Archive for the ‘Market Research’ Category

Stock market collapse could jeopardize Impinj IPO

Wednesday, August 10th, 2011

The recent and dramatic downturn in the stock market could spell bad news for Impinj’s bid to go public. According to an AP report, eight IPOs have been cancelled this week alone, with one more reducing its price as a turbulent stock market has caused many investors to flee stocks.

Only one company has gone public this month after eight IPOs were launched in the last week of July. The Impinj deal has yet to be priced. However, the company hopes to raise about $100 million from the IPO.

Financial experts say that it often takes between six months and a year to complete an IPO. The general consensus is that the Impinj offering will be priced between mid-August and the end of September. Impinj and online real estate firm Zillow both filed their S1 statements on the same day; Zillow went public two weeks ago. 

A cancelled IPO would certainly disappoint investors who have sunk more than $150 million into the leading producer of tag and reader ICs for the burgeoning EPC market. However, it wouldn’t have an entirely negative impact on the industry. For starters, the current market conditions are out of Impinj’s control and do not reflect the overall strength of the RFID sector and Impinj’s market leading position.

Just the same, a successful IPO “would definitely show that the core component of the industry – the tag and the reader — is a growing market and that there is a growing demand for it,” says one industry insider.

To draw a parallel between a cancelled Impinj IPO and the failed Alien IPO from four years ago would be unfair. Alien was a victim of untimely market conditions, but that was only half the story. Investors also had serious concerns about Alien’s business plan and the overall acceptance of RFID back in 2008. Today’s market, however, features strong orders and growing momentum. Impinj grew sales from $20.8 million in 2009 to $31.8 million last year. First quarter revenue for 2011 came in at $12.2 million, compared with $5.1 million for the same period last year.

Impinj has sold over two billion of its Monza tag ICs since the product line was introduced in 2005, including 940 million tags in 2010 alone. VDC Research projects the number of UHF Gen2 ICs shipped will grow from 1.6 billion in 2010 to 41 billion in 2015, a compound annual growth rate of 92.2 percent. Investors drool over such growth numbers, and such explosive growth should also push Impinj to a profit.

Click here to view RFID 24-7’s previous coverage of the pending Impinj IPO.

U.S. debt ceiling debate could impact Impinj IPO

Thursday, July 28th, 2011

A report from Credit Suisse this morning and carried by CNNMoney states that if the U.S. fails to raise the debt ceiling and defaults on its loans next week, the result could be a stock market tumble of one-third or more, and a contraction in the economy of five percent.

That’s bad news for everybody, but especially for companies like Impinj that are on the doorstep of going public. If the infighting over the U.S. debt continues, it’s entirely possible that capital for IPOs could dry up if the debt ceiling debate is not resolved quickly.

So you can’t blame the folks at Impinj for being a bit anxious as they prepare for the EPC solution provider’s IPO. Until recently, technology, social media and Internet IPOs were buzzing, with Internet high-flyers LinkedIn and Zillow seeing big gains on their opening day of trading. What’s to think that a hot RFID play with a great growth story wouldn’t have the same kind of debut?

If successful, Impinj would represent the first RFID pure play in the public markets. “Specifically, it would be the first EPC pure play, so the message clearly would be that the EPC market is coming on board quickly,” says one industry insider. A successful IPO “would definitely show that the core component of the industry – the tag and the reader — is a growing market and that there is a growing demand for it.”

But the stalemate in Washington, and the possibility of a U.S. default on Monday, could impact all IPOs going forward. As Washington continues to try and iron out a solution, the stock market endured losses this week until a modest turnaround today. Yesterday, ADS Tactical, Inc. (ADS) announced that it has terminated its IPO due to adverse market conditions. The company provides logistical services, mainly to the federal government.

“It’s a very dangerous situation right now, and anything remotely connected to the government, and the possibility of a temporary or perhaps permanent reduction in revenues, is turning people off,” says Scott Sweet, Senior Managing Partner at IPO Boutique. “That will be the case until there is a plan that seems workable, but at the moment it doesn’t seem as they are getting anywhere.”

