The deal provides VeriSign with R4's relationships with a number of key companies already deploying radio frequency identification, and it brings R4 the reach and financial backing of a company that had $1.8 billion in revenue last year.
While VeriSign has developed intelligent infrastructure services to enable companies to share data collected by means of RFID technology, the company believes that large-scale use of those systems remains between one and two years away. In the meantime, it is looking to the R4 acquisition to expand VeriSign's role in the RFID market and to help drive uptake of its ONS services
"This deal gives VeriSign an early relationship with customers deploying RFID. It also reaffirms VeriSign's investment in RFID and expands it beyond ONS and data management to whole solutions," says Brian Matthews, vice president of VeriSign Directory Services.
R4 Global Solutions' RFID clients include such major companies as Levi Strauss & Co., McKesson and Land O'Lakes. In a recent survey of systems integrators used to help companies meet Wal-Mart's RFID mandates, technology investment company Incucomm estimated that R4 had won 14 percent of the systems integration contracts awarded by the initial 137 Wal-Mart suppliers involved.
R4 maintains that many of its clients are moving toward RFID deployments that are more sophisticated than just tagging shipments. Those applications include cross-docking, cold chain (the storage and transportation of refrigerated goods) and electronic pedigree.
According to R4, the VeriSign acquisition brings R4 greater reach and stability, which is important to R4's Fortune 100 customers. "VeriSign is a stable firm and a growing organization. [The acquisition] can also enable us to potentially quickly introduce a network infrastructure and data sharing offerings," says Jeff Richards, R4's president and CEO.
R4 currently has 26 full-time employees and offices in San Francisco, Dallas, Boston and Atlanta. VeriSign says it plans to expand R4's reach outside the U.S. and add more staff.
VeriSign claims that the ability to now offer its own consultant services, via R4, will support VeriSign's existing business but won't put it into direct competition with larger companies offering RFID services. R4 is already planning to bid jointly with a larger services firm for upcoming DOD contracts for RFID services.
"There is a lot of cross-pollination between service companies [within the RFID market]," says Richards.
VeriSign's acquisition of R4 mirrors the company's earlier move into the managed network security services for companies looking to hand over management of their corporate network security market when in 2001 it acquired privately held consulting operation Exault Internet Security to kick-start its network security offerings.