Archive for October, 2010

ThingMagic buyout could ignite next round of RFID M&A

Thursday, October 28th, 2010

For those that didn’t receive this week’s edition of RFID 24-7, we’ve posted our lead story here for you.

When ThingMagic got its start in a garage in Somerville, Mass., 10 years ago, the firm’s co-founders probably never considered that the company would be scooped up a decade later by a billion-dollar buyer.

That’s exactly what happened yesterday when ThingMagic, in the midst of a year-long 10th anniversary celebration, was quietly acquired by Trimble, a California firm that specializes in making field and mobile workers more productive through wireless technologies like GPS, lasers and optics — and now — RFID technology.

No purchase price has been announced, but several sources indicate that ThingMagic is enjoying its best year, which could translate to a fair to high multiple. ThingMagic was not in the position of needing to sell, and CEO Tom Grant likely negotiated mostly out of a position of strength.

“Tom didn’t have to sell,” says an industry insider. “They were having a pretty good year, so I can imagine that the multiple was pretty good.”

Two circumstances could be behind the decision to sell. Company investors, some who have been invested in the firm for several years, may have started to grow anxious for an exit. ThingMagic’s last round of major financing came in 2008, when it raised $9.5 million from four venture firms.

Like OAT Systems, which was purchased by Checkpoint in 2008, ThingMagic was born out of the Auto-ID Lab at MIT. It’s also likely that the company required additional capital in order to scale. Now they have it in Trimble, which carries a $4.3 billion market cap and will likely look to ThingMagic’s line of fixed readers and its high quality module piece to extend its business proposition for its customers.

ThingMagic’s decision to move aggressively into modules several years ago while de-emphasizing a lackluster fixed reader business not only provided a high-quality module option for the industry, but likely saved the company’s business.

Although neither company commented on the value of the deal, the purchase price will eventually be revealed when Trimble, a public company, files its annual report.

The deal raises the question of who will be the next buyout target. With the economy continuing its slow recovery, and RFID gaining steam almost every day — primarily through the huge retail apparel deals in the works with Wal-Mart and other top retailers — the ThingMagic deal could represent just the tip of the iceberg when it comes to M&A activity.

“When you start to see companies turning away business [because they are too busy] and you start to see product shortages and high-multiple acquisitions, it’s a sign that the industry has crossed the chasm,” says Patrick Sweeney, founder and CEO of ODIN. Sweeney believes that merger activity will reach a fever pitch as companies like Trimble decide that they need a presence in the RFID market. “It looks like 2011 will be huge,” he says. “By the end of 2011, there will be one or two RFID pure plays left standing.”

Who are the possible targets? ODIN, for one, is likely on the list. While Sweeney won’t comment about any offers he has received, he has been positioning the company as more of a software firm than a services provider, which should make ODIN more valuable moving forward. In April, RFID 24-7 reported that there was likely more to the partnership ODIN signed with Savi that allowed the pair to offer the first software platform leveraging both passive and active RFID technologies. At the time, RFID 24-7 reported that the deal likely represented a second and less desired option for Savi, which may have preferred to purchase ODIN instead. If such an offer was made, Sweeney wisely declined, knowing the value of his company would only climb. Down the road, ODIN would be a good fit for IBM or Motorola moving forward.

A host of companies that have carved out niche markets could also be M&A candidates. WinWare, Inc., which produces CribMaster, for example, could be a likely target for a larger material handling provider or system integrator looking for a presence in the MRO and manufacturing sector. CribMaster offers RFID-enhanced and automated tool cribs and vending machines. FileTrail, a provider of records management software and RFID tracking solutions, has also carved out an attractive niche that may attract suitors. Rush Tracking, which was acquired by venture firm Pharos Capital last year, could be put into play at some point. VC’s don’t typically buy companies with the goal of running them; they all have exit strategies in mind.

Seattle-based Impinj could also be a major acquisition candidate. The rapidly-growing Impinj has more than a dozen venture investors on the books, and expects to double sales next year, according to an article in Xconomy Seattle. Impinj has raised more than $100 million in venture funding, and those investors expect to be repaid at some point, either through a public stock offering or a buyout.

