Biokey International Inc (BKYI)

[topseeded]

Touch and go: BIO-key feels Microsoft deal will be huge
By Andrew Sheldon, April 4, 2016 at 1:21 PM

For the first time in its history, Microsoft has included biosecurity software in its newest operating system, Windows 10. This update gives Microsoft's 200 million Windows 10 users the opportunity to integrate biosecurity into their personal computing.

It also gives Wall-based BIO-key a whole new set of consumers in need of its product, according CEO Michael DePasquale.

“We have native integration with the Windows 10 platform, so a Windows 10 user can take one of our sensors and basically plug it to their USB port and automatically replace their PIN or their password to access their device,” DePasquale said. “This is a very powerful testament to biometrics and to the replacement of passwords and PINs.”

By working as the exclusive biometric partner to Microsoft, BIO-key hopes it can directly access these users to nearly double its revenue.

“Their plan is to have over a billion Windows 10 users over the next 18 months,” DePasquale said. “So, we’re going to ride along with them on this adventure.”

In the last months of 2015, the company engaged in a 12-city tour with the Seattle-based software company that was called “Ignite Your Business.” The events were used to introduce Windows 10 and Microsoft Office 2016 to its enterprise customers.

“Microsoft is a very big believer, now, in moving everybody off to a more secure authentication medium,” he said. “As a result of those events, we generated well over 600 qualified leads and opportunities with Fortune 500 companies that are interested in replacing their passwords and making their authentication for their employees and customers more secure.”

To augment this push, the company also announced some new additions to its hardware offerings, including SideTouch, an updated version of the company’s mini fingerprint reader known as SideSwipe, which it debuted at the end of February.

“Instead of swiping your finger along the sensor, you just touch it,” he said. “(The reception) was outstanding.”

That development, DePasquale said, came from market demand.

“People prefer touch these days,” he said. “You look at the iPhone, it has what’s called ‘Touch ID’ on it.”

The company hopes to best capitalize on this momentum by taking these technologies to the retail market sometime this year.

“This is the first time in our history that we’re looking at the consumer markets as well as the enterprise and government (markets), which is where we’ve really cut our teeth,” he said. “Because Windows 10 has that native support for biometrics, there’s no reason you couldn’t go into a Microsoft store or Amazon and order one of these to replace your password.”

At $39.99, DePasquale believes the company has found the right price point for the consumer, calling the product “very inexpensive, very high quality.”

To further bolster this momentum the company has garnered through its new products and relationship with Microsoft, BIO-key also has just acquired $19.5 million in financing from its Chinese partner, China Goldjoy Group.

Much of the deal was finalized in October 2015, DePasquale said.

“We did a financing with private, commercial investors in China who are our partner with some of the hardware we were making,” he said. “So, we had a longstanding relationship with them for more than two years and they decided it was the right time for them to make an investment in BIO-key and ratchet up our relationship.”

“That’s a seminal event for the company because it really gives us the resources to build out our business and do it in a much more aggressive manner,” he said.

The company also licensed software from an affiliate of its Chinese partner, which will serve as the basis for a new platform the company is building to be used in the payments industry.

“We’re going to be integrating our biometric technology with the technology that we have acquired to go after the payments business, first in China, then throughout Asia (before) we move here to Europe and North America,” he said. “That will, in and of itself, it will change the dynamics of the company.”

But what about the competition? As this tech sector grows, is BIO-key worried about other companies encroaching on the biosecurity market?

“Our form factor and our price really give us a huge competitive advantage,” DePasquale said. “And, with our Chinese partner, our manufacturing capability is significant and far less costly than what our competitors may be able to produce.”

That doesn’t mean the company isn’t watching the clock.

“There’s no rush to get to market because we’re concerned about competition, but there’s a rush to take advantage of that uptick that Microsoft is experiencing by upgrading all those customers to Windows 10,” he said.
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http://www.njbiz.com/article/20160404/NJBIZ01/304049978/touch-and-go-biokey-feels-microsoft-deal-will-be-huge