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Is Apple's Expected New Tech a Huge Risk?

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Anyone who's been paying attention to the chatter of late knows that Apple (NASDAQ: AAPL  ) is expected to roll out the next generation of iPhones on Sept. 10, and that the new iPhone 5S is expected to include fingerprint scanning technology. Apple acquired AthenTec in 2012, and the acquisition is expected to lead to the inclusion of a fingerprint security feature in the iconic iPhone home button in the next model. If that's true, I believe there are three significant concerns Apple shareholders should be watching in the early weeks after the new devices begin to be reviewed and make it into the consumers' hands: Does it work, does anyone care, and is it being copied?

Does it work?
If you take for granted that the technology will be included in the iPhone 5S, the big question about the fingerprint scanner is whether it works as close to perfectly as people have come to expect. We all recall the barrage of bad press that came Apple's way when its Maps app was released and Google (NASDAQ: GOOGL  ) Maps was kicked off the iPhone, yet Apple's app was riddled with bugs. While some of these hiccups have been addressed, and Google has since released a Google Maps app for iOS, the entire exercise still stands, to me, as a step backwards. In my experience, Apple Maps still makes a fair number of mistakes, or at the least picks less desirable routes. The Google alternative works better, but because it isn't well integrated with the phone -- without several additional steps -- the end result is a less reliable experience.

I believe the bar is raised even further when we're talking about iPhone security. If the fingerprint scanner proves as temperamental as Siri -- the voice-activated digital assistant -- Apple could have a real problem. You can easily skip using Siri, or even Apple Maps, but if you become unable to access your phone at all, the technology has the potential to cause problems far beyond those Apple has ever seen. The logical belief is that Apple will find a way to let users reset their phones, should that happen; but if there's an easy workaround, then what kind of security does the technology really provide? I think it's admirable that Apple is reaching for progress, but the stakes seem to be very high.

Will anyone care?
I can't speak for the millions of people who use iPhones on a daily basis, but I've never any users lamenting that their iPhone was breached to their detriment. If the four-digit security function has proved insufficient for most users, it certainly has escaped the attention of the blogosphere. With that in mind, it seems improbable that anyone but those with a thirst for the latest and greatest would find a fingerprint scanner to be reason alone to buy an upgraded phone. The new device's other expected upgrades -- better camera, improved battery life, and greater speed -- must, therefore, be sufficient motivation.

Imitation is the purest form of flattery
If fingerprint scanning technology is well received on a broad basis, you should expect to see others copy it as quickly as they can. Where Apple has a distinct advantage is that because it controls both the device and the OS, it's probably better positioned to bring such technology to market. Would a competing offering come from Google through Android, or from Samsung in the Galaxy S series? In all probability, the two would have to work together. That's a definite advantage for Apple, particularly if it can expand the technology beyond smartphones.

The takeaway
While Apple is taking, in my opinion, a significant risk with fingerprint technology, the long-term benefits may be worthwhile. Imagine how appealing a similar feature might be for "iOS in the Car," for example. While you may have few concerns over the security of your smartphone, the security of your car is a different matter. Apple investors should pay careful attention to the reception that this feature gets over the weeks and months following the release, because it has the potential to be a huge immediate risk with substantial long-term rewards.

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Read/Post Comments (14) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 01, 2013, at 7:29 PM, twolf2919 wrote:

    Common, don't be so naive! Do you really think that the fingerprint reader, if included, will be the *only* way to unlock the iPhone? Have you ever considered that Apple might simply provide it as an easy alternative to the existing number lock? I.e. if security is enabled on your iPhone and want to unlock it, you push the "Home" button just as before - if the fingerprint sensor recognizes you, the phone is unlocked - if not, the already existing number unlock screen pops up and you can input your secret number, just as before.

  • Report this Comment On September 01, 2013, at 7:52 PM, MooneyPilot wrote:

    These hypothetical arguments based on rumors area waste of time. Yes, Apple bought Authentec. No, no one outside a small group of Apple employees knows what the next generation iPhone will include and whether a fingerprint sensor is part of the package.

