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RFID Journal Blog
Zebra Bullish on Active and Passive RFID
Senior VP Mike Terzich tells RFID Journal that RFID is an important part of the company's portfolio of solutions.
On Monday, Aug. 15, Zebra Technologies celebrated the 20th anniversary of its initial public offering by ringing the opening bell of the NASDAQ stock exchange. Afterward, Mike Terzich, Zebra's senior VP for global sales and marketing, sat down with me for an interview about the company's RFID strategy.
Zebra made several acquisitions in the RFID market a few years ago, including the purchase of Multispectral Solutions, WhereNet (see Zebra Buys WhereNet), Proveo and Navis (see Zebra Buys Navis, Proveo), though Zebra subsequently sold Navis to Cargotec Corp. (see RFID News Roundup: Zebra Divests Navis and Parts of WhereNet). Terzich spoke about the core RFID printer business, as well as how these acquisitions fit in with the overall company strategy. Below are excerpts from the interview.
Terzich: Our RFID business has multiple dimensions, because we have both passive and active RFID solutions. RFID is a small piece of our overall business, but it's growing and there is empirical evidence that some applications are taking root. The industry has overcome the technical hurdles, and companies are smarter now about how they want to deploy RFID systems. We are seeing more closed-loop applications that drive business benefits. I would say we are seeing steady progression in business, and interest in both the active and passive side.
Roberti: Apparel is one area that is seeing a lot of interest in RFID systems. How does Zebra play in that market?
Terzich: Small producers could use our tabletop printers to print labels and tag garments, but where we see the real opportunity is in the store. Sometimes a garment made in Asia arrives without a tag, or a tag is pulled off or falls off after the garment is put on the sales floor. We have stationary and mobile devices that can print RFID labels for retagging applications. We see a real opportunity with items with complex SKUs, because tag costs have come down to the point where retagging an item costs less than 10 cents per tag. It makes sense for retailers.
Roberti: Where are you seeing growth in the RFID business?
Terzich: On the active side, we're seeing interest in personnel-safety applications on oil rigs and in mines. In these applications, people wear an active RFID tag, so you can do a quick scan of who is accounted for during an emergency and quickly locate those who have not made it out of a facility. Active is also picking up in automotive, where you have high-value goods moving through the production process. You can put a reusable tag on transmissions, engine blocks and other big components and see exactly where they are in real time in the product process.
The economic environment is also driving interest in RFID. Retailers understand that sales aren't growing rapidly, and they need to retain customers. RFID enables them to have the product on the shelf when customers come in, and you get efficiencies by taking inventory rapidly with RFID.
Ports are another opportunity. Our port system in the United States is very antiquated. The amount of goods moving through the marine terminals is constrained. Queue times are lengthening, and that affects companies that have moved to just-in-time inventory. And the ability to know what's in those containers is somewhat limited, so security needs are fueling interest in RFID.
Roberti: In 2004 and 2006, Zebra purchased some 200 RFID patents from BTG for $10 million. [See Zebra Set to Expand Its Footprint in RFID Space.] Did any specific products or product features come out of that deal?
Terzich: I don't know if any specific products were tied to those patents, though our next-generation passive RFID solutions have some interesting capabilities. We looked at that patent portfolio as leverage to utilize as we extended further into the RFID industry. That portfolio gave us the ability to cross-license with other companies that have patents we might want to employ.
Roberti: In 2007, Zebra purchased Multispectral Solutions, Navis, Proveo and WhereNet. Why did you eventually decide to divest Navis?
Terzich: Navis provides the ERP software for marine terminals. We had a vision that we would take this application to other industries. What we found is that it was not well constructed to do that. It does well in the space it's in, but it represented a risk to try to adapt the Navis platform for other industries. The divestiture didn't deter us from our main goal, which was to build the ability to manage more complex supply chains.
What we are trying to do strategically is give voice to data. There is a progression. Years ago, in the bar-coding space, you wanted to know "what is it?" It's a box. The bar code answers the question of what it is. With RFID, you start the migration from "what is it?" to "where is it?" to "what is it doing?" We don't provide the complete solution, but we enable the solution to deliver the data. We are a transporter of useful of information.
Roberti: What is the strategy for growing your company's active-RFID asset-tracking division—Zebra Enterprise Solutions?
Terzich: The name ZES is going away, and the solutions will be part of the company's complete offering. But in the active space, we are focused on three areas-automotive/industrial, processes industries, such as oil and gas, and government. Our goal is to go deeper into those industries and to work with our existing customers on new applications.
Roberti: How important is RFID to the company's future?
Terzich: Very important. The one thing we learned is our portfolio needs to have a variety of technologies. The driver is the portfolio. Bar code will remain core to our business, but depending on the asset you want to track, you will likely want to use active or passive RFID to manage the assets.
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