“We’ve seen pockets of consolidation occurring in RFID over the past few years,” says Michael Liard, RFID practice director for ABI Research. “Do I think it’s the start of a snowball effect? I’m not sure. Somebody else will be next, maybe a software player. I expect more in the future. It needs to happen and speaks to the fragmentation and the number of players in the value chain today.”

RFID pioneer ThingMagic purchased by Trimble

Monday, October 25th, 2010

RFID pioneer ThingMagic, in the midst of a high-profile 10th anniversary celebration, upped the ante today. The firm announced that it has been sold to California-based and publicly-traded Trimble.

ThingMagic was born out of the former Auto-ID Center at MIT. According to the press release issued by Trimble, ThingMagic will continue to offer high-performance fixed and embedded RFID readers and services to customers in a wide range of industry verticals from construction to transportation.

It was not immediately known if ThingMagic will remain in its Cambridge, Mass., headquarters, or the fate of its management team, which includes four original co-founders, including Yael Maguire.

The sale likely represents an exit plan for the investors who have put more than $30 million in venture funding into the firm since its inception. ThingMagic’s last funding occurred in 2008 in a deal with In-Q-Tel thought to be worth about $3 million. In-Q-Tel is the strategic, not-for-profit investment firm that works to identify, adapt, and deliver innovative technology solutions to support the mission of the U.S. Intelligence Community

“Adding ThingMagic’s RFID technology and system integration expertise will allow Trimble to build more comprehensive and capable solutions for its existing markets and potentially provide entry into new markets,” said Jürgen Kliem, vice president of Trimble’s strategy and business development. “Similar to the widespread integration of GPS into today’s positioning solutions, we believe RFID can transform markets and is a natural complement to our existing technology portfolio.”

Exel deploys RFID-based yard management system from Motorola & PINC

Thursday, October 21st, 2010

Yard management has long been a sweet spot for RFID technology, and the folks at Exel recently implemented an RFID-based system at a multi-customer trans-load facility in Southern California. The 300-space facility serves mostly as a deconsolidation center, unloading sea containers and shipping materials for points across North America for retail customers.

Exel partnered with Motorola for the RFID hardware and solutions provider PINC Solutions to develop its yard management system. The team implemented a cost-effective solution focused on advanced asset location capabilities using real time location systems (RTLS), rather than utilizing the full capabilities of more traditional and static yard management systems.

The project took less than four months to implement and required a limited amount of information technology hardware and software to support the operations. Key system elements include:

• A gate management module at the entrance to the facility

• Tracker modules for the yard trucks that move trailers and containers around the site

• A software system for administrative users and customer service representatives that allows for yard visibility, customizable fields and easy configuration

• Use of a web-based software as a service (Saas), eliminating the need for on-site servers

RTLS determines the location of assets on a constant and recurrent basis. It is a system comprised of RFID tags attached to trailers and associated computing software that determines the position of an RFID device (tag) on a trailer. The system is capable of reporting the position of the RFID tag within seconds.

Trailers from various shippers arrive at the facility, and upon arrival, each receives a temporary RFID asset tag. The fleet trailer and shipment information (i.e., SCAC code and trailer number) are associated with that specific RFID tag. The trailer is then moved directly to the assigned parking spot or zone, or to a dock door.

Yard trucks equipped with RFID readers and GPS receivers serve as the tracker module, and maintain and detect the location of yard assets and shipments, driver details, arrival and exit times, and more. When trailers exit the facility, tags are removed. In addition to being cost effective, the application was especially unique because the RFID readers were mobile on the yard trucks rather than stationary, as is typical in most passive RFID applications. It also relied on converging technologies utilizing WiFi (802.11x), RFID and GPS systems to communicate.

The system performs yard counts on an ongoing basis and provides email notification of events. All documentation is digitally stored and searchable. CSRs have quick and easy access to high-level information, an appointment scheduling capability that reduces data entry during check-in, and highly accurate trailer location data.

Click here to read the full case study.

Debating the merits of RTLS

Saturday, October 16th, 2010

Interesting conversation about RTLS over on the RFID 24-7 LinkedIn page. Author Ann Grackin of ChainLink Research makes some excellent points about RTLS, as does ODIN’s Bret Kinsela in his response. Leave a reply and let us know what you think.

