Why Apple Paid $356 Million For Mobile Security - Business Insider

It's not often that Apple makes a big acquisition, so it raised more than a few eyebrows this morning when news broke that Apple had just spent more than $350 million to acquire AuthenTec.

For those who aren't familiar with AuthenTec, it's a mobile security company that supplies fingerprint sensor technology and other embeddable security features to some of the biggest businesses in tech, including for Apple's arch rival Samsung.

"Apple's devices are becoming more open to the Internet, effectively increasing the need for security features," said Anil Doradla, an analyst with William Blair.? That's where AuthenTec comes in.

With this acquisition, Apple now gets access to AuthenTec's patents and a range of security technology that includes fingerprint sensors, encryption tools and more. Here's what Apple might do with all of that:

Mobile Payments

Apple's top execs have been hesitant about diving into mobile payments, at least in part because of security concerns. AuthenTec's fingerprint sensors could help with that by providing an added layer of security.

"It's my opinion that Apple views using fingerprint sensors to secure mobile payments as the primary motivation [for this acquisition]," said Richard Shannon, an analyst with Craig-Hallum.

Shannon predicts that Apple will put a sensor underneath the glass on the iPhone's display. Chances are this won't happen on the next version of the iPhone due out in the next couple months, but it could be added to a later model.

Password Management

AuthenTec's fingerprint sensors aren't just useful for mobile payments. Shannon also speculates that Apple could use this to manage passwords for other apps and websites, something that HP already uses AuthenTec for with its PCs.

Right now, iPhone users must remember an endless amount of passwords for many of the websites and apps they access from their phone, but one day, Apple could potentially implement software that would let users tap their finger to an app or website to unlock it instead.

"It's elegant and convenient," Shannon said. "If there's any company in the phone space that loves elegant and convenient, it's Apple."

Enterprise Potential

Apple has had more luck in recent years with enterprise adoption, thanks in part to the popularity of some of its recent products like the iPad. Doradla suggests that AuthenTec's technology could help boost enterprise adoption even more, by providing greater security for business use. This might not be the primary incentive for the acquisition, but according to Doradla, "it falls into the larger theme of Apple going into enterprise." Something tells us IT teams would definitely appreciate this.

Hardware Encryption

AuthenTec currently provides file encryption technology to companies like Samsung that offers better security for the user's data when he or she accesses the Internet or a VPN with the device.

Shannon says that follow in Samsung's footsteps and incorporate AuthenTec's encryption technology directly into the hardware in order to boost data security for products like the iPhone and iPad.

Blocking Competitors Like Samsung

Apple's other big motivation for this acquisition, according to both analysts we spoke with, may have been to take a shot at its competition, and Samsung in particular.

"Apple might have thought that AuthenTec was uniquely positioned in this space and they wanted to make sure it didn't fall into a competitor's hands," Doradla said. Indeed, it's telling that Apple made the acquisition less than two weeks after Samsung entered into a partnership with AuthenTec.

Source: http://www.businessinsider.com/heres-why-apple-just-paid-356-million-for-authentec-2012-7

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