. Nearly all (94%) device makers have invested in software development in the past five years
. Nine in 10 (88%) believe the Internet of Things (IoT) is driving growth within the manufacturing industry
. 84% have changed - or have already changed - their business model to put software at its core in delivering services and generating revenue
. Of the 37% who have made the transition, the average increase in revenue has been 11%

Amsterdam, December 14, 2017 - Surveying 300 business decision makers in device manufacturing firms across five major global markets, Gemalto, the world leader in digital security, reveals that the device manufacturing industry is embracing software over hardware as its primary business model.

The change highlights how crucial software is becoming to device manufacturers, specifically in improving business performance and growing revenue. And, as end-users begin to demand more options and control of their devices and data, entire industries are being forced to change their business models and strategies to cater to their customers.

According to Gemalto's 'How Software is Powering the Hardware Renaissance' report, the majority (84%) of organizations in the sector are changing how they operate. In fact, nearly four in 10 (37%) have already made a full shift to a software-centric business model, one that places software at the core of how a company delivers value and generates revenue. The research also found that 94% of respondents have increased their investment in software development in the last five years. Germany is leading the charge. All (100%) of German organizations questioned have boosted their software-based services over this time; with France second (98%) and the US (93%) in third.

Substantial benefits
Hardware technology companies are already reaping substantial benefits - of those that have changed their models, the average increase in revenue has been 11%. They expect further growth in the next five years, with the revenue from software projected to rise from 15% to 18%.

As well as revenue growth, businesses that have moved to software-based selling have seen other benefits. Over eight in 10 have driven diversity in hardware with software features (86%), implemented remote feature upgrades (84%) and improved customer experience (84%). Businesses also report having a more flexible strategy that allows them to adapt to market change (79%), better control copy protection (76%) and being more competitive in the market (73%).

These changes are also having a positive impact for employees. The majority of businesses have retrained their employees (64%) and hired new ones (58%), with three in five (61%) also revealing they have or intend to reshuffle employees into different roles.

Opportunities in IoT
With businesses starting to see the potential of the IoT, software-based business models are generating commercial benefits. Around nine in 10 respondents (88%) believe IoT is driving growth in the industry and that IoT itself is a chance to change their company's business model (85%). Enabling automated upgrades (61%), remote support (57%), collecting usage analytics (54%) and gathering increased and higher quality customer insights (53%) are the main benefits businesses see IoT enabling.

Challenges of software-based selling models

While it may bring substantial benefits and new opportunities, changing from a hardware to a software-based selling model isn't without challenges. When it comes to practicalities, almost all organisations (96%) that have changed, or are changing, have experienced some difficulties in making the transition work.

Looking at the challenges faced in more detail, one in two (56%) respondents reported that they needed to hire staff with different skills. Around one in three said solutions evolved organically without a central strategy (36%) and managing new sales and operational methodologies with outdated legacy processes (34%), caused challenges in the transition.

"The results of this survey validate what we see on a daily basis with our customers as we help them make this transition," said Shlomo Weiss, Senior Vice President, Software Monetization at Gemalto. "Companies who adopt software-based revenue models will reap three main benefits: long term relationships with their customers, predictable revenue streams and a clear competitive advantage. From gaining insight into product usage, to pay-per-use payment structures and on to new market penetration - all the companies we surveyed identified a real need to transform how they do business."

About the survey
Independent technology market research specialist Vanson Bourne surveyed 300 IT decision makers across the US, UK, France, Germany and Japan on behalf of Gemalto, the world leader in digital security. The respondents were from organizations that manufacture software-enabled hardware.

Additional Resources
Visit the How Software is Powering the Hardware Renaissance website for regional data or downloading the report and infographic.
Learn more about Gemalto's Sentinel Software Monetization solutions

About Gemalto
Gemalto (Euronext NL0000400653 GTO) is the global leader in digital security, with 2016 annual revenues of €3.1 billion and customers in over 180 countries. We bring trust to an increasingly connected world.

From secure software to biometrics and encryption, our technologies and services enable businesses and governments to authenticate identities and protect data so they stay safe and enable services in personal devices, connected objects, the cloud and in between.

