Fargo President David Sullivan Photo courtesy of Fargo Electronics

EDEN PRAIRIE, Minn. – David Sullivan, the new president of Eden Prairie, Minn.-based Fargo Electronics, was in Hawaii earlier this week watching out the window as a huge wave engulfed a jet skier.

While it’s certainly no day at the beach to be named the head of a successful technology company, at least Fargo – a global supplier of identity-card issuance systems – doesn’t appear to be in trouble. In fact, things appear to be going swimmingly for Fargo and for Sullivan.

You might also say Fargo’s future is “in the smart cards”.

That’s because ASSA ABLOY, Fargo’s corporate grandparent, foresees that nearly all locking systems will in the future be electronic. We have an M&A scenario that makes sense from a business standpoint and extends strategically beyond mere profitability.

Six months ago, Fargo Electronics announced that its stockholders had approved the company’s previously announced merger with a wholly owned subsidiary of Stockholm, Sweden-based ASSA ABLOY called HID Global Corporation.

Under the terms of the merger agreement, stockholders of the company received $25.50 in cash for each share of common stock. As a result of the merger, Fargo’s stock was no longer traded on the NASDAQ. The Swedes bought Fargo for more than $300 million.

On Jan. 29, HID Global in Irvine, Calif. announced that Sullivan would assume the presidency of Fargo Electronics. He reports directly to HID Global CEO Denis Hébert.

Sullivan is responsible for setting the strategy and development of business objectives for Fargo Electronics. His experience includes 13 years with HID Global in a number of senior executive roles. His most recent role was as managing director of its Europe, Middle East and Africa division.

“Beginning with Fargo’s foundation of exceptional people and products, I look forward to expanding and developing our capabilities for future growth,” Sullivan said. “I am enthusiastic about building on our successful track record and using my international experience to intensify our global presence.”

Gary Holland, the former president and CEO at Fargo, announced his retirement in Oct. 2006 at the age of 64.

“From the day I joined the company eight years ago, my goal has been to create an organization that would provide high-quality, reliable ID card solutions for our customers,” Holland said. “I believe Fargo is in that place today. I am proud of what Fargo has become and honored to have been a part of its growth.”

The company certainly has grown in the past 33 years.

Founded in 1974, Fargo develops secure card printers/encoders, materials and software. The company has sold 120,000 systems in the U.S. and 80 countries worldwide. Fargo provides physical, information and transaction security for a wide variety of applications and industries including government, corporate, national IDs, drivers’ licenses, universities, schools and membership.

HID is a supplier and manufacturer in the access control industry. It serves customers worldwide with proximity and smart-card technologies including central station-managed access controllers, secure and custom-card solutions, digital identity and photo-card management software solutions.

HID operates international offices that support 100 countries.

ASSA ABLOY began life in the Nordic region in 1994 with the spinoff of Assa AB from the Swedish security company Securitas and the acquisition shortly thereafter of the Finnish lock company Abloy. The firm manufactures locking solutions and owns such traditional U.S. brands as Yale and Medico.

With 150 companies operating in 40 countries, ASSA ABLOY holds 10 percent of the world lock market. With the Fargo acquisition, the company has some 30,000 employees with annual sales of about €3 billion.

ASSA ABLOY acquired HID to spur its growth within the electro-mechanical locking space. Already the world’s largest manufacturer of physical locks, ASSA ABLOY perceives that all locks will ultimately go electronic. HID sees the role of cards changing.

“We see cards moving into international access for computers as well as for multiple applications gaining logical access to everything from computer networks to cafeterias,” Sullivan said.

He added: “We see development of an overall smart card that stores biometric template data in a standardized format. Users will be able to interact with everything from desk encoders to cash-dispensing systems across multiple vendors,” he said.

Various secure and identification technologies are converging onto a single platform, which is the card itself. Sullivan added: “A rolling-key functionality can be imbedded with a floating handshake on both sides based on the increased sophistication of encryption communication,” he said, adding that HID provides both of these functions now.

Questions regarding Homeland Security naturally arise.

In this regard, Fargo in 2006 opened an office in Washington, D.C. and hired a director of government sales – John Santisteban – who works with prime integrators and federal agencies to ensure that Fargo solutions are included in various projects (such as Homeland Security presidential directive No. 12, which mandates that all federal employees and contractors who work in federal offices have a standard ID card).

Last week, HID Global demonstrated its iCLASS smart-card technology at the 10th annual Congressional Internet Caucus Advisory Committee Kickoff Reception & Technology Exhibition, which highlighted key issues such as interoperability among diverse applications including access control, biometric verification and secure PC log on.

Hands-on demonstrations of the latest technologies in hardware, video content, biometrics and consumer electronics helped illuminate these debates while demonstrating possible solutions. Sullivan notes that Fargo is a “pro-privacy advocate”.

He concluded: “We’re more interested in the user. Basic data that allows access or confirmation – such as with a biometric template pin number – is done between the card and the reader. It just says ‘yes’ or ‘no’. Fargo is constantly looking at ways to increasingly secure the data on a card including ultraviolet and inductive inks, optical variable devices (OVDs) and some highly secure applications.”