Outlook 2007: Small Steps On The Road To Big Breakthroughs: 2007 will be more about churning out low-cost cards for mobile subscribers and banking customers than putting advanced technology into consumers' hands. But trends are developing that could one day change that situation.

Anyone expecting 2007 to be the breakout year for the smart card industry is liable to be sorely disappointed.

At most, 2007 will show a glimmer of what the future could hold for contactless payment, mega-memory SIM cards and Internet-enabled smart card tokens that plug into PCs.

Instead, the coming year will be business as usual for the industry-and that means continuing commoditization, falling prices and only incremental advancements in product portfolios. This is better news for issuers than for vendors.

"It looks like (another) tough year next year, and by tough year I mean prices going down," says Derrick Robinson, senior analyst at UK-based IMS Research. "Nobody connected with cards or chips is going to make (much) money at it. They're stuck with this SIM card; that's what they do. That's what brings in the revenue stream."

The picture is brighter from the vendor's perspective in the medium-term, three years and five years out, he adds. But, as for 2007, mobile network operators can expect prices for SIM cards to continue to fall, although less than the roughly 35% plunge they benefited from during 2006, say observers. Average prices will drop more in the range of 20% to 25%, most agree.

Of course, as usual, prices will vary by region. In India and parts of Southeast Asia, for example, prices plummeted roughly 40% in 2006. In Europe and the Americas, the decreases were less.

For SIMs, there will be nothing that disrupts the general downward trajectory of prices-not a significant market for mega-capacity SIMs, nor cards linked to contactless chips in NFC handsets, nor those tuned in to mobile-TV signals. And while network operators continue to roll out 3G SIMs, these do not require high-end memory, and they are also falling in price.

Bankers also benefited from falling prices in 2006, about 10% in some markets. There are no signs this trend will reverse itself next year, although banks and credit card companies are starting to move to cards supporting a more secure-and slightly more expensive-option within the international EMV standard, known as dynamic data authentication.

And while contactless payment will likely be the most talked-about subject in the smart …