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New Chip Could Transform Active RFID Market

Last week G2 Microsystems announced the introduction of a new "system-on-chip" technology that it claims will bring down the cost and widen the application of real-time location system (RTLS) solutions. RFID Update spoke with a number of RTLS experts about the new chip and its potential to change the space.
Apr 03, 2006This article was originally published by RFID Update.

April 3, 2006—Last week G2 Microsystems of Campbell, California, announced the introduction of a new "system-on-chip" technology that it claims will bring down the cost and widen the application of real-time location system (RTLS) solutions. RFID Update spoke with a number of RTLS experts about the new chip and its potential to change the space.

What G2 has done is integrate onto a single chip many of the circuits and low-level components that comprise RTLS tags. There are a number of benefits to doing so. First, it lowers the amount of actual materials that go into each tag, making it cheaper to produce. G2 claims that a 75% reduction in the total cost of RTLS ownership might be possible. Furthermore, with much of the tag functionality consolidated onto a chip, the resulting tag form factor is much smaller. "They are really shrinking this thing down in size quite a bit," said Tuomo Rutanen, vice president of business development at Ekahau, a Virginia-based RTLS provider and G2 customer. Lastly, the new model allows the chip -- called "G2C501" -- to be specially designed to meet the particular needs of RTLS tags. For example, one of the key characteristics of G2C501 is its power efficiency. According to G2, the new "ultra low-power" chip can outlast current tags by a factor of ten.

"This is a big deal," said Rutanen. "It'll affect functionality, price, and the form factor of tags. With the reduced amount of componentry, it's really going to extend out the battery life on WiFi tags." Ekahau will incorporate the chip in its next-generation product line, due out later this year. Another RTLS provider, Massachusetts-based PanGo, also plans to roll out new product based on the G2C501.

Marcus Torchia, senior analyst with Yankee Group, explained that RTLS providers like Ekahau and PanGo prefer to outsource the manufacturing of the hardware elements of their solutions. "A lot of the RTLS vendors really don't want to do hardware work. That's not their thing," said Torchia. Outsourcing hardware manufacturing allows RTLS providers to focus on their core competencies, such as the development of RTLS software and value-added services. As the applications and industries in which RTLS is used continue expanding, the providers have their hands full with simply meeting demand and deploying systems.

And by all accounts, RTLS usage will indeed continue expanding. Currently, industries using RTLS include healthcare (hospitals), transportation and distribution, shipping, manufacturing, mining, and chemicals. Yankee Group predicts that the RTLS market will be worth more than $1.6 billion by 2010. IDTechEx pegs the market at $2.7 billion in 2016. Just last week, RTLS provider Ubisense announced $3 million in funding. As Yankee's Torchia noted, if things continue heating up in the RTLS space, "G2 has a very bright future ahead of them." For more on the RTLS space, see these articles: Integrating circuitry and components into one chip (often called a "chipset") is a common practice across most hardware markets once a particular device reaches a certain level of maturity and volume demand. In fact, RFID reader chipsets are expected for the first time this year or next, which will do the same thing for readers that G2's chipset will do for RTLS tags: cheapen and physically shrink them. ABI Research predicted in December that the introduction of RFID reader chipsets could herald a dramatically transformed landscape, increasing competition and dethroning current market leaders.
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