Alien Technology, the Morgan Hill, Calif.-based provider of radio frequency identification systems, has reportedly postponed its initial public offering. I know a lot of people will read bad things into this about the RFID market. No doubt some will see Wall Street’s apparent lack of enthusiasm for Alien shares as a sign that RFID is an over-hyped technology with a dim future.
I wrote back in April, when Alien filed paperwork with the U.S. Securities and Exchange Commission to offer shares to the public, that there were reasons—which had little to do with Alien’s financial performance—why an Alien IPO could be a wild success or a dismal failure (see It’s Time to Take Stock).
My guess is that investors who once bid up the shares of Internet companies to utterly insane levels and wound up getting burned (and in some cases going to jail) are now leery of new technology plays. And the value proposition for UHF Electronic Product Code technology is probably not clear enough to investors to make Alien’s stock attractive. That is, since everyone is not investing in EPC technology the way Wal-Mart is, Wall Street isn’t convinced that betting on a company that provides this technology is wise.
The situation could look radically different a year from now. Many large companies have been experimenting with EPC technology for the past year or 18 months. Many are much wiser now about how and where EPC RFID can provide benefits in the near and medium term and where it can’t. Some companies have already rolled out systems that are delivering value. Others are just starting to. They aren’t talking much about these successes yet, but as these stories start to come out, the market for EPC systems will accelerate. And then Wall Street will catch on.
