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ABI Research: "Major Consolidation" of RFID Pure-Plays

A new report from ABI Research takes a close look at the relationships forming between young, smaller RFID pure-plays and larger, established enterprise and data capture technology companies.
Apr 21, 2005This article was originally published by RFID Update.

April 21, 2005—The latest edition of ABI Research's "RFID Research Services" takes a close look at the relationships forming between young, smaller RFID pure-plays like OAT Systems and Acsis and larger, established enterprise and data capture technology companies like Symbol, Intermec, Hewlett-Packard, SAP, and ADT. The report notes that many of the leading small companies offer RFID expertise that complements the bigger companies' existing capabilities portfolio very well. Furthermore, such RFID pure-plays have successfully built strong businesses with RFID products and services that have been well received by end users. ABI's director of RFID and ubiquitous networks Erik Michielsen said, "These small companies can bring great value to the table. They are in a great position to complement their larger partners' skill-sets in broader areas such as enterprise resource planning, warehouse management systems or automatic data capture. They really understand RFID at the network edge."

Such positive attributes beg the question of whether the young companies could represent possible acquisition targets. Absolutely, predicts ABI. As the larger companies learn more about RFID and better understand how their new RFID partners could be fit permanently into their greater portfolio of offerings, "there will be major consolidation."

A prediction of upcoming acquisitions makes a lot of sense, and indeed the industry has been expecting heightened M&A activity for some time. RFID expertise remains a rare commodity when compared with other IT services, so pure-play and niche RFID product and service companies present their bigger counterparts with the opportunity to enter the RFID space quickly. This was certainly the case with the industry's only major acquisition since the Wal-Mart mandate: bar code giant Symbol found itself without sufficiently competitive RFID capabilities, strategy, or intellectual property, so last summer it paid a whopping $230 million for five-year old Matrics, widely considered a leading RFID tag and hardware manfacturer. Doing so swiftly and decisively transformed Symbol from an RFID laggard into a major player. Like the Matrics deal, expect future acquisitions to be of RFID companies that lead in their respective category, be it tags, middleware, or services.

Read the report's press release at ABI Research
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