RFID Market Consolidation on the Rise
July 16, 2008 -- It has been several years since RFID has been front page news, but recent activity in the vendor community may be an indicator of good things to come. Late last week, UHF Gen 2 RFID solutions provider Impinj Inc. announced the acquisition of Intel Corporation's RFID operation. This news comes shortly after Checkpoint Systems' announced its acquisition of OATSystems and may be just one of the many examples of vendor consolidation that will ultimately lead to innovative RFID solution offerings at lower price points.
The Latest Deal
On July 10, 2008, Impinj Inc. announced the acquisition of Intel Corporation's RFID operation, a business created by Intel's New Business Initiatives (NBI) incubator program. This program first developed the R1000 RFID reader chip (now dubbed Indy R1000), which incorporates the complete transmit, receive, demodulation and baseband functions of the passive UHF Gen 2 standard in one chip. This integration reduces design complexity by integrating up to 90 percent of the components in a traditional reader design and enables all reader form factors (fixed, mobile, embedded, etc.) in applications across numerous vertical markets, including supply chain management, asset tracking, authentication and access control.
According to a statement from Impinj, which did not include financial details, the addition of the R1000 reader chip to its portfolio of tag chips and fixed-reader products represents a huge step, accelerating its drive to deliver the high-performance and cost-effective RFID products. The addition is also expected to enable a new category of customers who are developing their own products based upon Impinj technology.
Expert Opinion
According to Michael Liard, research director, RFID & Contactless, ABI Research, Impinj's acquisition of Intel's RFID operation has potential to accelerate already-projected RFID reader price drops over the next few years. ABI Research estimates that the price of today's stationary readers average $1,500 to $2,300, with handheld pricing exceeding this range. Prices would need to fall between $500 and $1,000 before the consumer goods and retail markets see increased adoption.
"That's still a very high price," says Liard. "However, RFID deployments are happening in retail -- such as item-level tracking of high-end, high-risk goods -- where the application, value proposition and ROI can justify the cost of adoption at current price points. But, the R1000's smaller component size has good potential for bringing in new applications and allowing new, smaller form factors, which should bring prices down over the next three years or so."
IDTechEx points out that the R1000 reader chip is widely used in hand held readers -- an area where Impinj did not have any product offerings. Therefore, IDTechEx said in a statement that it expects the acquisition to strengthen Impinj's portfolio of tags and readers and further consolidate the industry, emerging as one of the leaders in tag and reader supply.
Wait and See
As the UHF RFID market continues to mature and companies find new ways to leverage the constantly-evolving technology outside of Wal-Mart's mandate, we can expect more consolidation to come in both the RFID hardware and software markets. For now, we enter another wait and see period -- only time will tell how these and future acquisitions will affect RFID adoption in the consumer goods industry. But, the future looks promising as the vendor community continues to innovate to drive ROI up and prices down.
The Latest Deal
On July 10, 2008, Impinj Inc. announced the acquisition of Intel Corporation's RFID operation, a business created by Intel's New Business Initiatives (NBI) incubator program. This program first developed the R1000 RFID reader chip (now dubbed Indy R1000), which incorporates the complete transmit, receive, demodulation and baseband functions of the passive UHF Gen 2 standard in one chip. This integration reduces design complexity by integrating up to 90 percent of the components in a traditional reader design and enables all reader form factors (fixed, mobile, embedded, etc.) in applications across numerous vertical markets, including supply chain management, asset tracking, authentication and access control.
According to a statement from Impinj, which did not include financial details, the addition of the R1000 reader chip to its portfolio of tag chips and fixed-reader products represents a huge step, accelerating its drive to deliver the high-performance and cost-effective RFID products. The addition is also expected to enable a new category of customers who are developing their own products based upon Impinj technology.
Expert Opinion
According to Michael Liard, research director, RFID & Contactless, ABI Research, Impinj's acquisition of Intel's RFID operation has potential to accelerate already-projected RFID reader price drops over the next few years. ABI Research estimates that the price of today's stationary readers average $1,500 to $2,300, with handheld pricing exceeding this range. Prices would need to fall between $500 and $1,000 before the consumer goods and retail markets see increased adoption.
"That's still a very high price," says Liard. "However, RFID deployments are happening in retail -- such as item-level tracking of high-end, high-risk goods -- where the application, value proposition and ROI can justify the cost of adoption at current price points. But, the R1000's smaller component size has good potential for bringing in new applications and allowing new, smaller form factors, which should bring prices down over the next three years or so."
IDTechEx points out that the R1000 reader chip is widely used in hand held readers -- an area where Impinj did not have any product offerings. Therefore, IDTechEx said in a statement that it expects the acquisition to strengthen Impinj's portfolio of tags and readers and further consolidate the industry, emerging as one of the leaders in tag and reader supply.
Wait and See
As the UHF RFID market continues to mature and companies find new ways to leverage the constantly-evolving technology outside of Wal-Mart's mandate, we can expect more consolidation to come in both the RFID hardware and software markets. For now, we enter another wait and see period -- only time will tell how these and future acquisitions will affect RFID adoption in the consumer goods industry. But, the future looks promising as the vendor community continues to innovate to drive ROI up and prices down.