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Omni-ID Getting Comfortable in RF-Hostile Environments

This installment on innovative RFID companies profiles Omni-ID, which in two years spun out from its parent company, struck major distribution, alliance and customer deals, plucked $15 million in venture funding from a barren environment and is helping dispel the notion that passive UHF doesn't work well around metal or liquid.
Apr 15, 2009This article was originally published by RFID Update.

April 15, 2009—A focus on solving a few specific UHF challenges has led to multiple opportunities for Omni-ID. Since its inception, the Foster City, California-headquartered firm focused its efforts on designing passive UHF tags that would provide excellent performance when used on and around metal and liquids, but would also provide consistent performance in environments where those traditional UHF scourges are not present.

Several patents and an expanded product line followed, as did some high-profile partners. IBM works closely with Omni-ID in the data center automation market, and $40.5 billion conglomerate Mitsubishi represents the company in Japan. Last month Omni-ID received $15 million in additional venture funding from its investors (see RFID Tag Demand Helps Omni-ID Net $15M in Funding), which was the third-highest private placement in an RFID company in the last 15 months, trailing only the $38 million Alien Technology received last October and the $27 million GOLIATH Solutions raised in March, 2008.

That's an impressive list of accomplishments for a two-year-old. Omni-ID has existed as a standalone company since 2007, when it was spun out from QinetiQ, a technology research and development firm with government and defense ties.

Omni-ID officially launched its first products last winter, three Gen2-standard passive UHF tags ranging in cost from $1.50 to $3 optimized for use in environments with high concentrations of metal or liquid (see Startup Offers "Universal Tag" for Metals and Liquids). It has since expanded its offerings with new products that were based on what Omni-ID learned about user needs and preferences in key applications. Omni-ID's products and focus on performance in challenging environments have created many opportunities for it in markets where RFID is not highly penetrated. Its main market is data center automation, where RFID tags are placed on racks, servers, cables and other expensive equipment to aid asset management. Omni-ID makes the only passive RFID tags that IBM offers as part of its comprehensive IT asset management solution.

"We wanted to establish a beachhead in one market," Omni-ID president and CEO Tom Pavela told RFID Update. "Data centers and financial services have given us that beachhead. That's still our core focus, but industrial, retail and other markets are growing and will be getting more of our attention. You'll be seeing some announcements about that later in the year."

Getting $15 million in a generally bleak economic climate has a way of getting companies to reset its sights. The funding has clearly helped Omni-ID make progress in another under-penetrated market: Asia. Earlier this year Omni-ID assigned its first employee there, and now has limited sales, business development, partner and tech support coverage in the region. The effort bore fruit, as Mitsubishi signed on to promote and distribute Omni-ID's products in Japan.

"We've always kept an eye on Asia, but it hasn't been as big a priority as North America and Europe because it's been slower to adapt RFID," said Pavela. "We've seen a lot of opportunity there in the last couple of years, and wanted to be there at the ground floor when things took off." (For a recent analyst take on the Asian RFID market, see Asian RFID Outlook Predicts Pockets of Opportunity.)

The experience gained developing tags for challenging environments could be carried over to reader design, but Pavela said Omni-ID is not going there. "I think if anything people are getting out of the reader market," he said. "There are a number of good readers out there now. We don't envision getting into the reader business."

Interference caused by liquid and metal has blocked many would-be RFID projects over the years, but it has cleared opportunities for Omni-ID and a handful of other vendors who target the space with growing success (see 'Myth Busted' -- Tests Find RFID Works Well on Metals).

"There are liquids and metals everywhere. There's huge opportunity. Part of the challenge we've had is: where do we target?" said Pavela. "There is some disappointment out there that these markets haven't grown as fast as people would have liked. But we look at the glass as half full. In fact, it's bubbling over with champagne as far as I'm concerned."
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