From the article:

Real-time locating inside facilities1 is an idea that has been sustained through belief in the value of the solution. We have seen great projects that do have value. But yet, the market growth for the past ten years is still small.

RTLS is target-rich—and in the early days there was a lot of ‘spray and pray,’ chasing a lot of use cases and accounts, hoping that once a good case study emerged from a particular industry, it would lead to growth. And since most of the RTLS projects are industry-specific—Auto, Manufacturing, Aerospace, Defense, Healthcare, Mining, etc.—there were large investment efforts to develop industry-based solutions.

But it has been hard to get a meaningful return from them, and one account did not lead to another. Clouding the issue are complementary technologies—‘semi-active’ (that’s active, right?), longer range passive with extra memory, cellular, etc.

Where is WhereNet? The acquisition by Zebra looked like a great idea—giving end-users the broadest choice possible in Auto-ID—but RTLS seems to have disappeared within that company. AreoScout? We haven’t heard much lately. Ekahau seems to be hanging in there, with sheer persistence and focus.

Professor receives RFID patent for inventory management apps

Thursday, October 14th, 2010

A professor at the Missouri University of Science and Technology has been awarded a patent for a new inventory management system that virtually eliminates frequency interference issues in facilities that use RFID to manage inventories and track products. The solution is expected to have the biggest potential when it comes to frozen goods like foods and pharmaceuticals.

Dr. Jagannathan Sarangapani, a professor of electrical and computer engineering, says the improved product readability could save companies considerable money in lost inventory and will help to protect consumers and companies by guaranteeing the product is what it claims to be.

“Our system reads and manages inventory in real time with a nearly 99 percent read rate,” says Sarangapani. “Previous systems had only a 60-70 percent read rate.”

A number of factors can impact the ability of RFID readers to successfully read product tags. Tag interference occurs when multiple readers attempt to read a tag at the same time. Reader collision occurs when multiple readers are used and a carrier signal from one reader interferes with another. Reader collision makes the tags unreadable and lowers overall read rates.

Sarangapani says his team overcame these challenges by developing software that activates and deactivates adjacent RFID readers within the facility based on the tagged product’s location. The software also queries an inventory database based on information collected from the item’s tag. “If shelves are empty of a product, or if a product is about to expire, it will alert the system,” Sarangapani says. “Employees can also track when the next shipment is coming.”

An additional benefit of the new system is its ability to read tags on frozen goods. “Many chemicals and medicines must be kept refrigerated or frozen,” Sarangapani says. “Other systems cannot read tags on frozen items, so they have to be thawed first to be inventoried. Thawing sometimes makes the product unusable and it must be destroyed.”

Customer savings from iGPS’ RFID-enabled pallets approach $68M

Monday, October 11th, 2010

Customers of Intelligent Global Pooling Systems (iGPS), operators of the first pallet rental service providing all-plastic pallets with embedded RFID tags, have saved nearly $68 million by switching from wood to iGPS’ lightweight plastic pallets, according to the firm’s web site.

iGPS now runs a running tally of its customer’s savings on its home page.

The savings have come from a variety of sources, mostly the lighter weight of iGPS pallets (48 pounds versus wood pallet’s 75-80 pounds), allowing customers save on transport costs immediately.

“Production line shutdowns caused by nails and splintered wood that jam equipment are a thing of the past, as are warehouse floors littered with wood shards and nails,” says Bob Moore, iGPS Chairman and CEO.  “Further, unlike wood pallets that warp and shrink, we provide a consistently true 48-inch by 40-inch platform that can hold more products per load.  And since iGPS pallets are easily scanned as they depart facilities, there are no year-end surprises in the form of questionable lost equipment charges.”

Four embedded RFID tags in each pallet enable shippers and receivers to track shipments throughout the supply chain and locate products in the event of a recall.  

iGPS’ pallet provides shippers and receivers with measurable sustainability benefits as well.  An independent life cycle analysis has documented that iGPS pallets are dramatically better for the environment than both one-way and multi-use wood pallets on every commonly-measured metric, including global warming, ozone layer depletion and ecotoxicity.  Over the course of five years, iGPS customers have cumulatively prevented the destruction of over 600,000 trees, saved 635,000 gallons of fuel and saved nearly 14 million pounds of greenhouse gas emissions.

