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An Apple customer enters an Apple store in Palo Alto, Calif. (Paul Sakuma/AP)
An Apple customer enters an Apple store in Palo Alto, Calif. (Paul Sakuma/AP)

Breakingviews

Apple fortifies security credentials with AuthenTec deal Add to ...

Apple Inc. has put its finger on a security gap. The iPhone and iPad maker is paying $356-million (U.S.) for AuthenTec, a creator of fingerprint technology. The figure represents only a long weekend’s cash flow for the gadget giant, but it’s still among its biggest deals yet. The move suggests Apple sees the need to fortify defences for its devices.

When Apple opens its wallet, however much, it’s a notable event. For a company throwing off roughly $10-billion of cash each quarter and stockpiling some $117-billion, it’s an unusually restrained shopper. In recent years, the $540-billion behemoth’s only publicly reported deal with a bigger price tag than AuthenTec was for Israeli flash memory maker Anobit.

AuthenTec’s activities hint at why Apple might see fit to shell out a 58-per-cent premium to its quarry’s undisturbed share price. The Melbourne, Fla. outfit sells fingerprint sensors to computer makers around the world and, significantly, to mobile phone makers in Japan where payments using handsets are commonplace. That’s an area that has been slower to take off in the United States, but where Google and others plainly see great potential. Apple could be hoping to crack the market.

Apple’s target also provides other mobile security. That’s most relevant for the potentially enormous corporate market for handsets and tablets. For all its strategic failings and plunging share price, Research In Motion, with its BlackBerry handsets, still has a security lead over Apple – and arguably a bigger one over devices powered by Google’s Android operating system. AuthenTec probably wouldn’t close that gap, but it just might help Apple narrow it.

It could be mere coincidence that Samsung, a serious Apple rival and patent-war adversary, is an AuthenTec customer. But some investors, having pushed AuthenTec’s share price slightly above the $8 agreed sale price, might be thinking a higher offer is coming from somewhere. As far as a bidding battle goes, though, no one is better fortified than Apple.

 
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