Voxx International bets on iris-scanning technology

Voxx International Corp., facing sagging sales of computer tablets, DVD players and satellite radio systems, is betting on iris-scanning technology to open new markets and buoy its sagging stock price.

Voxx moved its executive headquarters from Hauppauge to Orlando, Florida, in January but retains about 330 employees on Long Island. It earns about half its revenue from sales of auto electronics, but is moving ahead on several fronts to market the iris-scanning systems of its newly acquired EyeLock subsidiary:

• Citibank is moving toward the second-phase test of a Diebold ATM with EyeLock technology that would authenticate users via an iris scan instead of a bank card and PIN;
• Taiwan’s Wistron NeWeb Corp. is demonstrating a laptop with EyeLock authentication technology built in;
• Voxx demonstrated at January’s Consumer Electronics Show how an iris scan could authenticate identity in business and rental auto fleets, and personalize radio presets and seat and mirror positions in private cars.

The biometrics market is increasingly competitive as proponents of fingerprints, facial recognition, voice recognition, and hand geometry vie for market share.

Michael Coakley, an adjunct professor of computer science and information systems at Pace University, said that researchers are busy seeking innovative biometric readings.

“Everything is fair game now,” he said, “handprints, fingerprints, footprints, hair follicles. It seems like everybody is trying to find a body part to extract a biometric reading.”

“In the future, there’s no question that biometrics are the way you’re going to be authenticated,” Voxx chief executive Patrick Lavelle said. He likened the EyeLock business model to that used by Qualcomm, which earns royalties on chips used in mobile devices. Voxx acquired controlling interest in Manhattan-based EyeLock in September.

Research firm Tractica, based in Boulder, Colorado, forecast that global iris-recognition revenue will grow from $587 million in 2015 to $1.92 billion by 2024.

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Stephanie Schuckers, director of the Center for Identification Technology Research at Clarkson University, said that she expects biometrics to replace passwords within five years and that iris scanning already is in use by Canada and other countries at border crossings. Commercial acceptance, however, is “all about supply and demand,” she said.

Amid relentless news about identity theft and cybercrime, Voxx executives expect demand for the iris-scanning devices of EyeLock to gather momentum.

EyeLock president Jim Demitrieus said that he expects licensing deals on smartphones, laptops and autos by year’s end, though he cautioned that lengthy manufacturing cycles would delay the booking of revenue.

Already in the marketplace is the company’s Myris device, a disk that connects to a personal computer’s USB port and lets users scan their irises instead of entering passwords.

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In addition to consumer applications, Lavelle said that EyeLock is “deep in the validation process” with government agencies as a tool for confirming identity and granting access.

In a conference call earlier this year, Lavelle said Eyelock could be the biggest driver in increasing the company’s stock market valuation over the next two to three years.

“Every day we hear a greater need for increased cyber, perimeter and authentication security, and with EyeLock we feel we have the best technology,” he said.

With iris-recognition systems, users register the complex patterns of one or both eyes. Afterward, the EyeLock system can authenticate the user even from a distance and even if the person is wearing glasses. The company holds that iris scans are the second most foolproof identifier after DNA, and far more accurate than fingerprints.

The chance of a false identification with an iris scan? One in 1.5 million, according to the company.

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The EyeLock system also can discern whether the eyeball is alive, executives said, skirting some gory science-fiction scenarios.

“It’s just like Mission Impossible,” Lavelle said.

For the quarter ended Nov. 30, Voxx posted net sales of $192.5 million, down 13.8 percent from the year-ago period. Its stock closed Thursday at $4.53, less than half of its 52-week high.

Lavelle said the widespread adoption of smartphones has battered Voxx’s MP3 business and others. The dollar’s strength also has cut into the company’s sales in foreign markets.

In September, Voxx announced that it had acquired a 54 percent equity interest in EyeLock for about $20.2 million, including assumption of $4.7 million in debt. Voxx also agreed to provide up to $10 million in working capital.

Lavelle said that, for now, the EyeLock unit requires a capital “burn” because Voxx does not want to “miss any opportunities” in exploiting the biometric technology.

“We’ll continue to invest so that we can get to the end,” he said.

By Ken Schachter

kenneth.schachter@newsday.comkschach

Ken Schachter covers corporate news, including technology and aerospace, and other business topics for Newsday. He has also worked at The Miami Herald and The Jerusalem Post.