EXHIBIT 99.1

EXHIBIT 99.1

CONTACTS:
Steve Moore Darby Dye Manfred Mueller
Chief Financial Officer Investor Relations - US Investor Relations - Europe
510 360 2300 510 360 2302 +49 89 9595 5140
smoore@scmmicro.com ddye@scmmicro.com mmueller@scmmicro.de

SCM MICROSYSTEMS REPORTS SECOND QUARTER RESULTS

FREMONT, CA - AUGUST 5, 2004 - SCM Microsystems, Inc. (Nasdaq: SCMM, Prime
Standard: SMY), a leading provider of solutions that open the Digital World,
today announced results for its second quarter ended June 30, 2004.

SCM's reported financial performance for the 2004 second quarter reflects
continuing operations for the Company's Security business only, as SCM sold its
retail Dazzle(TM)-branded digital media and video business in July of 2003.
SCM's continuing Security business is focused on enabling secure access to
digital content and services through the digital television and PC platforms.
Financial results for the retail digital media and video business are being
treated as discontinued operations.

SECOND QUARTER RESULTS

Revenues from continuing operations in the second quarter of 2004 were
$11.5 million, as communicated by SCM in a preliminary press release on July 9,
2004. This represents a decrease of 40% from revenues of $19.3 million in the
second quarter of 2003. By product segment, second quarter 2004 revenues
included $4.4 million from sales of digital TV security modules for pay-TV
broadcast decryption, $4.3 million from sales of smart card readers and other
products for PC and network security, and $2.8 million from sales of OEM digital
flash media reader technology.

Sales of digital TV modules to the Company's traditional small-operator
customer base declined sharply in the quarter, due to aggressive competition
from non-licensed products. In addition, the Company experienced delays in
launching and deploying new digital TV products, which had been expected to
generate significant revenue in the second quarter.

Gross margin from continuing operations in the second quarter of 2004 was
15% and included the writedown of approximately $2.9 million in inventory for
the Company's digital TV products.


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Without the writedown, gross margin for the second quarter would have been 40%,
within the range of management guidance of 40% to 42% for the quarter.

Operating expenses for continuing operations in the second quarter of
2004, as reported in accordance with GAAP, were $8.9 million. This figure
includes amortization of intangibles of $0.3 million and a credit to
restructuring and other charges of $0.1 million, which resulted from tax
adjustments to other charges taken in 2003. Operating loss for the quarter was
$(7.2) million. This compares with operating loss of $(4.2) million in the year
ago quarter, which included amortization of intangibles of $0.3 million and
restructuring and other charges of $2.1 million.

Net loss from continuing operations for SCM's Security business for the
second quarter of 2004, as reported in accordance with GAAP, was $(6.9) million,
or $(0.44) per diluted share, compared with net loss of $(5.0) million, or
$(0.33) per diluted share in the second quarter of 2003.

Robert Schneider, chief executive officer of SCM Microsystems commented,
"The rapid deterioration of our traditional digital TV business in the second
quarter created a significant gap between revenues and expenses. To address this
gap and to position the Company for profitability, SCM's management has adopted
a strategy to lower expenses by approximately 25% over the next six months. To
accomplish this, we intend to reduce headcount-related costs by 20% to 25% and
are evaluating additional areas for reduction throughout all functions of the
organization."

"After careful consideration, SCM's management has determined that our
best strategy for revenue growth is continued investment in new products and
technologies to address the evolving needs of our current markets," continued
Schneider. "SCM holds a unique position in the Digital TV, PC Security and Flash
Media Interface markets. We are a trusted partner to conditional access
providers who will implement the next generation of digital television
technology. We have strong relationships with government integrators and banking
institutions who are at the forefront of digital authentication based on smart
cards. We have many years experience in developing, manufacturing and
implementing security solutions for our customers around the world. We believe
we can leverage our market leading position with next generation secure access
products to address new market opportunities and drive revenue growth."

GUIDANCE

For the third quarter of 2004, management estimates that revenues from its
Security business will be in the range of $8 million to $12 million, reflecting
continued pressure on sales of Digital TV products in Europe and a lack of
visibility into the timing of anticipated digital security projects. Gross
margin is expected to be between 38% and 41%. Within this range of revenue and
gross margin, SCM expects to record an operating loss for its Security business
in the third quarter of 2004.


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CONFERENCE CALL

SCM will hold a conference call and webcast on August 5, 2004 at 8:30 AM
Eastern Time to discuss the results of its 2004 second quarter. The webcast can
be accessed through the Company's investor relations site at
www.scmmicro.com/ir_en/index.html.

ABOUT SCM MICROSYSTEMS

SCM Microsystems is a leading supplier of solutions that open the Digital World
by enabling people to securely access digital content and services. The company
markets and sells its smart card reader technology for network and physical
access and conditional access modules for secure digital TV decryption to OEM
customers in the government, financial, enterprise and broadcasting markets
worldwide. Global headquarters are in Fremont, California, with European
headquarters in Ismaning, Germany. For additional information, visit the SCM
Microsystems web site at www.scmmicro.com.

NOTE: This press release contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934. These statements are subject to risks and
uncertainties which may cause actual results to differ materially from those
contemplated herein. These include, without limitation, our statements regarding
(i) our expectations for revenue, gross margin and operating loss for the third
quarter; (ii) our ability to lower expenses; and (iii) our ability to address
new market opportunities and drive revenue growth. Actual results could differ
materially. Our financial results may not meet expectations. Our efforts to
reduce expenses may be unsuccessful, or may take longer than expected. Other
risks and uncertainties that could cause our actual business and operating
results to differ include, but are not limited to our ability to grow based on a
strategy of participating in multiple early stage markets; our ability to
successfully develop and introduce new products that satisfy the evolving and
increasingly complex requirements of customers; the markets in which we
participate or target may not grow, converge or standardize at anticipated rates
or at all; we may not successfully compete in the markets in which we
participate or target; and competitors could take market share or create pricing
pressure. For a discussion of further risks and uncertainties related to our
business, please refer to our public company reports, including our Annual
Report on Form 10-K for the year ended December 31, 2003 and our Quarterly
Report on Form 10-Q for the quarter ended March 31, 2004, both filed with the
U.S. Securities and Exchange Commission.

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-- FINANCIALS FOLLOW --

ALL TRADE NAMES ARE TRADEMARKS OR REGISTERED TRADEMARKS OF THEIR RESPECTIVE
HOLDERS.


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NOTE: The Condensed Consolidated Statements of Operations in this press release
include pro forma operating results that are not in accordance with GAAP. A
reconciliation of the presentation of pro forma results to GAAP is also provided
in this release. As described in the tables, pro forma net earnings exclude
charges related to the amortization of intangible assets, restructuring and
infrequent charges and discontinued operations. We believe pro forma results
enable our management and our investors to better evaluate comparable operating
results. Further, our pro forma results are a primary indicator our management
uses to plan and forecast for future periods. These pro forma results are not
intended as a substitute for information presented in accordance with GAAP.
Furthermore, our pro forma information may not be comparable to pro forma
information that other companies provide.


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SCM MICROSYSTEMS, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)