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Alien Encounter

Alien Technology is important, but it is neither the savior nor the destroyer of RFID industry.
By Bob Violino
Tags: Standards
Mar 23, 2003March 24, 2003 - One of the first features published by RFID Journal was about Alien Technology (Alien NanoBlocks Will Reshape RFID). A lot has changed since that story. Alien is now at a crossroads. The company is moving from research and development to commercialization of its technology.

I recently had the chance to visit Alien's headquarters, out in Morgan Hill, Calif. I attended the Alien Academy, an intensive two-day course aimed at educating potential customers about radio frequency identification, the Auto-ID Center's Class 1 specification and the Alien products built on it (see Two Days at the Alien Academy).

I also had the chance to speak extensively with Alien CEO Stav Prodromou and VP of business development Tom Pounds. This week's feature spells out Alien's strategy going forward and answers some of the key questions surround the company (see The Truth about Alien Technology).

While the story puts to rest some of the myths surrounding Alien, I have no doubt that the company will continue to be controversial. That's because its technology is disrupting the existing market for RFID products. Many RFID companies will tell you that potential customers are holding off on purchasing RFID products because they are waiting for a 5-cent tag from Alien.

It's not hard to understand why many people would love to see Alien fail. But people should be careful about what they wish for. If Alien were to fail, it would clearly be a blow to the industry and could sour end users on RFID technology. On the other hand, if Alien succeeds, it could create a massive market for RFID -- one that everyone can play in.

I know many people imagine that Alien is going to grab all of the business for RFID tags because of its patented Fluidic Self-Assembly process. Some venture capitalists are calling Alien "the next Cisco" because it will sell the network infrastructure to everyone. Only this time it will be wireless networks and instead of connecting computers to computers, they will connect objects to computers.

I'm not sure Cisco is the right analogy. Cisco dominates the router market, but not because it is the low-cost producer. Cisco took its first mover advantage and bought up hundreds of companies to turn itself into the dominant player in the router market.

A better analogy might be the Ford Motor Co. When cars were selling for $1,500 each, Henry Ford came along with a new assembly technique and created cars for $300. Yes, Ford captured almost 50 percent of the market within a couple of years, and lots of small automakers went out of business or were bought up by competitors. But those companies probably wouldn't have made it anyway, and Ford sold to people who probably would not have purchased cars otherwise. In other words, he didn't take make share from competitors; he created a new market for low-cost cars. And the popularity of the automobile benefited the established players in the end.

Alien is an important company, because it's FSA process has the potential to deliver billions of very low-cost microchips that can easily be attached to antennas to create RFID inlays. Our feature spells out where the company is in its development cycle and how it plans to go to market. It has a sound strategy and is executing on it. But Alien won't be the only company selling RFID tags (CEO Prodromou well understands this). And the market will develop with or without Alien -- just as we'd be driving cars today even if Henry Ford remained a farmer. But the market will develop a lot faster with Alien than without it.

Mark Roberti is the Editor of RFID Journal. If you would like to comment on this article, send e-mail to mroberti@rfidjournal.com.
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