RFID 2014 State of the Industry - RAIN RFID€¦ · • Retail RFID is ‘in the tornado’ •...

Dramatically improving supply chain performance through real-world research

RFID 2014 State of the Industry

Bill McBeath, Chief Research Officer, ChainLink Research

September 9, 2014

© ChainLink Research 2014; All Rights Reserved Slide 2

Agenda

• Market Observations

• Market Growth

• RFID Value Chain Structure

• Innovation, Current and Future

• Implications for End Users

• Implications for Investors

• What's on the RFID Research agenda?


MARKET OBSERVATIONS


Some Market Observations

• Retail RFID is ‘in the tornado’

• Next Killer App is TBD

• IoT is Huge Catalyst for RFID Growth

• Out-dated Views of RFID Persist

• Moving from general-purpose to application-specificreaders

• Alternatives to handheld readers for retail are coming

• Cloud + RFID increasing in importance

• Vertical solution providers are making money. HorizontalVARs struggling.


MARKET GROWTH


UHF Passive RFID Perspective

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Auto-IDCenter

Established

Class 1 Gen 2ratified byEPCGlobal

ISO 18000-6c ratified

Walmartand DoDsupplychain

mandatesbegin

Marks andSpencer

inventory pilot

Gen2V2ratified by

GS1

4.4B tags/y

500M tags/y

WalmartHH

apparelinventorybegins American

Apparel fixedinfrastructure

pilot

M&S to tag100% of

inventory –400M tags

AmericanApparel reports14% revenueuplift in field

test

MCS chip-based

serializationpact

Walmartpulls back

supplychain

mandate

Class 1available(Alien)

Class 0Available(Matrix)

GS1 &EPCGlobal

merge

Checkpointbuys OatSystems;Tyco buys

Vue

Honeywellbuys

Intermec;SML buysXterprise

Zebra buysMotorolaSolutions

Motorolabuys

Symbol

GP readerpricesdrop

Intellaunches 1st

UHF RFIDreaderchip

ImpinjbuysIntel

Rdr chip

Alienannounces

500M unit, 5₵ “Squiggle” tag

order fromGillette

150 Billion RFID Tags Will be Deployed in this Decade

Smartracbuys UPM

Asian inlaycapacityramps up

Symbolbuys

Matricsfor

$230M Zaraannounces2000-store

rollout

MacysannouncesacceleratedRFID plans


0 M

5,000 M

10,000 M

15,000 M

20,000 M

25,000 M

30,000 M

35,000 M

40,000 M

2013 2014 2015 2016 2017 2018 2019 2020

U

n

i

t

s

Years

Six Year Passive RFID Forecast

Passive Tags w/ Sensors

UHF BAP

μWave Passive Tags

UHF Passive Tags

HF Passive Tags

LF Passive Tags

RFID Unit Forecast


Market Segment Share – Total Passive Market

Market by Industry- All Frequencies


Falling Prices, Purpose-driven DesignImprove UHF Reader Price-Performance

• Integration reducesreader BOMs

• Eroding reader chipASPs (~50%/5yrs)

• Expanding form-factor andprice/performancediversity

Special-purposereaders

-9% CAGR


Embedded RFID to Swell Number ofUHF-RFID Enabled Devices

thousands

Mainly general-purpose readers,some handhelds

Growing diversity ofpurpose-designed

readers

Embedded RFID(IoT-related)

Fixed infrastructuredeployment

30% CAGR

80% CAGR

49% CAGR


RFID VALUE CHAINSTRUCTURE


UHF RFID Ecosystem Structure

IoT Platform Software and/or Service Provider(Axeda, Digi, Gurtam, ILS Technology, InSync, Modus, Omnilink, Spireon, ThingWorx Transcends, Ubidots, WebNMS,

Zebra Zatar)

Vertical Solution Provider(Checkpoint, FileTrail, Lyngsoe, Seeonic, Stanley B&D (AeroScout), Terso, Tyco)

General System Integrator(Accenture, CACI, HP, IBM, ITT, Oracle, SAIC, SRA)

Enterprise Software (with RFID Support)(IBM-WebSphere, Microsoft-BizTalk-RFID, Oracle-Enterprise 1, SAP-AII)

Converter-Service Bureau(Avery, CCL, Data2, George Schmitt,

Kennedy, MPI, Print-o-Tape,Repacorp, r-pac, RR Donnelly, SML,

Top Flight, Weber)

Tag Chip Vendor(Alien, EM Marin,

Impinj, Hitachi, NXP,Tego)

Inlay Contract Manufacturer(Arizon, Shang Yang)

Inlay Vendor(Alien, Avery, Invengo, Shanghai Boing, SMT, Trace)

Hard tag Vendor(Confidex, Datamars, HID, OmniID, Tyco, Xerafy)

Example companies are meant to be illustrative, not comprehensive

End UsersHardware Vendor

(Alien, ATID, AWID, Caen,CSL, Deister, Kathrein,Motorola, Honeywell,Impinj, Times-7, TSL,

Siemens)RFID Software Vendor

(InSync, Nofilis, Seagull)

Horizontal AIDC VAR(Barcoding Inc., Fluensee,

GlobeRanger/Fujitsu, RFID GS)Reader Chip Vendor

(AMS, Impinj,PHYCHIPS)


INNOVATION, CURRENT ANDFUTURE


Innovation not Slowing

• Total applied tag cost– Encoding speed and reliability

– Die attach innovation

– Antenna/substrate innovation

• Cloud solutions– Over 60% of vendors at RFID J Live had SaaS

– IoT platforms

• More sensitive chips and tags– Enables smaller tags, more applications

– Shifts performance burden to readers

• Embedded RFID – RFID in the IoT– When RFID is just a feature


Innovations to Watch For

• Gen2V2– Standard ratified, products in development

– Cryptographic tag authentication (small cost adder)

– Extensive memory security and access options (large cost adder)

• Fixed infrastructure – readers in the ceiling– Smarter readers with steerable beams

– Lots of dumb readers?

