Look at your finger. Yea, that’s right, take a look at all those grooves and patterns on it.

No one on earth has that same pattern. What’s more, beneath the outside layer of skin, to where the “live” layer is, lies a unique pattern that identifies you regardless of whether you actually have any visible fingerprints or not!

This is probably one area of technology that you rarely, if ever, think about, but fingerprint security technology is getting better and better with more uses being found for this growing industry in everything from PC’s and home security systems, to cell phones and checkout stands.

I’ve found an exciting and fast-growing company that was on my watch list that is the leader in this industry called AuthenTec (Nasdaq: AUTH).

How do AuthenTec fingerprint sensors work

AuthenTec sensors use a unique semiconductor-based fingerprint reader that uses small RF (Radio Frequency) signals to detect the fingerprint ridge and valley pattern, thus capturing sharp and clear fingerprint patterns from the live layer of skin just beneath the surface.

The RF electronic imaging mechanism, called TruePrint technology, makes AuthenTec’s sensors less affected by common skin surface conditions — including dry, worn, calloused, dirty or oily skin — that can impair the ability of other sensors to acquire accurate fingerprint images.

This approach, which is in marked contrast with optical, thermal and DC capacitive solutions that read the surface of the skin, gives AuthenTec sensors significant advantages in image quality and in the protective coatings that the sensor can image through.

AuthenTec’s patented TruePrint technology sensors are the ONLY sensors on the market that read this live layer of skin beneath the actual surface!

Oh, and in case you were wondering, because I know some of you are, you CANNOT cut someone’s finger off and swipe it through one of AuthenTec’s sensors like the movies!

Specifically, TrueFinger — part of the TruePrint technology - ensures that only real, live fingerprints are read by converting the properties of the skin into digital data which are delivered to the host computer for analysis.

Because of this approach, anyone who attempts to swipe the finger of a dead person in order to access their important physical or logical data would not succeed in getting past TruePrint.

Now that that’s out of the way…

The Power of Touch

AuthenTec’s TruePrint technology was first developed in 1998 and has been getting better, cheaper and more reliable ever since.

As you can see from the image above, all of the sensors are about the size of a dime, or much smaller and are found in a range of devices.

The best part is that TruePrint sensors are more accurate than traditional fingerprint sensors because they actually scan beneath the surface of the skin, rather than just looking at the surface.

While there are several types of silicon-based fingerprint sensors on the market today, including surface-reading sensors that use either the electrical or thermal properties of the skin surface to detect the fingerprint ridge and valley pattern, AuthenTec sensors are the only silicon sensors that read beneath the skin surface.

Because of this innovative approach, AuthenTec’s TruePrint technology offers many benefits, including the most accurate and reliable imaging available today.

This is what attracted me to the company when they came public this summer.

By now you’re probably wondering in what sorts of devices you can find AuthenTec’s products right?

While AuthenTec’s applications for their sensors are growing, they come in 3 primary segments as outlined below: PC’s and Peripheral devices, Wireless Devices, and Access Control.

Sensors for PC’s and Peripheral Devices

In the PC market, fingerprint biometrics has emerged as the most popular biometric technology to protect critical computer information, enable convenient security and ensure convenience and personalization.

AuthenTec sensors are used in 200 different models of notebook and tablet PCs, including those made by 10 of the world’s top PC manufacturers.

Their sensors have also been used in a wide range of peripherals devices, including PC keyboards, memory keys, portable hard drives, and password managers.

Some of their customers for the PC’s and Peripherals segment include: Acer, LG, Samsung, Motorola, Lenovo, HP and others.

Sensors for Wireless Devices

In wireless devices, AuthenTec sensors are used in more than 95 percent of all biometric cell phone models to protect the physical device, stored files and secure mobile commerce transactions.

As the demands of the wireless market continue to grow, service providers are introducing new and more powerful wireless devices — making wireless platforms even more valuable – and vulnerable to fraud or theft.

By installing a simple, small and discreet sensor on a phone, AuthenTec can protect the data inside from being pilfered and not detract from the phone’s functionality, usefulness or aesthetics.

In fact, by incorporating this technology on more and more phones, especially those used in business settings or to conduct business (think smart phones, etc.), AuthenTec can tap an ever growing market here and abroad and expand the ubiquity of fingerprint technology where people need it the most.

Some of their customers for the Wireless Devices segment include: Casio, Fujitsu, Hitachi, Samsung and others.

Sensors for Access Control

In access control, AuthenTec’s sensors are used worldwide to protect homes, corporate buildings, government offices, airports, and other facilities.

Their sensors have been designed into a wide range of access control devices, including multiple biometric door locks, smart cards, remote RF entry keys, time and attendance readers, and other devices.

In addition, their sensors are also used in the U.S. government’s largest biometrics implementation for the U.S. Census Bureau whereby 500,000 fingerprint sensor-equipped PDAs will be used to gather information for the 2010 census.

You can see where this segment can go in terms of growth, as every house in America and around the world can implement these biometric readers for added security, convenience and aesthetics on anything from front doors, to gates, light switches, you-name-it.

Some of their customers for the Access Control segment include: Black and Decker, Biometrx and others.

Let’s Talk About the Company

Addressable Market

According to a report from Frost and Sullivan, AuthenTec enjoys a massive market opportunity. The market for fingerprint sensors is expected to grow 50.6% annually, to $2 billion by 2013.

In addition, these devices are becoming cheaper and more mainstream and it won’t be long before we see AuthenTec’s fingerprint technology in every walk of life, from not only PC’s and cell phones, but also in things that perhaps are in the works or we might look to in the future such as unlocking car doors (or even starting the engine!), various remote control devices like TV remotes, garage door openers and the like, and a multitude of other applications that I haven’t even thought of or are underway as we speak.

In fact, AuthenTec is the recognized volume supplier leader of biometric fingerprint sensors worldwide — shipping nearly two thirds of all sensors sold in the PC, wireless and access control markets during the past five years.

The company continues to win new designs with the world’s Top 10 PC manufacturers as its fingerprint sensors have now been integrated into more than 200 PC models.

The Bottom Line

AuthenTec is a rapidly expanding company with a niche product and a patented moat around its business that no competitors can claim.

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