“We not only provide our customers with the world’s most advanced pallet, delivered in excellent condition, but also a platform that delivers immediate and measurable savings that go right to customers’ bottom lines,” says Moore.  “These savings — up to $2 per pallet load — have been documented through rigorous operational studies by our customers, many of the world’s leading companies.”

Retail RFID guru Zander Livingston pursues RFID riches with Truecount Corp.

Monday, October 11th, 2010

During his six years at clothing retailer American Apparel, Zander Livingston saw RFID boost sales by at least 15 percent in stores where item level tagging was implemented. In addition, he witnessed production increases of 75 percent for functions like inventory management and receiving.

It’s no wonder that Livingston has fled retail for RFID riches. With the technology exploding at the retail level, Livingston has formed his own firm, Truecount Corp., which will focus exclusively on end-to-end solutions for the retail supply chain.

The Dorset, Vt.-based firm hopes to ride the unprecedented growth of RFID at the retail industry — especially with apparel retailers. RFID is expected to represent more than a $6 billion industry by the end of the year. (Click here to read more about RFID’s explosive growth in the retail sector.)

“Throughout my six years in this industry, I have experienced first-hand the dramatic results RFID can achieve for retailers, and am impassioned by the possibilities for item-level RFID for retail,” says Livingston, who will serve as CEO of the company. “I am happy to know that my contributions at American Apparel were significant in shaping the state of RFID in retail today.”

According to Drew Nathanson, senior RFID analyst and director of research operations at VDC Research Group, Inc., more than 400 million tags will be consumed by retailers in 2010, a number that jumps to 800 million in 2011. By 2014, he projects 3.4 billion tags will be used in retail, including item-level tags, as well as tags used for smart courtesy cards and access control.

Livingston says that Truecount will combine a powerful, integrated software platform with consulting, training and implementation services to give retailers greater control over assets. He says that says a primary motivation for founding Truecount was “the great opportunity” to take advantage of the lack of strong retail software solutions in the RFID space.

Livingston has formed Truecount as a partnership with software industry executive Jordan Lampert, and enterprise architect Paresh Yadav. Although no customer names were unveiled in the firm’s press release, company execs say they are being pursued by major store brands and are working with a category-leading retailer on the upcoming launch of their RFID solution.

“The pilot periods have ended. RFID has proven its value with impressive ROI results,” says Lampert. “Current economic conditions are actually accelerating the growth of RFID by creating new challenges for retailers. Businesses at all levels are being forced to reduce staff at a time when they need to control shrinkage and balance inventory as never before.”

“Apparel item-level tagging is driving the industry,” Bill Hardgrave, founder and director of the RFID Research Center at the University of Arkansas, told RFID 24-7 in a recent story. “There is just tremendous movement there and we’ll see substantial quantities by year end. On the passive UHF side, we’ll see numbers by the end of the year that we’ve never seen before.”

Avery’s predicted revenue increase could translate into 1B tags sold next year

Thursday, October 7th, 2010

Much was made of the recent Wall Street Journal article that predicted Avery Dennison’s RFID revenue could triple from $50 million in 2010 to $150 million next year.

ODIN technology’s Bret Kinsella just penned an interesting blog piece, translating that revenue into actual tag volume.

At the industry average tag price of 12.35 cents, cited in ODIN’s recently published RFID Tag Pricing Guide, Avery’s revenue calculates to over 400 million RFID tags sold this year. Now, if Avery’s RFID sales do in fact triple next year, assuming a predicted price drop of only 5% in 2011, that would generate over 1.25 billion tags sold. 

According to Kinsella’s math, if revenue reaches $100 million and prices drop by 10 percent, the total volume would still be 900 million.  One billion-plus annual tag sales seem certain no later than 2012, and with the recent pushes from Wal-Mart and the Department of Defense, we are probably looking at numbers closer to two billion for that year.