Gemalto's solutions are at the heart of modern life, from payment to enterprise security and the internet of things. We authenticate people, transactions and objects, encrypt data and create value for software - enabling our clients to deliver secure digital services for billions of individuals and things.

Our 15,000+ employees operate out of 112 offices, 43 personalization and data centers, and 30 research and software development centers located in 48 countries.

For more information visit www.gemalto.com, or follow @gemalto on Twitter.

AND
- Gemalto rejects unsolicited and conditional proposal by Atos
- Gemalto, the world leader in digital security,
is best positioned to grow successfully on a standalone basis and
create long term value for its stakeholders, including its shareholders

- The Atos proposal does not form the basis for constructive engagement as it:

fails to provide a compelling strategy versus Gemalto's standalone prospects;
significantly undervalues the Company;
fails to adequately address the interests of its various stakeholders;
does not offer sufficient deal certainty.


Amsterdam, December 13, 2017 at 8:00 PM - Gemalto N.V. (the Company) announces that it has rejected the unsolicited and conditional proposal by Atos SE (Atos) for a possible recommended cash offer for all issued and outstanding shares of the Company at an offer price of EUR46 per share (cum dividend) set forth in letters received from Atos on 28 November, 8 December and 11 December 2017, and as announced by Atos on 11 December 2017 (the Proposal).

Gemalto, the world leader in digital security, is best positioned to grow successfully on a standalone basis and create long term value for its stakeholders, including its shareholders.

Consistent with its fiduciary duties, the Board of Directors, in consultation with its financial advisors Deutsche Bank and J.P. Morgan and legal advisors Allen & Overy and Darrois Villey Maillot Brochier, has carefully reviewed and discussed whether the Proposal is in the best interests of the Company, its business and clients, employees, shareholders and other stakeholders. After thorough consideration, the Board of Directors has unanimously come to the conclusion that this is not the case.

Philippe Vallée, Gemalto CEO commented: "In 11 years, we have turned Gemalto into a technology Blue-Chip, recognized in over 180 countries throughout the world. In 11 years, the Company has created 5 000 jobs. In 11 years, Gemalto has become the world leader in digital security.

We have taken the measure of the recent changes in our historical markets, taken the responsible decisions and are now focused on leveraging the many opportunities of our fast-growing markets.

We will soon be presenting to our stakeholders our ambitious and substantial development plan for the Company that will focus on the next generation of digital security for companies, governments and citizens worldwide.

Gemalto's employees, its Board of Directors, its Management team and I are fully aligned and committed to achieving the success of this plan that will benefit our stakeholders, including all our shareholders."

In its review, the Board of Directors has considered the following topics of particular relevance:

Strategy
Gemalto - the world leader in digital security - is best positioned to grow successfully on a standalone basis and create long term value for its stakeholders, including its shareholders, through its ambitious strategy.

Gemalto's unique technology platform allows it to support clients' digital security needs across multiple high-growth markets;
Gemalto is well advanced in its transition from traditional banking and telecom smartcard markets to fast-growing Government, Enterprise & Cybersecurity and Machine-to-Machine markets;
The implementation of Gemalto's transition plan is already enabling the Company to be more agile and nimble and better serve its clients' needs. The Proposal is unclear as to critical elements of the combination strategy, integration and potential consequences for its stakeholders;
Gemalto is organized to benefit from innovation across its business units and the potential break-up contemplated by Atos through the contribution of Gemalto's businesses to three separate divisions of Atos (for example the integration of the payments business into Worldline) would negatively impact Gemalto's performance and ability to best serve its clients.
Valuation

The Board of Directors considers that the Proposal significantly undervalues the Company:

The timing of the Proposal is opportunistic: the proposed offer price represents a discount of 27.4% vs. Gemalto's last 12-month high and a premium of only 3.5%[1] vs. Gemalto's 12-month average share price. It is made at a time when Gemalto has stabilised its performance following a challenging period;
As mentioned, Gemalto is well advanced in the transition from traditional banking and telecom smartcard markets to fast-growing Government, Enterprise & Cybersecurity and Machine-to-Machine markets. The impact of this transition is yet to be reflected in the Company's share price as its strategy and positioning around these growth segments will be detailed during the forthcoming Capital Markets Day;
The proposed offer price of EUR46 per share does not reflect Gemalto's leadership positions in these fast-growing segments, and is well below the valuation levels of companies involved in highly strategic Government and Cybersecurity activities;
The Proposal does not adequately reflect a fair sharing of synergies accruing from the potential combination, which Atos believes to be substantial.

