Extreme fragmentation of RFID supply
2006312 Raghu Das
IDTechEx believes that there are about one thousand companies servicing one part or another of the RFID supply chain. Over 500 can be seen in the IDTechEx Knowledgebase of over 1900 case studies of RFID in action - by far the largest such database in the world. The average RFID sales of the one thousand are only $2 million or so. Analyst ABI Research has studied 137 RFID vendors and concludes that Accenture Ltd., Acsis Inc., ADT/Tyco Fire & Security, Alien Technology Corp., Avery Dennison, BEA Systems, EM Microelectronic - MARIN SA, IBM, Intermec Technologies Corp., Manhattan Associates, OATSystems Inc., Omron Corp., Philips Semiconductors, SAP Aktiengesellschaft, Savi Technology, STMicroelectronics N.V., Symbol Technologies, Texas Instruments - TI-RFid, Unisys and Zebra Technologies Corp are the leaders. This does not include RFID smart cards where companies such as Giesecke and Devrient and Gemalto are in the lead and it is a bit hard on companies such as AWID and UPM Rafsec.
However, a glance through all of the cited companies reveals that their average sales are only in the tens of millions of dollars yearly. This is extreme fragmentation and not what the biggest potential users want. They expect to see major operational experience and high RFID trading levels to prove it. They need global support from subsidiaries experienced in RFID. One famous company not on the list announces its subsidiaries in various parts of the US, in Europe and in Asia on their website. We rang most of them during the appropriate office hours and they were all voicemails. That is not good enough, nor are subsidiaries totally unfamiliar with RFID, another common phenomenon that we encounter.
To their credit, Assa Abloy of Sweden, Trierenberg Holdings of Austria, Alien Technology of the US and Digital Angel of the US have made several RFID acquisitions each in recent years. VeriSign bought R4 Global Solutions. However, this is a rarity and, for every RFID acquisition, several new RFID companies are created. Yes, it is common for companies formerly outside RFID, such as Symbol Technologies and Linpac to have entered RFID by acquisition but, shrewd as these moves may be, that does not concentrate the industry. The opportunity arising from this problem is that any company engaging in a string of appropriate international acquisitions could gain massive competitive advantage. Meanwhile, expect those with only UHF offerings to notice how item level tagging of food, postal items and drugs - the biggest opportunity of all - is headed for HF in the main. They will be acquiring companies with HF capability such as those in these applications and in laundry, library, card, ticket and other HF dominated sectors. Or they will try to develop the capability themselves, with a danger of offering too little too late.
IDTechEx provide independent analysis on RFID and can help you understand how these problems can be an opportunity. Contact us for more at firstname.lastname@example.org