Oct. 19, 2006, 5:18PM

ID Management Market to Surpass $10B

By DAN CATERINICCHIA AP Business Writer

© 2006 The Associated Press

WASHINGTON — The U.S. identity management market will surpass $1 billion for

the first time this year and government contracting titans like Lockheed

Martin Corp. as well as smaller players, such as L-1 Identity Solutions

Inc., are jockeying for a piece of the action, analysts said Thursday.

One of the biggest opportunities is the production of a common federal ID

system for government employees and contractors mandated by a 2004 White

House directive. Federal agencies are required to begin issuing the cards

Oct. 27 and have two years to complete the process.

The Social Security Administration began issuing its new ID cards on

Wednesday. The agency expects to take 20 months to deliver them to all

85,000 employees, said David Simonetti of consulting firm Jacob & Sundstrom,

Inc. Simonetti, who helped lead the department's efforts, discussed the

program Thursday at a conference in Vienna, Va., hosted by the Information

Technology Association of America.

Other national ID card efforts, border management programs, and the smart

chip-embedded passports the U.S. government and other nations have started

issuing represent multibillion-dollar opportunities for contractors, said

Jeremy Grant, a biometrics and emerging technologies analyst at financial

services firm Stanford Research Group in Washington.

Wall Street thinks identity management is all about biometrics and it's not,

Grant said Thursday. Smart card providers, radio frequency identification

chips and readers, and physical security are all part of the identity

management arena, he added.

Stanford Research issued a report earlier this year that estimated spending

of $1.26 billion in 2007 compared with $767 million in 2006 in this area.

Between fiscal years 2007 and 2011, the U.S. identity management market will

be $7.7 billion with another $14 billion spent internationally, Grant said.

The private sector will follow government's lead by finding applications for

biometrics and other solutions in various areas from banking and retail, to

corporate security and health care.

In addition to large systems integrators like Lockheed Martin, Bearingpoint

Inc. and General Dynamics Corp., numerous other companies are lining up to

compete, including L-1, which was formed in August through the merger of

biometric identification system makers Viisage Technology Inc. and Identix

Inc.; Digimarc Corp., which controls about two-thirds of the drivers'

license market; and Cogent Inc., a maker of fingerprint identification

systems for law enforcement agencies.

Shares of Lockheed Martin dipped 15 cents to end at $87.94, while L-1 added

4 cents to close at $14.55, Bearingpoint lost 14 cents to $7.64, and General

Dynamics slid $2.58, or more than 3.4 percent, to $72.45, all on the New

York Stock Exchange.

Shares of Cogent added 34 cents, or about 2.4 percent, to end at $14.59, and

Digimarc slid 8 cents to close at $9.06, both on the Nasdaq