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Will Acquisitions Lead to RFID Dominance?

The RFID industry is experiencing a wave of consolidation that seems to be aimed at companies' achieving "gorilla" status.
By Mark Roberti
Aug 01, 2012—It's commonly said that Saturday is "moving day" in professional golf tournaments, which typically start on Thursday and end on Sunday. There are varying interpretations of the term, but it is generally taken to mean Saturday is the day you need to move up the leaderboard and position yourself for potential victory the next day. It's the day a golfer might take extra risks to try to make up shots.

Several major acquisitions, which appear to be more strategic than past deals, indicate that radio frequency identification providers are seeing the current period in a similar way. With some major retailers, aerospace companies and hospital chains seeking to deploy RFID technology enterprisewide, solution providers seem to be positioning themselves to be the gorillas in the market ("gorilla" is the term coined by Geoffrey Moore, leading expert on the technology adoption life cycle, for a dominate technology provider, such as Apple in the MP3, smartphone and tablet markets).

It started in December, when Dutch RFID transponder company Smartrac N.V. acquired UPM RFID, a division of Finnish wood pulp, paper and timber provider UPM-Kymmene. Smartrac announced it planned to leverage UPM RFID's passive ultrahigh-frequency manufacturing capabilities to position itself as one of the world's largest providers of UHF RFID inlays. Smartrac previously had purchased two other transponder manufacturers: Neology and KSW Microtec. The three acquisitions represent Smartrac's interest in further penetrating the UHF RFID market by providing tags, as well as the inlays built into the transponders, and full RFID solutions.

Smartrac's purchases position the company to compete with Avery Dennison, one of the world's leading providers of RFID transponders. Avery has the largest market share in North America. Smartrac has penetration in Europe, and Invengo, another transponder manufacturer, has a strong position in Asia. It's likely these three companies will be battling for market supremacy in the coming years, and there probably will be more acquisitions as each company tries to strengthen its hand.

In June, Motorola Solutions announced it had reached an agreement with Psion to purchase the British handheld computer manufacturer for $200 million. The deal is expected to close during the fourth quarter of this year. The acquisition appears, in part, to have been driven by Motorola's desire to dominate the market for handheld and fixed RFID readers.
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