Click here to read Kinsella’s full blog.

Click here to download the ODIN RFID Tag Pricing Guide

Textbooks and technology; public schools and universities embrace benefits of RFID

Tuesday, October 5th, 2010

Here’s last week’s issue of RFID 24-7 for those that missed it. You can subscribe to RFID 24-7 here.

School’s back in session, and RFID technology is being used to monitor students and staff and to track equipment more than ever, from K-12 to the college level.

Adoption is becoming so widespread that it appears the industry is finally over the PR nightmare of 2005, when the Sutter, Calif. school system began tracking elementary school students without conferring with parents first. A firestorm of controversy erupted, and RFID for educational purposes took a huge step backwards.

This year Northern Arizona University will begin to use RFID to track attendance at larger classes on campus, thanks to $85,00 in federal stimulus funding. And numerous public school systems are considering adopting the technology for everything from making sure students board the proper bus to enhancing security when it comes to who enters the building.

Has technology finally meshed with textbooks? It appears that way.

“We definitely see an increase in our business in the sector and have identified education as a primary target vertical market,” says Holly Sacks, senior vice president of marketing and corporate strategy at HID Global. “The goal in the K-12 markets is most definitely campus and student safety and security.”

You can also add sustainability and promoting healthier lifestyles among students to the list. A ride-your-bike-to-school program in Nebraska, administered by the non-profit Boltage, relies on an RFID tag affixed to the back packs of children who choose to walk or bike to school. They pass under a solar –powered RFID reader at the school, which reads their unique ID number when they arrive.

The reader connects to the Internet, and uploads data daily. Each student has an account on the web site where they can see all their trips, and the school can run reports to support specific incentive programs.

And the New Canaan, Conn. public school system is investigating the use of RFID tags with student and faculty ID cards in an effort to increase security at its school buildings. Joanne Kelleher, director of marketing at SecureRF Corp., says the school system is also interested in tagging high-value school equipment like laptops, to provide for better accountability. The RFID tags could be used to track where students and faculty are located throughout campus, and as a locating device in the event of a major disaster.

SecureRF Corp. initially suggested that the school system adopt the technology, which could be funded by a $100,000 grant Secure RF is seeking from the National Science Foundation. SecureRF has not been awarded the grant yet, and company officials say the earliest a pilot could happen is next spring.

The research project is designed to provide data that will allow the school system to evaluate the outcome and determine if RFID will meet the community’s threshold for privacy. If the pilot is deployed, RFID will first be used at the high school, and only with the consent of parents and with students that opt-in.

While security and student safety are the primary movers at the K-12 level, RFID has many converging applications at the college level. Tom Bauer, director of public affairs for Northern Arizona University, notes that the school has been using RFID for many years to assist with admittance to dorms, athletic events, and places like the library and cafeteria. The classroom attendance is just another add-on application.

NAU has set aside $85,000 to deploy the classroom attendance technology, which has been installed in four classrooms. Testing to see how well the system works will begin in the upcoming weeks. Eventually, the school hopes to have 20 classrooms equipped with the automatic attendance-taking technology.

“This is going to help professors to save valuable classroom time by not having to take a roll call,” says Bauer, noting that each professor will have the option of using the system, and that it will not be required. “Secondly, we’re hoping that it encourages attendance because engagement in the classroom leads to more student success.”

The program has been met with some resistance on the NAU campus. About 1,650 students have signed up for a Facebook page called NAU Against Proximity Cards. However, Bauer says “there have been some exaggerated claims, and we’re trying to get the correct word out. Nobody is being tracked. You can still choose not to go to class. We’re just trying to get the correct information out there, and sort through the bad information, such as using RFID as tracking a device.”

Sacks says that the benefits of deploying RFID technology campus cards basically come down to security, convenience, and cost. Security is realized by using student ID cards as credentials to control access to secure facilities and campus IT networks.

“High frequency RFID campus cards can, and are, used to support multiple identity-driven student service applications,” she says. “These include class attendance, library resource check out, student laundry equipment use, cafeteria and book store purchases, local public transportation. Cost savings are realized when all these application are enabled on a single student ID cards.”