchange rates.
• Gross margin improved by 150 basis points, reflecting continued focus on value-selling and further improvements in operational efficiency.
• Tight control on operating expenses offset the consolidation of newly acquired activities.

More than 450 operators worldwide benefit from our products, software and services, which include:

Digital Life Management: our solutions put users’ valuable data onto any device, from the mobile to the PC via the web. Users can protect, manage, communicate and share this data. We have already deployed these solutions for over 90 operators to help 60 million users manage their contacts.

Mobile Marketing Solutions: these include content management and delivery, relationship marketing and mobile advertising. They address operators, content providers, advertising agencies and traditional brands wanting to deliver personalized, rich and relevant content and campaigns via the mobile.

Mobile Financial Services: we provide secure access from a cellphone for banking, payments and money transfer services, enabling banks and operators to provide innovative services, lower costs and reduce fraud.

Trusted Service Manager: being at the heart of the converging worlds of telecommunications, banking and transport, we help mass transit operators, banks, businesses and MNOs offer a range of services to consumers seamlessly and securely via a user’s handset.

Roaming Services: our innovative Roaming Director service provides the world’s most efficient steering system, helping operators maximize revenues and deliver the optimum performance for subscribers.

Our range of solutions and services also addresses the new markets of mobile TV, Machine-to-Machine (M2M), convergence and others.

• 1.8 billion individuals benefit from at least one of our solutions. Our technology is both at the core of the MNOs’ offer and in the hands of consumers, allowing high interactivity.
• Our value propositions span the entire spectrum, enabling mass market services as well as new high-end revenue streams.
• Our expertise in OTA updating for SIMs puts operators in control and offers a platform for new services.
• With 44% market share(*) by volume in advanced economies, Gemalto is firmly positioned to address fast-growing premium markets – such as mobile broadband, mobile contactless transactions, remote management and M2M.
• Gemalto is already rolling out innovative mobile data services in developing economies with considerable growth potential.
• With our considerable R&D investment we are in a strong position to capture emerging trends and satisfy unmet needs.
• Strategic acquisitions have strengthened our hand in both digital life management (O3SIS) and software and contactless services (NXP). These are further bolstering our ability both to extend our offer and propose solutions as a Trusted Service Manager (TSM).
• We are engaged in active partnerships with handset manufacturers to establish seamless solutions.
• We have a strong involvement in organizations and bodies defining standards, setting trends and shaping the industry.
• With our breadth of expertise across a range of markets we are in a unique position to serve customers with converging needs.

^(*) Source: Gemalto

Gemalto has been providing services for MNOs since the earliest days of GSM. More than 450 of them benefit from our products, software and services. Our technology has underpinned key shifts in the market over the past 20 years – from getting more people connected, to developing value added services around them, to building deeper connections between them.

That means users are able to carry with them a unique set of products and services without thinking about how it all works. MNOs now have the ability to develop and deliver enhanced offerings that can create new revenue streams while protecting the user experience. And because today our solutions address 1.8 billion individuals, we’re in a strong position to help the mass evolution of mobile applications.

Gemalto has always aimed to deliver innovative and easy-to-use services. Now, the convergence of different technologies is driving an explosion of new opportunities. Because our solutions can work with almost any platform – older handsets, PCs, 3G modems, connected laptops, smart-phones and so on – we can help operators go beyond their ‘native’ devices, reinforcing their relationships with subscribers. That is one reason why, in 2009, cable TV operator Videotron selected our 3G SIM card for secure connectivity for its burgeoning wireless phone and data services.

The power of our SIMs is also creating opportunities. For example, our UpTeq™ MultimediaReady SIM card uses Smart Card Web Server (SCWS) technology to enable applications to run directly from the SIM. In 2009, T-Mobile selected Gemalto to develop prototypes of rich media applications built in to a SIM card – which means they will work with any SCWS-compatible handset, broadening access to high-end services.

