Monday, February 25, 2008

RFID investors, stakeholders meet in Boston

By Efrain Viscarolasaga

This week, U.K.-based technology research and consulting firm IDTechEx Ltd. is hosting its annual investor summit and smart labels conference in Boston. International companies such as the Coca-Cola Co., Ford Motor Co. and the Boeing Co. will be on hand to discuss existing uses and possibilities for radio frequency identification (RFID) technology.

But while IDTechEx projects the $5.3 billion worldwide RFID market could balloon to more than $28 billion by 2018, all is not exactly well in the industry. Supply-chain applications, once thought to be the most fertile ground for RFID technology, have lost some of their luster. The most notable example? Wal-Mart Stores Inc.'s 2003 RFID mandate to suppliers was heralded as the tipping point of the industry. Five years later, however, industry insiders say that program has stalled, leaving some to wonder about the technology's future in the supply chain and instead focus their efforts on other uses for RFID technology.

Two Cambridge RFID companies, ThingMagic Inc. and Tagsys Inc., have fixed their sights on such alternatives, and have been making inroads. Tagsys, which focuses heavily on the library, apparel and pharmaceutical markets, this week landed a new library customer in the Geneva City Libraries in Switzerland, marking the first installment of the company's new e-connectware software management platform, launched last summer.

ThingMagic, meanwhile, recently closed a deal with Ford and power tool maker DeWalt, which will help truck owners track power tools and other valuables in the truck's bed using RFID.

"We haven't given up on the supply chain, but we think it is going to take longer than people think," said Yael Maguire, co-founder and principal at ThingMagic. "We think the Ford deal is the beginning of an opportunity in the vehicle asset-tracking industry, and other vertical industries in general."

The challenges in an open-loop system such as the one Wal-Mart proposed in 2003 are cost and integration, according to insiders. Deployment costs for an all-encompassing system can run high when considering the labor and logistical add-ons such a system requires. Closed-loop systems, such as ThingMagic's Ford deal, require less integration and one or just a handful of vendors, said Michael Liard, a research director at ABI Research in New York.

"Closed-loop applications still dominate today's market, but the open-loop supply-chain opportunity is still on the table and cannot be ignored," he said. "Open-loop applications invite integration complexity and involve significant discussions around RFID data and data sharing."

But not everyone is taking a wait-and-see attitude on the opportunities in supply-chain applications. PaladinID Inc. in Laconia, N.H., which was founded as Northeast Barcode Solutions in 1998, is in the process of licensing a chipless RFID tag technology that would be integrated into its printed barcode products, allowing customers to print their own RFID tags. It is the same technology Waltham-based Boston Engineering Corp. licensed from INKODE Corp. for a luggage-tracking RFID system that it had proposed for Logan Airport.

"We are not seeing the adoption of RFID in common barcode scanning applications because of the cost," said Dana Ritchie, founder of PaladinID. "You can still get a printer and print out barcodes for less than 2 cents."