Deal certainty
The Proposal does not provide adequate deal certainty, given the significant conditionality attached to it, and the likely execution risks involved in the proposed transaction. In particular, the Proposal does not contain a substantiated explanation on, and analysis of, the envisaged anti-trust, CFIUS and other clearance procedures. It lacks details on timing, risks and potential remedies that would be offered to ensure completion. In addition, the proposed merger protocol contains a number of off-market, unclear, unusual and unacceptable terms and conditions.

Stakeholders

The Proposal falls short in addressing the interests of the Company, its business and clients, employees, shareholders and other stakeholders.

The Proposal provides very limited protection for Gemalto's other stakeholders, mentioning only a small number of general topics, and falls short of actual and concrete commitments. The Proposal fails to include important non-financial commitments customary for a friendly recommended transaction of this size and nature, including, but not limited to, commitments on no-redundancies, customer approach, and the required fair dealing and protection of the interest of any remaining minority shareholders if the offer were to be declared unconditional. In addition, the proposed duration of the non-financial covenants is not specified and their enforcement is not safeguarded post potential completion and delisting, leaving the Company's stakeholders essentially unprotected.

Atos' approach

The Board of Directors also note that Atos' Proposal is not reflective of a friendly and collaborative approach as it was not preceded by customary exploratory discussions, the announcement of the Proposal was done unilaterally and Atos indicated its intention to file an offer memorandum with the AFM irrespective of whether it has reached agreement with Gemalto. The Board of Directors is concerned that this could exemplify cultural differences between the two companies.

Attached to this press release is a copy of the letter that was sent today on behalf of the Board of Directors of Gemalto to Mr Thierry Breton, Chairman and CEO of Atos.

Onderzoek van Gemalto toont aan dat hardwarebedrijven hun inkomsten met 11% zien stijgen na een verschuiving naar softwaregebaseerde omzetmodellen

Bijna alle fabrikanten van technologische apparaten (94%) hebben de voorbije vijf jaar geïnvesteerd in softwareontwikkeling
Negen op tien bedrijven (88%) zien het Internet of Things (IoT) als groeimotor voor de maakindustrie
84% past zijn bedrijfsmodel aan - of heeft dit al aangepast - om software centraal te plaatsen in zijn dienstenaanbod en inkomstengenereringsmodel
Van de 37% bedrijven die de overstap hebben gemaakt, zijn de inkomsten gemiddeld met 11% gestegen
Amsterdam, 14 december 2017 - Een enquête die Gemalto, de wereldleider in digitale beveiliging, heeft afgenomen bij 300 fabrikanten van technologische apparaten toont aan dat de producenten uit deze sector software boven hardware verkiezen als hun voornaamste bedrijfsmodel.

Deze verschuiving bevestigt hoe belangrijk software is geworden voor producenten, met name om de bedrijfsprestaties te verbeteren en de inkomsten te doen groeien. En aangezien eindgebruikers meer opties voor en controle over hun apparaten en gegevens beginnen te eisen, worden hele sectoren gedwongen om hun bedrijfsmodellen en -strategieën aan te passen aan de wensen van hun klanten.

Volgens het 'How Software is Powering the Hardware Renaissance'-rapport van Gemalto veranderen de meeste bedrijven uit de sector (84%) hun manier van werken. Bijna vier op tien (37%) van de bedrijven zijn al volledig overgestapt op een softwaregebaseerd bedrijfsmodel, waarbij software een centrale rol speelt in de manier waarop een bedrijf waarde schept en inkomsten genereert. Uit het onderzoek bleek ook dat 94% van de bedrijven die deel hebben genomen aan de enquête de investeringen in de ontwikkeling van software in de voorbije vijf jaar heeft opgevoerd. Duitsland spant de kroon. Alle Duitse bedrijven (100%) die ondervraagd werden hebben hun softwaregebaseerde diensten in deze periode uitgebreid. Frankrijk (98%) komt op de tweede plaats en de Verenigde Staten (93%) op de derde.