Our Company played a key role in the deployment of 3G networks, and we continue to support advanced 3G roll-outs. In June 2009, we announced deals to supply our UICC and Removable User Identity Module (R-UIM) cards to the three major mobile operators in China for their 3G launche

And we are also at the heart of the next generation of networks, known as Long Term Evolution (LTE). Gemalto is helping MNOs deploy new value-added services using LTE’s speed and IP connectivity. We are supplying OTA subscriber services and UICC solutions to major LTE projects, such as Verizon Wireless in the US.

At the heart of all of these developments is the user’s multi-device digital life. Users now expect their content, services and identity to be with them everywhere. Gemalto ensures consumers on the move can protect, access and share any kind of personal data. Our Digital Life Management solutions work with most handsets on the market. We have already deployed them for over 90 operators to help 60 million users manage their contacts, for example, with an average adoption rate of 20%.

Our solutions also reflect the latest trends in digital life management. A new offer includes social media enablers, so subscribers can share their data using a unique interface for networks such as Facebook and Twitter. We augmented our own innovations in 2009 with the acquisition of O3SIS AG, a leading provider of personal data management solutions to MNOs that has over 20 blue-chip customers – and handles more than one billion personal data records.

There are 1.8 billion individuals currently benefiting from at least one Gemalto solution. This means we can build interactive, personalized mobile experiences independent of handset model or contract, opening up considerable possibilities in mobile marketing for anyone wanting to deliver personalized, rich and relevant content and campaigns via the mobile. Our solutions offer wide reach and built-in interactivity – improving measurement of return on investment (ROI), profiling and targeting. This represents a major opportunity to engage in real segmentation and meaningful opt-in for marketing messages.

We provide secure access from a cellphone for banking, payments and money transfer services, enabling banks and operators to provide innovative services, lower costs and reduce fraud. Our expertise in strong authentication means our SIM-based solutions meet the highest security standards while being flexible enough to adapt to a multitude of devices.

Providing solutions for all subscribers is a key objective for Gemalto. We know that the cellphone can play a significant role in digital democracy by spreading the benefits of structured financial services in countries where internet access is limited or people do not have a bank account. MTN Uganda is already using Gemalto for its nationwide mobile payment program – between roll-out in March 2009 and the end of June, around 180,000 mobile payment transactions had already been performed. And in February 2009, we announced a partnership with India’s mChek to deliver secure mobile banking via our SIM cards to markets in South Asia.

Gemalto is innovating for the engine-room of mobile communications, too. In order to negotiate and optimize their inter-operator tariffs (IOT), MNOs need to deploy effective traffic steering solutions with little or no impact for the subscriber. Gemalto’s Roaming Director service provides the world’s most efficient steering system, helping operators maximize revenues and deliver the optimum performance for subscribers.

We continue to expand our software and services expertise in high growth areas such as mobile Near-Field Communications (NFC) to reinforce our Trusted Service Manager (TSM) platform. This means we can enable transport operators, banks, businesses and MNOs to offer a range of services to consumers seamlessly and securely via a user’s handset. In March 2009, Gemalto acquired the mobile services operations of NXP, giving us additional capabilities in software and service solutions compliant with the MIFARE4Mobile™ interface. This further strengthened our TSM platform, enabling the mobile phone to be used with existing payment and contactless ticketing infrastructures.

Machine-to-Machine

Billions of people have a unique identity on the network using Gemalto technology – and now millions of machines and portable devices do too. We have developed a dedicated SIM platform for Machine-to-Machine (M2M) applications such as remote management, industrial data collection, surveillance and healthcare. This is proving its worth for automated services such as electricity meter reading, vending machine stock levels and breakdown diagnostics for cars.

Mobile TV

Gemalto also helps operators monetize content with strong authentication and protection of media streamed to users’ portable screens. In 2009, for example, our UpTeq™ mobile TV SIM card was the first to earn certification in accordance with the SIMalliance Security Guidelines, which means the cards provide the required level of security for mobile digital TV. We also provide ancillary services for operators and content providers. For example, our solution for mobile TV audience monitoring is used by Médiametrie, the French audience measurement company, helping every part of the mobile TV chain to maximize revenues.