VDC Research: RFID, Barcode, Retail Automation & Self-Service Market Blog

Remembering Bert Moore, AutoID Industry Veteran

We are deeply saddened by the passing of Bert Moore, a 25+ year veteran of the AutoID industry and a recognized expert on the subject, who passed away on July 6, 2012. His tremendous contributions to this community will be missed, but Bert will live on through the legacy of his stewardship and educational efforts on behalf of the entire AutoID ecosystem.

For many years, Bert served the AutoID community in a host of different capacities. As the director of IDAT Consulting & Education, Bert provided educational and consultative services to companies evaluating investment in/deployment of various AutoID solution types.

As the Director of AIM's (Association of Automatic Identification and Mobility) Technical Communications and Media Relations, Bert wrote and edited AIM's newsletters "RFID Connections" and "AIM Connections." In his role at AIM, he also served as the recording secretary for the Association’s Technical Symbology Committee (TSC) and RFID Experts Group (REG) and was a member of the RFID Emblem maintenance committee. 

In addition to his work with AIM, Bert also served on ANSI’s (American National Standards Institute) Data Identifier maintenance committee and chaired the CompTIA RFID+ Certification cornerstone committee.

During his years of service to the AutoID ecosystem, Bert received a number of honors and awards in recognition of his outstanding work, including the AIM USA "Industry Service Award" in 1992 and the 2010 recipient of the AIM "Excellence in Journalism" Award. In 1997, Bert was selected as a charter member of the AIDC 100 organization, an association of individuals who have made significant contributions to education within the AIDC industry. We thank Bert for his years of service to the Auto-ID community and send our thoughts to his family and loved ones.

Enable IPC Puts a Charge into the Active UHF Tag Market

Active tags are the tag type of choice for enterprises leveraging RFID for applications where tagged objects move dynamically and requirements exist for precise tracking/tracing capability, including asset tracking/management, remote monitoring, work-in-process tracking/tracing and RTLS. While active RFID tags generally meet the requirements of the aforementioned applications, there are two key shortcomings associated with this tag type: cost and battery life. However, Enable IPC, a supplier of RFID tags, has addressed the latter issue with a new solar-powered active UHF tag it recently introduced in partnership with William Frick & Company.

By integrating a small solar panel and capacitor into an active UHF tag, Enable IPC has created a self-charging tag capable of operating for up to 48 hours on stored power (i.e., without light) and recharging in as little as two minutes. The company claims the solar panel used is sensitive enough to generate power even in dim light, including moonlight and indoor/artificial light. With an industry-leading seven year warranty and IP 67 rating, the tag is designed to withstand dust, dirt and moisture. Its polycarbonate shell resists impact, UV rays, harsh chemicals and oils, making it well suited to applications requiring rugged tags.

VDC expects this innovation has potential to gain acceptance in applications where active UHF tags are an existing requirement and the prospect of significantly extended lifecycles (enabled by the tag’s self-charging capability) and thusly reduced TCO are attractive value propositions. In particular, we expect these tags will be well-received for applications including asset management, logistics, vehicle tracking and RTLS.

While Enable IPC led the development of this new tag, it partnered with William Frick & Company to leverage Frick’s marketing, sales and distribution expertise. For its efforts, Frick owns exclusive distribution rights for the tag in the Americas and has branded the tag as part of its SmartMark tag portfolio.

At this time, VDC is unaware of any competing active tag leveraging solar panels (or any other means of power generation) for self-charging. Accordingly, we believe the Enable IPC/Frick offering, at least for the time being, is highly differentiated in the active RFID tag market. While the company has filed a patent in connection with this tag, the patent has not yet been approved. Regardless of the outcome of that process, we expect some of the larger active tag vendors could launch similar competing offerings in the near term—particularly if the Enable IPC offering is well-received by the market in its early days.

LevelUp Levels the Payment Playing Field against NFC via Barcodes/QR Codes

Among the barriers NFC contactless payment faces on the road to broad adoption, none may be as challenging as identifying and proving sufficient value to merchants and other B2C enterprises that justifies their investment in such a solution. However, the Cambridge-based company LevelUp, an offshoot of the startup company SCVNGR, has found a way to justify merchants’ investment in a contactless payment solution. However, there is a small catch—it’s QR code-based, not NFC.

