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Flexibility Key to RFID Vendor Survival

In this guest article from AMR Research, analyst Dennis Gaughan argues that those RFID vendors who adopt flexible sales, technology, and partner strategies will be the ones that survive and thrive during the next stage of the market's development.
Sep 12, 2005This article was originally published by RFID Update.

September 12, 2005—The recent settlement of the legal disputes between Intermec and Symbol has removed one of the foreboding clouds that had been looming over the RFID industry. Taking the issue of intellectual property off the table gives the vendor community the ability to focus exclusively on developing more robust, mature products that can take advantage of Gen2. Feedback from early adopters and vendors who are testing Gen2 has been very positive, and AMR Research's spending data is expecting an increase in RFID budgets from $547K in 2005 to $640K in 2006.

Many of the customers we speak with are looking at the first half of 2006 to clarify their RFID deployment strategies, in time with the broader availability of Gen2 in the marketplace. Now is the time for the vendors in the marketplace to fine-tune their go-to-market messaging to be able to take advantage of the continued growth and much broader scope of the next round of RFID deployments. The most important attribute for an RFID vendor is flexibility in sales strategy, technology strategy, and partner strategy. Here is why:

Sales Strategy
Data from our recent RFID adoption study reveals that many different parts of an organization (operations, R&D, IT, finance, marketing, and sales) are involved in RFID purchase decisions. Because of RFID's potential across the entire supply chain, this should not be surprising, and the data has been confirmed by the interactions we have been having with customers over the last few months. So what does this mean for vendors? It means that vendors need to have a more detailed and flexible sales strategy that can articulate the benefits of RFID to many different constituents. RFID sales staff must be flexible enough to take the sales pitch in many different directions, even during the same meeting. The vendors who can win over the varied influencers will be the ones that have the most success.

Technology Strategy
Most of the hype and activity around RFID is associated with UHF, EPC-based RFID. But as many customers and vendors are starting to realize, there are many other flavors of RFID that can be used to solve a particular business problem. For example, the US Department of Defense is a heavy user of active RFID and many hospitals are piloting the use of 802.11-based RFID to track medical equipment. Pharmaceutical companies are looking at HF RFID to track their goods. Heterogeneous RFID will be commonplace. Vendors will need to be flexible to support multiple protocols, frequencies, and classes of RFID if they want to be considered strategic to their customers.

Partner Strategy
Successful RFID deployments require process change and a great deal of technology integration. Only a select few vendors will be able to offer the breadth of hardware, software, and services to be a one-stop shop for their RFID customers. Even those biggest vendors will leverage partners for some of the components of a solution. The vendors that are successful will be the ones that can be flexible enough to develop strong partnerships with the many classes of vendors required to bring an RFID solution to bear.

The vendors who can adapt to the rapidly changing marketplace through flexible strategies will be the ones who not only survive but thrive through the inevitable consolidation of the market.
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