Impinj might luck out in that its IPO is likely still six to eight weeks away, during which time the debt ceiling debate could be put behind us. Impinj filed its IPO in April, and its S1 was filed on the same day as Internet real estate firm Zillow, which went public this week. So that means Impinj could be getting close.

A successful Impinj IPO would be a stellar sign for the industry. Impinj is a relatively small company with sales of just under $32 million in 2010. However, the firm has a strong IP position and a very strong market position, and a successful IPO would enable Impinj to further advance the overall RFID marketplace through increased funds for R&D and marketing to develop new applications. Impinj has been very supportive of industry-wide application development, and a successful IPO would only enhance that.

 

New study reveals increased RFID adoption

Wednesday, July 20th, 2011

A survey of more than 100 companies reveals that 34 percent of organizations are using, piloting, or already in the process of implementing RFID technology – representing a 21 percent increase over a similar study conducted by CYBRA Corp. in 2008.

Greater inventory accuracy, increased profits and improved efficiencies were the three primary reasons mentioned for deploying the technology. Of those using or implementing the technology, 80 percent say they will do so because of  EPC (Electronic Product Code) compliance issues and also to maximize profits.

Improved inventory accuracy (60 percent) and EPC Compliance (55 percent) remain the top two business drivers for RFID adoption. Those who cited EPC compliance as a driver for deployment (24 percent) also cited item level tagging as a current initiative.

Almost half of survey respondents say that the ROI is now less than two years due to reduced labor costs from RFID, much improved inventory accuracy, and the fact that software, tags, and hardware are now less expensive.

Click here to view the entire report.

Tomorrow, we write about an exciting new asset tracking application.

Video documents savings from cloud-based RFID solution

Wednesday, May 18th, 2011

More and more enterprises are turning to technology solutions like RFID and cloud computing. Now, the two go hand in hand. Balluff RFID unveiled a cloud-based solution for RFID applications on Wednesday that allows users to leverage shared IT infrastructure and standard software to collect and present tracking data without having to develop, maintain and finance a redundant and load balanced infrastructure internally.

(Click here to view RFID 24-7’s previous coverage on RFID and the cloud.)

By turning to cloud-based solutions like the one from Balluff and software provider IGear, the burden and cost of the IT infrastructure can be greatly reduced or even eliminated. Investment in IT infrastructure is a major concern of companies considering the use of RFID technology.

“Manufacturers are moving their applications to secure cloud environments,” says Mark Doyle, vice president of sales at IGear Online. “While quality and productivity applications are becoming more mandatory, the capital and labor to build and maintain these systems are becoming scarcer. The cloud has emerged as the optimal solution.”

According to Balluff, building an on-premise application for a single machine or work cell could require an upfront investment of $30,000 or more for hardware, software and integration services. The ongoing cost of support and maintenance requires an additional $10,000 investment. In contrast, a comparable cloud application would involve an annual subscription of $1,000 with the potential need for one-time configuration services of $10,000, representing a savings over $20,000 during the first year and as much as $9,000 every year thereafter.

Click here to view a video on the Balluff RFID solution.

Asset tracking and supply chain solutions drive strong growth at Zebra

Wednesday, May 4th, 2011

The stock of Zebra Technologies up is strongly today after the company announced first quarter results that exceeded Wall Street estimates. Zebra’s 2011 first quarter net sales were $237.3 million, up 11.9 percent from the same period in 2010. The company expects second quarter sales to fall in the range of $240-250 million.

By mid-morning, the stock had set a new 52-week high and was trading just over $43.00 a share.

In a press release, Zebra attributed the increased results to supply chain and asset tracking solutions.

“Excellent execution on a clear and focused business strategy helped Zebra deliver these record results,” Anders Gustafsson, Zebra’s chief executive officer, stated in the release. “Innovative new products introduced over the past year are helping us meet more of our customers’ asset tagging needs in a more complex supply chain environment.”