Historically, the adage “if it’s not broken, don’t fix it” certainly has applied to most merchants’ payment acceptance strategies. While credit/debit cards and good old-fashioned cash work well enough, each has material costs associated with its acceptance—namely, interchange/processing fees for cards and handling/management expenses for cash, not to mention the risk of shrinkage.

What makes LevelUp an attractive option for merchants is that the company eliminates (or, more accurately, entirely subsidizes) credit/debit card processing fees, which generally represent 2-3% of a given transaction amount. That small percentage may not sound like much, but it adds up—transaction fees are estimated to drain approximately $50 billion (that’s billion, with a B) from merchants’ bottom lines annually. LevelUp only makes money when it delivers a new customer, or generates a repeat business (i.e., loyalty) from a specific customer at a particular merchant.

Barcode/QR code based payment applications are not a new concept—in fact, Starbucks’ payment app, provided by mFoundry, sets the gold standard for success when it comes to mobile payment apps. However, what distinguishes LevelUp is the type of merchants that are adopting the solution—in particular, independent retailers and other SMBs whose limited IT budgets typically preclude them from evaluating contactless solutions. To date, most contactless payment deployments (barcode, QR code, or NFC-based) have been at major Tier 1 enterprises, such as Starbucks. LevelUp is working to change this paradigm, and early indicators suggest it is succeeding, as the company has 3000 participating merchants across 10 regional markets and just secured an additional $12 million in VC funding. Perhaps QR codes/barcodes will be the technologies that bring contactless payment to the masses after all, not NFC—only time (and the actions of consumers, merchants and financial institutions) will tell.

US Government Investment--The Prescription for Growth in the RTLS Healthcare Market?

Real-Time Location System (RTLS) solutions have benefitted from significant media coverage this year, most notably due to recent activity in the market for solutions targeted at the healthcare sector. VDC Research believes RTLS solutions are on a strong growth path in this vertical for a number of reasons.  Major indicators include a steady stream of announcements showcasing new, prominent deployments, government initiatives/funding and mounting asset management and visibility challenges that are fueling demand for wireless solutions in the healthcare industry.

Within healthcare environments, inside a hospital, for example, RTLS solutions are used for tracking equipment, supplies, personnel and patients. RTLS also serves reporting and alert functions such as nurse call stations and hand hygiene washing compliance systems. RTLS solutions for use in healthcare are highly specialized systems designed to work in the confines of “the four walls” of the enterprise whether operating in a defined zone/area, department, floor, site or campus.

Keeping in mind the points above, the fact that two major investment deals in the market for RTLS in healthcare have been announced during recent weeks is highly noteworthy:

• Aeroscout, a provider of WiFi-based RTLS solutions for health care and industrial verticals, was acquired by Stanley Healthcare Solutions (SHS), a division of Stanley Black & Decker (SBD). The addition of Aeroscout is intended to accelerate the growth of SHS, a provider of patient/resident safety solutions as well as supply chain and storage solutions. Aeroscout’s industrial-focused solutions will augment the security and industrial offerings of the acquirer’s parent company, SBD. Specific terms of the deal were not disclosed, but estimates value the deal at approximately $200-250 million.

• Awarepoint, a provider of ZigBee-based RTLS solutions, recently received $14 million in new funding. The company, which specializes exclusively in solutions for the health care market, raised $7.5 million from the Heritage Group, a health care-focused VC firm, in addition to $6.5 million from existing investors. Awarepoint will use these funds to develop existing hardware and software offerings and expand its services portfolio.

Could this sudden flurry of investment in the RTLS market be just a coincidence? We do not believe this is the case. VDC believes the likely catalyst of this activity is a recently funded federal contract worth $543 million, funneled through the US Department of Veterans’ Affairs for the explicit purpose of funding RTLS solutions within the VA. Although HP ultimately won the bidding for this contract, competing RTLS vendors such as SHS/SBD and Awarepoint are not excluded from benefiting from this contract. Whereas HP is a services provider, it will need to source RTLS hardware (and perhaps software) from other vendors. Accordingly, SHS/SBD, Awarepoint and other competitors are now likely jockeying for position to win these future opportunities.

VDC expects federal funding for RTLS solutions will drive a noticeable increase in competition within the RTLS market. With over a half billion dollars at stake for this single contract alone, we think a number of firms competing in adjacent Auto-ID markets (e.g, RFID, barcode) will evaluate RTLS market entry in the next 12-24 months.

