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Omron's New Mantra

The Japanese electronics vendor is focusing on making UHF systems for the supply chain, starting with the creation of the RFID Business Development Group in the United States.
By Jonathan Collins
Nov 27, 2005—The emergence of UHF RFID across company supply chains has already made many businesses reexamine the way they operate in order to maximize the potential benefits the technology might bring. However, that type of reassessment isn't just for end users.

Omron, a manufacturer of sensing and automation products in Kyoto, Japan, has been producing RFID systems for more than 20 years. Still, the manufacturer has had to rethink its business in order to best meet the demands of the new market for UHF RFID. This week, Omron will announce it has created a new division, the RFID Business Development Group, to focus its efforts on UHF and HF standards-based equipment. The company says this unit is based not in Japan, but rather in the United States.

"Typically, a Japanese company will start a new business in Japan and try out new products there first. But although we have had experience in RFID for so long, supply chain application of tags is a whole new market, and we had to form in the U.S. first instead because the deployment action is primarily in the U.S.," says Bill Arnold, chief strategist at Omron's new RFID unit. Omron’s new unit has sales offices in Schaumburg, Ill., but it also rents space from Omron Electronics, the company's industrial automation division in St. Charles, Ill., for its lab and test operation. So far, the unit employs fewer than 40 people in its sales offices in the United States, Shanghai, China, and Europe, but the company says those numbers will grow rapidly. Omron says it will have spent $20 million on its RFID initiatives worldwide by the end of next year, and underlining the importance of the new unit to the company, the company’s president and chief executive officer, Hisao Sakuta, has appointed himself its project leader.

Omron's previous RFID work had focused largely on the development of customer-specific 125 kHz and 13.56 MHz RFID systems for closed-loop factory automation. Industrial automation, including both RFID and non-RFID systems, accounts for around 40 percent of Omron's nearly $6 billion in total annual revenue. Electronic components such as embedded sensors and switches primarily for the communications and automotive market represent 28 percent of revenue, while equipment for transportation systems and the health-care market together account for between 12 to 14 percent. These products employ proprietary protocols developed by Omron to work in conjunction with its programmable controllers and other automation products. The tags for these applications, usually environmentally hardened by encapsulation, are designed for withstanding reuse and rewrites for 10 or more years.

The company's RFID experience, however, hasn't been only in proprietary systems. For the past seven years, the company has been producing ISO 15693 standard 13.56 MHz high-frequency (HF) interrogators (readers), antennas, inlays and tags made with chips from its key semiconductor partner, Philips. Because of maturity in the 13.56 MHz RFID market, Omron says, equipment based on the ISO 15693 vicinity card standard is now being used for some closed-loop applications. Omron's ISO 15693-based HF equipment has been deployed by a number of industries in a variety of such applications, ranging from tagging books in libraries to plates in sushi restaurants and bicycles at parking facilities in Japan.
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