Last month Zebra unveiled its UHF Gen 2 RFID card powered by Impinj Monza® 4 chips. The new UHF card extends Zebra’s high performance card product line with a new model that offers exceptional performance in access control, personnel tracking, long-range ID applications, and social media and hospitality check-ins.

Impinj IPO will ignite investment in RFID sector

Wednesday, April 27th, 2011

In late 2005, I predicted in another publication that a young upstart company called Impinj would some day file for an IPO. Six years later that time has arrived. In case you missed this week’s coverage of the Impinj IPO announcement, we have included it on our blog page.

Four years ago, Alien Technology created a buzz in the industry by filing for an IPO. Buzz quickly turned to bust because of poor market timing, a balance sheet that didn’t please investors, and orders that never materialized.

How is last week’s announcement by Impinj to pursue an IPO possibly worth $100 million any different? Like Alien, Impinj has never turned a profit. Impinj lost $11.4 million in 2010, and $1.8 million in Q1 2011.

Well, the losses are the only similarity, and they carry an asterisk, since tag sales are exploding, something that was not true four years ago. Today’s market features real orders and strong momentum. Impinj grew sales from $20.8 million in 2009 to $31.8 million last year. First quarter revenue for 2011 came in at $12.2 million, compared with $5.1 million for the same period last year.

“There is a different story here,” notes Drew Nathanson, Auto-ID practice director at VDC Research. “When Alien announced its IPO, the market wasn’t there yet. This is real money coming in.”

“And even though Impinj is not profitable, it is clear they will be eventually because they own so much share in a lot of these core markets that are growing at huge rates.”

Impinj will not comment on the IPO because of SEC regulations, but the company will not be profitable in the near-term. However, explosive growth is occurring in the apparel item-level sector, an industry Impinj is a big player in. And Impinj execs see item level tagging spreading quickly into non-apparel sectors like electronics, cosmetics, tires and jewelry. In fact, it is highly believed that Walmart is ready to extend its item level-tagging program to electronics and tires and possibly other non-apparel product lines before year-end.

Impinj has sold over two billion of its Monza tag ICs since the product line was introduced in 2005, including 940 million tags in 2010 alone. VDC projects the number of UHF Gen2 ICs shipped will grow from 1.6 billion in 2010 to 41 billion in 2015, a compound annual growth rate of 92.2 percent. Investors drool over such growth numbers, and such explosive growth should also push Impinj to a profit.

Impinj focuses exclusively on UHF RFID solutions, which is the fastest growing segment of the RFID market. UHF Gen2 systems are ideally suited for high-volume, item-level applications that require low-cost, consumable tags, such as retail inventory management, pharmaceutical authentication and airline baggage tracking. From 2009 to 2010, unit sales of the Monza UHF Gen2 tag ICs increased by 279 percent. Impinj is the market leader in UHF Gen2 tag ICs, reader ICs and stationary readers. According to VDC, Impinj owns 60 percent of the tag IC market, 86 percent of the reader IC market and a 25 percent share of the stationary reader market.

Impinj estimates that its technology enables more than 70 percent of the UHF Gen2 reader market when you combine the share of its Speedway reader with that of other readers based on its Indy reader ICs.

“Their innovation rate is aligned and they seem to have a very good understanding of how their markets are evolving and the constantly changing end user requirements,” says Nathanson.

Impinj will use the proceeds of the IPO to pay down debt, including venture firms that have financed the company to the tune of at least $160 million since it was founded in 2000. Published reports say that venture capital firms own about half of the company. Intel holds a stake worth about 6 percent.

A successful IPO would drive further investment in the industry, resulting in the potential for more IPOs and increased M&A activity. A year ago, RFID 24-7 reported that ODIN could be 12-18 months away from filing an IPO. Privately held ODIN has never commented on its sales, although industry estimates place revenue at $25-30 million annually. That puts ODIN at about the same size sales-wise as Impinj. ODIN CEO Patrick Sweeney said this month that first quarter sales increased by 30 percent in 2011, indicating continued solid growth.