Historically, RTLS has been a market with protracted sales cycles, limited/one-off deployments and restricted opportunity for scaling across multi-site locations. This federal contract, of course, changes all of this—the US Government has already earmarked the RTLS funding, the VA operates many locations and the agency is fully onboard for scaling RTLS across its entire operation. Given the recent VA contract, healthcare solutions will be an obvious strategy for market entry, but we believe other government opportunity exists in asset tracking applications for military/DoD as well.

AutoID Technology Recap - See What You've Missed This Month

Each month, we will be posting a brief recap of our posts to give our readers a quick guide to what we've covered. Each post will be categorized by AutoID technology (RFID, NFC, Barcode or Other). Check back here in the last week of each month to see what you've missed!

(Read the full post by clicking on the title)

 

NFC Secure Element Issue No SIM-ple Matter: Key Questions Surface at London Underground

AutoID Technology Focus: NFC

SIM-based secure elements (SEs) do not meet the performance requirements for applications—such as transportation ticketing—where customer throughput is a key metric. Well, this is at least the opinion of Shashi Verma, the Director of Customer Experience of the London Underground. Verma recently went on record stating that current SIM-based SEs are too slow to deliver the required levels of passenger throughput on London’s public transport network. The critical question of SE ownership is a contentious issue that could potentially delay the broad deployment of secure NFC applications—such as ticketing, contactless payment and security/access control.

 

Apple Confirms m.Wallet Application in iOS 6…

AutoID Technology Focus: NFC

...But, contrary what the NFC-related rumors swirling around Apple would suggest, this app uses QR codes, not NFC. At the company’s 2012 Worldwide Developers Conference (WWDC) keynote address, the company introduced an updated version of its mobile operating system, iOS 6, which features Passbook, a new mobile wallet app that enables a range of cards, tickets, coupons and other credential types to be stored electronically in a mobile device.

 

NCR Makes 2D Barcode Secure Enough for ATM Cash Withdrawals

AutoID Technology Focus: NFC/Barcode

In recent posts, I have discussed some of the headwinds NFC faces in respect to achieving mainstream adoption. One of the most critical challenges facing NFC is that many of the applications it enables are achievable via other, more established technologies such as QR codes and 2D barcodes, usually with less cost and integration complexity to boot. To counter this criticism, NFC proponents are quick to point out that these competing solutions have their own shortcomings, particularly in respect to their lack of security.

 

Part 1 of 2: Universities "Tap" NFC for Campus Security/Access Control

AutoID Technology Focus: NFC

We’ve said it before, and we’ll say it again: contactless payment and mobile commerce applications are only the proverbial tip of the iceberg in regards to the diversity of applications NFC enables. Security/Access control, particularly for physical (e.g. corporate/academic campus, floor, room) applications, is among the other NFC use cases VDC has been monitoring with expectations for near-term growth.

 

Part 2 of 2: Security/Access Control Could “Unlock” Domestic Opportunity for NFC

AutoID Technology Focus: NFC

While enterprise environments present the most obvious market opportunity for vendors of NFC-enabled Security/Access Control solutions, we believe the consumer/domestic market also has strong potential to drive near-term growth in the NFC market. As NFC-enabled smartphones increasingly win share among consumers, this domestic Security/Access Control opportunity will ripen as consumers seek to leverage NFC technology embedded in personal devices for a broader range of uses, both in- and out-of-home.

 

Which Application Will Drive Consumer NFC Adoption? Samsung Lets You Decide…

AutoID Technology Focus: NFC

Which NFC application will be the first to gain broad acceptance among consumers? The answer to this ongoing question is not much clearer now than it was a year ago, despite the numerous new NFC-enabled smartphones that have reached the market during the past 12 months. Many enterprises and NFC vendors are thinking ambitiously when it comes to driving consumer adoption, with use-cases like mobile payment, mobile marketing, and other relatively complex B2C applications being the cornerstones of many enterprises’ strategies. In contrast, Samsung, a leading manufacturer of NFC smartphones, is taking a more practical approach with the introduction of its TecTiles, which are essentially NFC tags with a sticker backing.

Stay tuned in July for even more expert coverage of the AutoID market.