– Drones? (Some surprising potential there)

• Data analytics– Item intelligence

– Activity as a leading indicator of sales

– May require fixed infrastructure for full realization

• RFID as a Service (RaaS)– Financial innovation can flatten capital investment hurdle


IMPLICATIONS FOR ENDUSERS


Implications for Retail

• ROI is very strong for certain categories– High mix complexity

– Solid business case can be made today

• Don’t underestimate rollout efforts– Associate training is critical to achieve high inventory accuracy

– Don’t expect suppliers to tag (unless you are private label)

• Supply chain implementations in some private labelchains

• Will suppliers reach a ‘tipping point’?– % of total items being tagged

– Ability to realize an ROI (chargeback reduction)

– Industry-wide outreach efforts brewing


Implications for Manufacturing

• Proven use cases abound– Asset tracking

• containers, raw materials and components, finished goods, tools

– Visual RFID replacing paper

– Mass customization

– Feeder line synchronization

– Item-level process control

• RFID readers embedded in production equipment

• Majority are closed-loop today … looking at open-loopapplications– Manufacturers putting RFID in the products

– Adding intelligence and functionality to products

– Protecting brand

– Ensure authentic parts/supplies used


IMPLICATIONS FORINVESTORS


What is the Internet of Things?

Broadband internet

Ubiquitous, low-cost cellular & WiFi

Short range wireless networking

Cheap, standardized electronics

Lightweight comms protocols

Advanced sensors

RFID

IoTIoT

25 years ofconvergentevolution oftechnologies andmarkets

RFID is Part ofthe Internet of

Things


RFID is Part of the Internet of Things

Internet

Communicationsinfrastructure

IPIP

Gateway(Reader)

Sensors(tags)


Corporate Titans are Investing Billionsin IoT R&D and Marketing

Firm Activity

IntelChips and gateway product roadmaps for IoT. Partnerships to build a wholeproduct for IoT apps. RAIN Alliance founding member.

GoogleMassive acquisition program including robotics, AI and smart home products.Wearables. Stated vision to build a “real life internet.” Rumored IoT platformdevelopment. RAIN Alliance founding member.

MicrosoftRenaming “Embedded Team” “IoT Team” and staffing up. Expanding focusfrom industrial to consumer. Integrating embedded with Azure. Rumored majorsoftware IoT platform development. Wearables R&D. Biz Talk Server/RFID

CiscoPromotion of “IoE” (“everything”) thought leadership messaging. Networkproduct development including IoT gateways. RFID data center deployment

SAPInvestment in development of real-time, contextual data analytics for processcontrol. Thought leadership messaging. AII RFID platform

IBMWatson AI, sensor business unit, M2M system integration. Lightweightcommunications protocol development. WebSphere RFID support

GEAllocated $1B for “Industrial Internet” targeting aviation, healthcare, rail, power,oil & gas. RFID solutions for healthcare, oil and gas, others.

Source: Company web sites, interviews, public news sourcesRAIN: RAdio-frequency Identification Alliance

In every case RFID is part of the story


Signposts for Investors

1. A Broadly growing base in global healthcare,banking, government, biosciences, oil & gas,aerospace, automotive, IT and more

3. Activeinnovation andre-investment

2. Exponentialgrowth inretail

5. Compellingupwardmomentum

Inte

rnet

ofTh

ings

4. A Coordinatedecosystem


WHAT'S ON THE RFIDRESEARCH AGENDA?


What is the Market?

Where will the growth be?

Which segment should we focus on?

What does it take to enter thatmarket segment?

Is my solution complete?

Who are the buyers?

What is the

Value?

The Challenge for RFID Solution Providers


What are our current business drivers, challenges andgoals

What should our roadmap look liketo achieve these goals?

Who are the providers

who can deliver the

Value

The Challenge for End Users


What’s on our Agenda

• Webinar Education Series on RFID Markets and Solutions

• Internet of Things research:– What is it? Creating a framework for IoT landscape.

– Platforms

– Applications

• RFID research:– Fixed Reader Infrastructure Economics for Retail

– RFID Market Growth 2014 -2018 Passive and Active Markets

– Industry/use-case specific market growth and solutions:

• Retail

• Healthcare

• Manufacturing

• Logistics & Transportation

• Oil and Gas


About ChainLink Research

Questions?

[email protected]

617-762-4040 x414

ChainLinkResearch.com/rfid

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RFID 2014 State of the Industry - RAIN RFID€¦ · • Retail RFID is ‘in the tornado’ •...

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