Is ODIN on track for an IPO too? All you have to do is read into Sweeney’s blog post regarding the Impinj IPO: “The big winner will be the second company to IPO, because everyone who is sitting on the sidelines during Impinj’s road show is about to see a very successful tech company emerge and will wish they got in on Impinj; and they will climb all over themselves to get in on the second IPO in the RFID sector. If Impinj is successful, and I believe they will be, and I owned an RFID company I would be doing everything I could to be the second company out in the IPO market.”

ODIN, which acquired Reva Systems late last year, is also a potential takeover target, as are companies like GlobeRanger, Tego, Omni-ID, and Intelleflex, especially if momentum behind cold chain tracking continues.

The Impinj IPO places a spotlight on a pure-play RFID star. A successful IPO means investors will take note that the technology is finally mature and that they can invest in the industry and reap gains in the short term, instead of waiting years for payback.

“The call volume coming in from the investment community, especially the larger investment firms, indicates that they are really looking at this market in a big way,” says one industry expert. “They are looking to dump more money in, so expect a lot of acquisitions happening going forward.”

 

Avery Dennison hits 1 billion mark for inlays

Wednesday, April 6th, 2011

Avery Dennison RFID has shipped its one billionth ultrahigh-frequency (UHF) RFID inlay — an industry first – and company officials say they will hit the 2 billion mark much faster than the seven years it took to get to one billion.

“We are confident that our second billion chips will be shipped in much less than half the time it took to ship our first billion,” Jack Farrell, vice president and general manager of Avery Dennison RFID said in a release. “As use cases expand and companies invest in IT process improvements, RFID solutions become almost a mandate for the future. This is a very exciting time for the RFID industry.”

Avery Dennison RFID inlays are attached to or embedded in labels and tags produced by multiple label converting partners and distributed in more than 60 countries worldwide. By providing a unique identifier for individually tagged items that can be read without the line of sight required by traditional barcode systems, RFID-based systems can collect and organize data exponentially faster and more accurately.

Over the past year, Avery Dennison RFID inlays have become more widely used by major apparel brands and retailers in item level marking systems. Retail item level tagging is expected to drive much of the growth in RFID during the next 12 months.

Avery Dennison sees UHF applications expanding beyond supply chain and into healthcare, authentication and transport logistics, as well as retail apparel. In addition to pioneering the use of UHF inlay applications, the company has moved into the established HF RFID space to facilitate the growth opportunities presented by that technology.

“We are excited about the overall future growth of RFID in both UHF and HF,” said Maggie Bidlingmaier, Avery Dennison RFID global director, sales and marketing. “The recent momentum in near-field communications technology, enabled by RFID-equipped smart phones, is particularly exciting, as it opens up the opportunity for many new applications for consumers as well as businesses.”

Smartrac posts record year with sales of EUR 180M; expects more strong growth for 2011

Thursday, March 31st, 2011

It’s becoming clear just how strong a year 2010 was for the RFID sector. It’s been widely reported that tag manufactures couldn’t keep up with demand in 2010, as the economy rebounded and companies began implementing RFID trials and production deployments in earnest.

Publicly traded Smartrac N.V., a manufacturer of RFID transponders based in Amsterdam, shed some light on the industry growth when it reported its financial figures for fiscal 2010 earlier today.

The firm grew sales by a robust 41 percent in 2010, reaching EUR $180.1 million. The company expects more normalcy from the market this year – albeit still double digit growth – to push sales to EUR $200M.

“The year 2010 was an exceptional one for SMARTRAC,” said said Dr. Christian Fischer in a release. “We have accomplished several strategic milestones and shaped the foundations for the future of our company,” said Dr. Christian Fischer. “However, we are also aware of the fact that certain challenges remained unsolved in 2010 and will require our full attention in 2011. For 2011, we expected Group sales to grow to EUR 200 million. In terms of profitability, we are working hard to achieve Group EBITDA margins which come back closer to past levels.”

