Touch Id

Touch ID. Source: Apple.

Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG)(NASDAQ:GOOGL) frequently borrow from each other when it comes to their respective mobile platforms. iOS and Android continue to see feature convergence in numerous ways, with iOS 8's Extensibility being one of the more prominent examples of this. However, when you add Touch ID to the equation, Apple can take its platform to a whole new level -- one that Android will have trouble following.

With iOS 8, Apple is finally opening up Touch ID to third-party developers. Since Touch ID is a hardware element, Google cannot replicate it alone. Google can support fingerprint sensors within the operating system, but the search giant needs to coordinate with OEMs to include the hardware. Even then, that's only once component vendors can provide sensors that can match Touch ID's performance.

A glimpse of more to come
To get an idea of iOS 8's potential here, consider the popular password manager app 1Password. Currently in iOS 7, users have to input an alphanumeric password, manually copy another alphanumeric password from the app, and then paste it into another app. It's a cumbersome process. Here's a beta tester using 1Password on iOS 8, leveraging Touch ID and Extensibility.

The tester uses a Safari extension to use 1Password to login to after authenticating with Touch ID. The next step will be for third-party apps to use Extensibility to directly communicate with 1Password for authentication. After that, if apps and sites can authenticate purely using fingerprint data (as opposed to using the fingerprint as a way to access the password), then all of a sudden we're a couple of steps closer to killing the alphanumeric password.

There are nearly limitless potential use cases for Touch ID (including payments). The broadest is a widespread shift away from passwords. Back in 2012, Wired's Mat Honan was the victim of a hacker attack that "destroyed [his] entire digital life in the span of an hour." It's a bit ridiculous to consider how much relies on simple strings of numbers and letters. While Touch ID is hardly infallible, it's far more advanced and secured than the status quo.

Copycats fall flat
Android rivals are trying their best to catch-up. Samsung's Galaxy S5 includes a fingerprint sensor, but its performance is terrible. The Verge's take on the sensor is less than flattering:

One of the S5's flagship features is its fingerprint sensor, which lets you unlock your phone and even pay for things with one swipe of your finger. It does work, as long as you hold the phone in two hands and oh-so-carefully swipe your finger down the exact center of the home button, at the perfect angle and speed. If you get it wrong, it falls back on a pointlessly complex alphanumeric password. It's impossible to do in one hand, and I could type the world's longest, most secure password in less time than it typically took me to get the sensor to work.

Third-party companies have attempted to use Samsung's approach, including eBay's PayPal and 1Password rival LastPass. Still, this all relies on the underlying sensor performing well, which it doesn't. Samsung uses the common slide-sensor approach while Apple uses a small-area-touch solution.

Synaptics (NASDAQ:SYNA) acquired Validity Sensors last year in an effort to accelerate its roadmap with small-area-touch fingerprint sensors. The company expects phones carrying these sensors to begin shipping later this year. Separately, Synaptics may win Apple back as a customer, but that would potentially be for its integrated display driver chips. Even though Synaptics expects Android devices with small-area-touch fingerprint sensors in a matter of months, they will comprise but a fraction of the Android camp.

Race to the mainstream
Android's fragmentation has many layers. To facilitate broader adoption, Google will need to build in OS-level support for all of the various types of sensors that OEMs may choose to use. Not all OEMs will include fingerprint sensors, and fingerprint sensors will likely remain a high-end feature. Then third-party developers will have to cope with the hardware fragmentation of all these sensors. It's going to be a mess. Realistically, it will be years before any semblance of mainstream adoption takes place for fingerprint authentication within Android.

Apple only includes Touch ID on the iPhone 5s currently. But when you combine Apple's strategy of moving older phones down to lower price points with its loyal user base and consistent upgrade cycles, mainstream adoption will occur much faster.

By the end of 2015, when the iPhone 5s is the "low-end" model, all iPhone models should be equipped with Touch ID (unless Apple continues selling even older models into emerging markets). Fingerprint authentication will become an embedded feature of the ecosystem once enough developers are onboard. There should be no question that developers will support Touch ID once it's present throughout the lineup, which will happen in less than 18 months.

When Touch ID was first introduced last year, it was a headline feature. Its true potential remains untapped, but investors are getting even closer. Getting rid of antiquated alphanumeric passwords once and for all (at least on mobile) will be a powerful differentiator and a compelling reason to buy an iPhone over an Android.

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Evan Niu, CFA, owns shares of Apple and has options on The Motley Fool recommends and owns shares of, Apple, eBay, Google (A and C shares). Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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