Grote voordelen
Hardwarebedrijven plukken nu al de voordelen van de verschuiving: van de bedrijven die hun model hebben aangepast zijn de inkomsten gemiddeld met 11% toegenomen. Zij gaan uit van een verdere groei in de volgende vijf jaar, waarbij verwacht wordt dat de inkomsten uit softwarediensten zullen stijgen van 15% naar 18%.

Naast de omzetgroei zien bedrijven die de overstap hebben gemaakt naar een op software gebaseerd verkoopmodel nog andere voordelen. Meer dan acht op tien bedrijven hebben de diversiteit van hun hardwareaanbod vergroot met softwaretoepassingen (86%), upgrades op afstand doorgevoerd (84%) en de ervaring voor hun klanten verbeterd (84%). Bedrijven melden ook dat ze zo over een flexibelere strategie beschikken om zich aan te passen aan marktveranderingen (79%), zich beter te beschermen tegen kopiëren (76%) en een sterkere marktpositie te verwerven (73%).

Deze veranderingen hebben ook positieve gevolgen voor de werknemers. Een meerderheid van de bedrijven heeft zijn personeel bijgeschoold (64%) en nieuwe werknemers aangetrokken (58%), en drie op vijf bedrijven (61%) hebben werknemers andere functies gegeven of zijn van plan dit te doen.

Kansen in IoT
Nu bedrijven het potentieel van het Internet of Things beginnen te erkennen, leveren softwaregebaseerde bedrijfsmodellen commerciële voordelen op. Bijna negen op tien van de ondervraagden (88%) vinden dat IoT een groeimotor voor de sector is en dat IoT op zich een kans is om het bedrijfsmodel van hun organisatie te veranderen (85%). Automatische upgrades (61%), ondersteuning op afstand (57%), verzameling van gebruiksgegevens (54%) en een uitgebreider en beter inzicht in de wensen van de klant (53%) zijn de belangrijkste voordelen die deze bedrijven verbinden aan IoT.

Uitdagingen van verkoopmodellen op basis van softwarediensten

Hoewel het overstappen van een hardwarestrategie naar een verkoopmodel op basis van softwarediensten grote voordelen en nieuwe kansen kan opleveren, kunnen er ook problemen opduiken. Wat de praktische kant van de zaak betreft, hebben bijna alle organisaties (96%) die de verandering hebben doorgevoerd of aan het implementeren zijn moeilijkheden ondervonden om de overgang te doen slagen.

Als we de uitdagingen meer in detail bekijken, dan zien we dat een op de twee ondervraagden (56%) extra personeel met andere vaardigheden moest aanwerven. Ongeveer een op drie gaf aan dat oplossingen die organisch tot stand waren gekomen zonder centrale strategie (36%) en het beheer van nieuwe verkoopmethodes en operationele systemen met voorbijgestreefde processen (34%) problemen veroorzaakten bij de transitie.

"De resultaten van dit onderzoek bevestigen wat wij elke dag zien bij onze klanten die wij helpen om deze overstap te maken," aldus Shlomo Weiss, Senior Vice President, Software Monetization bij Gemalto. "Bedrijven die softwaregebaseerde omzetmodellen invoeren kunnen profiteren van drie belangrijke voordelen: een langdurige relatie met hun klanten, voorspelbare inkomstenstromen en een duidelijk concurrentievoordeel. Van het verwerven van inzicht in het gebruik van producten over betalingssystemen op basis van gebruik tot de verovering van nieuwe markten - alle bedrijven die wij ondervraagden wezen een reële behoefte aan om de manier waarop zij zaken doen te veranderen."

Over de enquête
Vanson Bourne, een onafhankelijk onderzoeksbureau gespecialiseerd in de technologiemarkt, ondervroeg 300 IT-managers uit de Verenigde Staten, het Verenigd Koninkrijk, Frankrijk, Duitsland en Japan in opdracht van Gemalto, de wereldleider in digitale beveiliging. De ondervraagden waren werknemers van bedrijven die software-enabled hardware produceren.

Aanvullende bronnen
Ga naar de How Software is Powering the Hardware Renaissance-website voor de gegevens per regio of om het verslag en de infografiek te downloaden.

Lees meer over de Sentinel Software Monetization-oplossingen van Gemalto