Dec 16, 2008This article was originally published by RFID Update.
December 16, 2008—This is the second installment of a three-part series recapping the top nine RFID developments from 2008. This article -- with developments 4, 5, and 6 -- covers how the RFID vendor community was changed by mergers, acquisitions, divestitures, startups and venture funding. Yesterday's Part 1 covered technology developments, and tomorrow's conclusion will identify new trends and the 2009 outlook.
#6 -- Startups Broaden RFID Spectrum
Startups brought a lot of interest and innovation to the RFID industry in 2008, and helped push the industry in new directions. Startup activity was not limited to technology providers, but also included organizations that formed to promote RFID use and standards development, and end-user companies whose business models rely on RFID-enabled processes.
The startup that received the most attention was Mojix, which announced a system that allows passive RFID tags to be read from 600 feet away through nodes networked to a reader. Mojix is emblematic of how 2008 startups added to RFID's capabilities or helped take the technology in new directions.
There are plenty of other examples. DecaWave announced the first standards-based UWB chip for real-time location systems. Financial services and oil companies each formed associations to promote RFID use in their industries. Other groups formed to be catalysts for near-field communication (NFC) adoption and standards development. Startups NeoCatena Networks, Veratag and Verayo each added security capabilities to RFID systems and were among the founders of the new RFID Security Alliance. Blue Spark Technologies and Kovio made advances in printable RFID batteries and tags, respectively. And Omni-ID introduced tags that expand the types of RFID-trackable materials. As noted, two end-user companies are also building their businesses around RFID: Nick on the Go is a new joint venture service from Hertz and Nickelodeon that uses RFID tracking to deliver media players to rental car customers, while a startup water delivery service is using RFID and sensor data from AT&T to automatically plan replenishment routes.
Related coverage:
- Startup Touts 600-foot Read Range for Passive RFID
- Startup to Deliver Standards-Compliant UWB RTLS
- Startup Says System Can Detect, Block Cloned RFID Tags
- Startup Adapting MEMS Technology for RFID Authentication
- RFID Startup Offers Enhanced Security for Tag Chips
- New Association Highlights RFID Security Issues
- Startup Offers "Universal Tag" for Metals and Liquids
- RFID Tattoos to Make a Mark on Cattle Tagging
- New tikitag Service to Use NFC to Connect Consumers
- Oil Industry Forms RFID Group to Aid Adoption
- Banking Interest Climbs for RFID, Spurs Standards
- Industry Group Turns Attention to NFC & Mobile Payments
- New Eco-friendly Thin Batteries Introduced for RFID
- Kovio Set to Commercialize Printed RFID Tags
- RFID Helps Kids Take Dora the Explorer on Road Trips
- Wireless Sensors to Set Routes for Water Delivery
#5 -- Funding Flow Slows
The startup activity highlighted above is even more impressive considering the flow of venture capital to RFID startups appears to have slowed significantly during 2008. RFID Update identified $116+ million of venture capital invested in RFID companies through December 15, 2008 (see table below). That total represents average venture investment of $9.7 million per month, which is well below the average of $24.1 million per month received during the preceding 18 months, according to previously published RFID Update data.
| Company | Amount | Date | Technology/Market Focus |
| Impinj | $14m | January | UHF tags & readers |
| GOLIATH Solutions | $27m | March | Retail |
| RFID Global Solution | Undisclosed | May | Integration |
| InSync Software | $3m | July | Asset & inventory tracking |
| ThingMagic | $9.5m | July | UHF readers |
| RF Surgical Systems | $8.2m | July | Healthcare |
| Alien Technology | $38m | October | UHF tags & readers |
| ThingMagic | Undisclosed | November | UHF readers |
| Advanced ID | $3m | November | Livestock tracking |
| Awarepoint | $13.3m | November | RTLS |
| Total: $116+ million | |||
The $38 million Alien Technology received from existing investors in October was by far the largest announced deal of the year and will be the last time it seeks venture funds, according to the company. The other large investment went to GOLIATH Solutions, which is heavily focused on retail promotion tracking solutions. GOLIATH's system uses passive UHF technology, a segment that attracted most of the venture investments identified in 2008.
Private equity investments in RFID companies in 2008 had slowed even before capital markets and overall economic conditions deteriorated in the fall. With no improvement in sight, 2009 could be one of the leanest years for investment the industry has experienced since early in the decade.
Related coverage:
- Alien Gets $38M in New Funding, Brings Total to $329M
- RFID Promotions Tracking Provider Gets $27M Funding
- RFID Investors Pour Millions Into Segments Old and New
- RFID News Roundup (Awarepoint)
- ThingMagic Receives $9.8 Million from Current Investors
- Impinj Sells Non-RFID Assets, Moves Ahead as Pure Play
- Tight Capital Could Squeeze Firms Out of RFID Industry
#4 -- Vendors Position Through Acquisition
Investment in the form of acquisitions was strong in 2008, with both public and private RFID companies swinging major deals (see chart below). Although merger and acquisition activity is nothing new, 2008 was notable because several high-profile companies made deals. For example, Intel sold its RFID reader chip business to Impinj. Checkpoint Systems and Sensormatic, who collectively serve most of the world's largest retailers with in-store security and inventory management systems, extended their rivalry by each making acquisitions to boost their item-level RFID offerings. Several other firms acquired smaller software companies so they can offer more complete solutions.
| Date | Acquired Company | Acquirer | Price |
| March | RSI ID Technologies | Sirit | $2.4m |
| April | Multispectral Solutions (MSSI) | Zebra Technologies | $18m |
| May | Xmark | Stanley Works | $45m |
| June | OATSystems | Checkpoint Systems | $37m |
| July | Intel (RFID reader chip business) | Impinj | Undisclosed |
| August | TrenStar Tracking Solutions (asset management software business) | Fluensee | Undisclosed |
| October | Agility Healthcare Solutions | GE Healthcare | Undisclosed |
| October | Vue Technology | Sensormatic Electronics | $43m |
There is more to the Xmark-Stanley Works deal than meets the eye. Xmark was a subsidiary of VeriChip, which gained notoriety for its controversial human-implantable RFID chips for lifetime identification. VeriChip marketed the system to patients and hospitals to provide identification for emergency patients who cannot communicate. After selling Xmark, which produced most of VeriChip's revenues, VeriChip announced the implant business was not sustainable. The company changed its focus to developing RFID tags with biosensors for medical applications, but in November VeriChip announced it might be delisted from the NASDAQ stock exchange, making its uncertain future even cloudier.
Related coverage:
- Impinj Buys Intel's RFID Business, Cements Leadership
- Checkpoint Buys OAT to Become One-Stop RFID Shop
- RFID Industry Reaction to Checkpoint-OAT Deal, Part 1
- RFID Industry Reaction to Checkpoint-OAT Deal, Part 2
- Sensormatic Buys Vue for $43M
- GE Healthcare Finds Opportunity, Acquires RTLS Firm
- VeriChip Sells an RFID Business, More Change May Come
- Implantable RFID Business 'Not Self-Sustainable'
- Fluensee Acquires TrenStar's RFID Software Business
A weak economy, changing adoption patterns and new technology needs could lead to more RFID companies emerging, merging or failing in 2009. Tomorrow's conclusion of this series will examine these factors and how some developments from 2008 could impact 2009 and beyond.