Click here to view the full earnings report.

 

Move to cloud computing will accelerate RFID adoption

Monday, January 31st, 2011

For anyone that missed last week’s issue of RFID 24-7, here is our lead story on cloud computing.

Cloud computing continues to gain steam. A study from Saugatuck Technology predicts that almost two-thirds of all new business application/solution decisions will be cloud-based by 2015.

As RFID adoption continues to skyrocket, the benefits of cloud computing are expected to further accelerate deployment of the technology. By utilizing the cloud, enterprises can avoid costly infrastructure build-outs required for RFID technology. Cloud computing can also make the integration of new data seamless, benefiting stakeholders at both ends of the supply chain.

Pallet firm CHEP, Coca-Cola, Vail Resorts and many other companies already rely on the cloud to harness the crucial data that RFID provides them. The sweet spot for 2011 is likely supply chain applications, which are expected to flock to the cloud for hosting of RFID data and operations.

Many experts believe that a cloud-based architecture will quickly enable scalable RFID, eliminating one of the biggest roadblocks to adoption of the technology. Many technology providers are leveraging the cloud to deliver solutions that make RFID and the data mined by the technology more valuable than ever before.

“In the future we see RFID device makers further cloud-enabling their solutions for the marketplace,” Joe Pleshek, president and CEO of Terso Solutions, said during a recent webcast on RFID and the cloud. “You’ll also start to see more supply chain systems leveraging cloud-based RFID solutions.”

The benefits of cloud-based RFID solutions are numerous. For starters, operating in the cloud means that end users can eliminate costly up-front expenses to build-out RFID infrastructure. In addition, users gain the ability to receive state-of-the-art software updates on a regular basis, more frequently than most companies can provide on their own. Cloud-based services usually offer more functionality, and users only pay only for the services they subscribe to.

“According to an RFID end user survey we conducted in Q4 2010, more than 70 percent of respondents cited the following four reasons for adopting a cloud/hosted platform: cost savings, ease of implementation, ease of upgrading/refresh, and speed of deployment,” says Drew Nathanson, director of operations at VDC Research Group. “That figure is even higher when looking exclusively at the Tier II and Tier III communities.”

RFID is being integrated with the cloud in many ways. The Epic Mix app allows skiers at Vail’s five Colorado resorts to track their progress on the slopes and automatically track data from each ski run, including vertical feet skied and days on the mountain. Accessible online or via a mobile phone, the app relies on RFID-enabled lift tickets that are read by readers installed at each chair lift.

Skiers can see their progress online or on their mobile phones and can also share their accomplishments via social media updates. Skiers can also track their friends on the slopes, knowing when to break for lunch, for example. And the whole process is powered by hosting data on the cloud. “Vail Resorts is blazing a trail by using RFID to marry the physical world with the virtual world,” says Patrick Sweeney, CEO of ODIN, the firm behind the RFID portion of the technology.

Coca-Cola is leveraging the cloud to harness information from its RFID-enabled Freestyle vending machine drink dispensers. The machines allow consumers to choose from more than 100 categories of soda, juices and waters. Each vending machine uses 30 flavor cartridges equipped with Impinj Monza tag chips and Indy reader chips. Readers assigned to cartridges record how many times they are used, and data is sent through wireless network to a centralized repository.

“This allows Coca-Cola to pull that information together and to analyze it for near real-time visibility to end user demand for certain flavors, as well as managing the inventory of cartridges,” says Terso’s Pleshek. “This deployment of RFID could only be done by utilizing a cloud-based infrastructure.”

That’s true in the case of CHEP, a pallet management company that includes RFID on all of the pallets it uses for freight deliveries around the world. Information collected from the RFID-enabled pallets and the bar codes of products on those pallets is connected to a cloud integration platform hosted by HubSpan, a provider of cloud-based B2B integration solutions. From that data, rules can be created for different products, such as temperature requirements for perishable goods.

