[10/17/08] Reik Read
Reik Read, a Senior Research Analyst on Baird's Equity Research team, recently shared his insights on RFID technology and the companies that provide it:
A few years ago, Wal-Mart mandated RFID technology for their top suppliers and everyone got excited about the technology. What has happened since then?
Everyone was initially focused on Wal-Mart. In the meantime, a lot has been going on in other industries to suggest the technology is getting traction. It is no longer "one size fits all." Product segmentation and specific solutions are being developed for different applications. Resellers are getting more involved, and a wider number of industries - apparel, manufacturing, financial services, food track and trace, and health care - are finding different ways in which this technology can add value and provide attractive returns on investment. Some larger companies, including Proctor & Gamble, Airbus, Metro and John Deere, are looking at RFID from a strategic perspective and have appointed people to develop long-term strategies.
How is the Gen 2 technology changing?
Two years ago, there was essentially only one product set for Gen 2, fixed readers that were primarily used for portal applications. Today, we still have such readers, but also now see RFID readers that are less expensive and offer fewer bells and whistles but more focused functionality, thus enabling a cost effective solution for document management, government, health care, and light industrial applications. We are also seeing increasing development on mobile reader products that can be used for exception reporting or finding mis-located products. Alien Technology, Impinj, Motorola (MOT), Sirit (SI) and Intermec Inc. (IN) produce these readers.
The tags are changing too. Different types of tags are being used for different environments, depending on the amount of metal, water or harsh conditions may be present. Companies like Avery Dennison Corporation (AVY), UPM Raflatac, and Intermec Inc. (IN) are coming up with different tags to use for different applications.
What are some of the industries where RFID is taking hold?
Using HF technology, we see traditional applications of access control continue to expand. We are also seeing increased use of HF where shorter scanning ranges and greater security are desired, such as with several health care applications. Texas Instruments (TXN) and Covidien recently collaborated to develop an RFID solution that reduces patient risk during medical imaging procedures. In the real-time locating and active space, defense applications remain key with automotive, marine terminal and health care gaining traction. In the Gen 2 UHF space, we are seeing several pilot programs yielding good ROI. Key industries where we are seeing evidence of value add include automotive, transportation and logistics, apparel, financial services and retail/CPG.
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