  • Report this Comment On September 01, 2013, at 8:00 PM, Justice007 wrote:

    Are you aware that Apple will not be the first to ever include fingerprint reader on a smartphone? In this case, Apple is again copying something someone else has done before. Go and do some research please. I will give you a hint. Check out Motorola, and Motorola was using the same company that apple bought for their figerprint technology.

  • Report this Comment On September 01, 2013, at 8:13 PM, Taekado wrote:

    I am looking forward to the new changes that apple has in store. I still have my old iPhone 3G, it still works just, not one problem. The quality that is put into these phones are nothing short of superior. My iPhone 5 has been flawless in every way. I am sure that when they implement fingerprint security, it will be done looking at all angles.

  • Report this Comment On September 01, 2013, at 10:39 PM, FreeRange1 wrote:

    @justice007 - you seem to be pretty clueless on this subject. Past fingerprint scanners on mobile devices have been a resounding failure as the technology was not there yet - it frequently broke / wore out, very quickly. Apple has acquired advanced patented technology that is exclusive to them. It is not about being first! It is about being best in class.

    As to the author, Apple maps is a very poor example - the app itself was / is actually considered quite good. The problem was with faulty third-party data, but this situation has GREATLY improved very quickly. And has been frequently demonstrated, Google, has a fair amount of problems with their data as well. Why don't you do an article on that????

  • Report this Comment On September 01, 2013, at 11:03 PM, Shanaroooo wrote:

    Oh imagine that, another negative article about Apple posted by the Motley Fool.

  • Report this Comment On September 01, 2013, at 11:11 PM, Justice007 wrote:

    FreeRange1, like I said, go and do some research. As far as I know only one smartphone has had a fingerprint reader to date, and it was less than two years ago. The smartphone was using the very the fingerprint technology from the very company that Apple just brought use for theirs. Don't respond to me with any foolishness. The article claimed that others may be copying fingerprint readers on phone from Apple when Apple will not be the first to use it on smartphones.

  • Report this Comment On September 01, 2013, at 11:11 PM, deruiter wrote:

    Google maps is one of my favorites on iPhone, it works fantastic!

  • Report this Comment On September 01, 2013, at 11:14 PM, Strangler17 wrote:

    @FreeRange1: I see you have, quite literally, been sitting on Apple for a very long time. You should get that checked out, no one likes a sheep.

    Apple Maps being inferior to Google Maps wasn't the problem. The problem was that Google Maps was kicked out.

  • Report this Comment On September 01, 2013, at 11:15 PM, Strangler17 wrote:

    Motorala Atrix users loved their fingerprint scanner. I know because I had one. It didn't have any flaws like you said. I could pull it out of my pocket while swiping my finger on the back of it, and it would be ready to go when I looked at it.

  • Report this Comment On September 01, 2013, at 11:35 PM, HenTor wrote:

    The finger print scanner has got to be about more than unlocking a locked phone (I don't even lock mine at all). I expect that it will be at the heart of the ID verification in a mobile payments system. That's the big innovation.

  • Report this Comment On September 02, 2013, at 1:23 AM, Foolorama wrote:

    Actually, consider unlocking your car, your home, making payments and your phone - then you'll be closer to the reality expressed by ios' more swcure and integrated platform.

  • Report this Comment On September 03, 2013, at 8:10 PM, bilbofool wrote:

    Fingerprint based authentication has far greater potential than allowing to use your phone. It is an infrastructure that could be user for authentication of web-based services and Apps. Now imagine that you could do electronic purchase simply by putting your finger. Imagine you could log-in to hundreds of sites without needing to enter your username and password. The potential is huge.

  • Report this Comment On September 05, 2013, at 6:16 PM, ck76 wrote:

    Forget the fingerprint technology! Do we really need it? We have enough paranoid people as it is (i.e. such information could potentially be hacked, stolen and used to substitute for another person's identity).

    Rather, an excellent feature to incorporate would be a zoom lens, both telescopic (from a distance) and magnifying (of something really small) in function. If however the 5S does feature higher resolution (more megapixels) photography, then, to a small degree, the above will be introduced.

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