Food manufacturers can put certain rules in place to dictate that certain products be stored at specific temperatures. That information is scanned and pushed up to the cloud, and HubSpan analyzes the data and creates rules that send alerts to end users about that product’s specifications.

“So by using RFID technology, we can drive information that allows businesses to be responsive to situations and be proactive,” says Nathan Cowan, general manager of global sales for HubSpan. “The cloud allows us to segment out those rules on a connection by connection basis.”

Of course, the cloud is not for everybody. Many companies have security concerns about storing data on the cloud, although Cowan says most security concerns are addressable. Companies also worry about a lack of control of data.

“You do lose some control,” says Nathanson. “You might own your data, but you lose some control and that’s one of the barriers for this. People are scared. There is some confusion out there about how the [hosting] companies are going to have ownership or even look at that data. So there are definitely pros and cons.”

While those trust issues remain to be worked out, providers of cloud-based services are emphasizing another kind of trust, that is the trust in knowing inventory information is accurate in real-time. That leads to better collaboration through the entire supply chain.

“When you can provide real time, as-it’s-happening visibility and predictive analytics as to where things will be based on what’s happening today, you create a very powerful, highly trusted, automated way of collaborating,” says Raj Saksena, president and CEO of Omnitrol, a provider of software solutions that provide real-time manufacturing visibility, supplier production collaboration, global asset tracking and product traceability. “That data can now be fed into business intelligence tools in the cloud where people can log in and get the status of things by taking the information as it’s delivered directly from operations.”

As 2011 progresses, look for smaller companies that might otherwise shy away from RFID to utilize the cloud as they begin their initial RFID deployments.

“When we think of the investment in RFID, so much work has to be done to build out infrastructure that it often times dissuades companies from implementing,” says Cowan. “Now that the cloud is being deployed as a way to facilitate information exchange, companies can dip their toe in the water and get greater benefit at low costs.”

Top 5 trends that RFID solutions providers should be aware of in 2011

Tuesday, January 25th, 2011

VDC Research Group has announced its predictions for the key trends anticipated to shape the 2011 RFID solutions market. 2010 has been a banner year for the AIDC market, with many RFID suppliers experiencing double-digit growth.

The top five trends include a continued surge in item level retail tracking; asset tracking applications that go beyond location; the emergence of authentication and anti-counterfeiting as leading applications; increased benefits from solutions convergence; and more revenues will come from new accounts rolling out RFID for the first time.

Here’s a more in-depth look at each prediction!

Adoption of item-level tracking in retail continues to surge: VDC expects item-level tracking applications in retail to continue to expand rapidly in 2011, as the solution is adopted in new accounts, scaled and expanded in existing accounts and embraced globally. Growth will also be further driven as RFID continues to migrate toward the point of manufacture.

Asset tracking applications go beyond location: Asset tracking solutions will continue to expand beyond just providing the location of an asset. They will increasingly be leveraged to provide more information about the asset—its environment, movements and users—as a means to support and enhance business processes, increase asset utilization, support compliance and minimize costs.

Authentication and anti-counterfeiting emerge as leading applications: Product authentication and anti-counterfeiting applications are anticipated to grow quickly and expand into a broad range of verticals over the next 3-5 years as companies look to create a more secure supply chain. These applications are expected to extend the functionality of existing systems beyond track and trace to protect brands, further improving ROI.

Solution convergence will provide key benefits: Although there may be overlap in functionality and capabilities, the convergence of RFID, barcode and other AIDC solutions will provide the end-user more actionable business intelligence with little disruption to existing solutions and processes. The combination of these technologies will be particularly beneficial for applications and environments, such as supply chain and inventory management.

More revenues to come from new accounts: Although approximately 80% of total global RFID revenues in 2009-2010 were from established accounts that have been evaluating/piloting the technologies for at least 18 months, VDC expects a shift in consumption coming from new accounts to occur in late 2011 and early 2012. This tipping point will be a function of favorable pricing, increased packaging of solutions and availability of off-the-shelf solutions, more benchmark and performance metrics, enhanced standards and improved business models.