ChainLink Research – All Rights Reserved 2015

RFID or IoT

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First there were RFID hardware players. Then there were RFID middleware and track and trace platforms. Then there were IoT Platforms. The landscape is getting confused.

What are these? How are they different? Who are the players in this market? How are RFID players adapting to the invasion of IoT? How will hardware firms manage their channel relationships? These and other questions are tackled in this mini report.

This report is for solutions providers as well as for technology buyers. _____________________________________________________________________________________________________________________

ChainLink Research — 2015

ChainLink Research – All Rights Reserved 2015

RFID or IoT

Introduction .................................................................................................................................................. 1

Software Segmentation or Not? ................................................................................................................... 2

So What about IoT? ...................................................................................................................................... 3

Is IoT Software Different from RFID Software, Though? .............................................................................. 4

Industry Verticals .......................................................................................................................................... 4

RFID vs. IoT? Is It Simply Marketing? ............................................................................................................ 7

References: ................................................................................................................................................... 9

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Introduction Both RFID and IoT markets are in rapid growth mode. RFID, GPS, and mobile devices are getting connected to the internet for track and trace, visibility, cold chain tracking, transportation management, marketing and many other applications. With IoT, equipment—whether with sensors, RFID, mobile, or good ol’ internet cables—is being connected to the internet to monitor and extend the functionality of products and monitor processes, fixed or in motion. The convergence is obvious.

Devices are everywhere. Yet hardware companies (chips and sensors) have become a bit worried that the hardware will be commoditized1 and their companies will become unattractive—part of a low-level commodity-like sector. This comes, ironically, just as their future shines bright with a positive growth rate in the market.2

Moore’s Law is well known in the technology business. But along with Moore comes the commodity blues, something many hardware markets experience. The ‘newness’ wears off. Competitors enter the market and drive down prices. As initial hardware offerings evolve with each revision, offering more and different features and many improvements, they often cost less and have lower profit margins. PCs and storage3 are examples.4

So what does any self-respecting hardware company do to avoid the commodity blues? Software!

1 Even though there are many chip makers in the market who have been working on reducing costs during the last decade, lately, prices have been steady.

2 The full forecast report can be purchased here: Passive UHF Market 2015 to 2018

3 A great analysis of storage costs can be found at mkomo.com

4 The automobile seems to defy this trend. Of course, yesterday’s Ford of $300 had nary the features, technologies, clean engines and so on of today’s $23,000 grandchild. See a great timeline of Fords here.

Figure 1: PC Price Plummeting PCs

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Figure 2: The Commodity Blues

Software Segmentation or Not?

Since the early 2000s, software has always been part of the RFID market.5 After all, the whole point is the data. Plus RFID has many frequencies and combinations with other devices or equipment, so RFID solution providers needed the ability to integrate to any device. But the market was segmented—hardware players over there—by frequency, please; and you, software players, over there. An obvious mutual dependency exists between them, with software and system integrators as key channels to the hardware.

Many of the hardware players, firms like Impinj, Alien, Motorola, Zebra,6 Tyco, Checkpoint HID, Smartrac, and Intermec were carrying a heavy marketing and lead development load. They were not just sitting in a lab tinkering with wires and chemicals and waiting for their channels to sell. They also sold direct, especially to those big, important customers. But it was obvious the market needed more. They were being asked directly by their customers for more. Thus, we saw the emergence of software from the hardware players.7

Software plays several critical roles for the hardware firms: • Software tends to defy commodity blues • It allows the provider to work more directly with end-customers and understand their evolving

needs, thus developing better products over time • Need we say, software helps to capture more of the total customer spend.

5 Firms like Acsis, and Oat Systems (now part of Checkpoint) were part of the RFID pioneers 6 Today, Moto's RFID is part of Zebra. 7 Tyco was an early sign-on with several acquisitions and partnerships that created a real Tyco Retail Solution. Motorola was a huge advocate for software with a highly successful and well-developed channel partner strategy. In fact, their head of channels was one of the ‘best practices’ firms that we used for our channel management research.

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Channels are—and will always be—important. After all, hardware players can’t chase every market. Many of the channel partners dominate in major industries and accounts. And quite frankly, software is their game. They understand how to develop requirements, build, deploy, and scale.

Although there may be some ‘convergence afoot’ with hardware or service businesses buying software companies,8 some hardware players, like Impinj, are investing heavily in building their own software products. In our recent RFID market report, we postulated as to whether RFID players might even abandon the hardware business to concentrate on software. Short answer: probably not for most of them. However, channel conflicts could arise concerning customer ownership, how to share a deal, and so on. Channel conflict will be a problem in the future as this in-house software development trend continues.

Further, software should be interoperable. So hardware firms face a conundrum. Do I really make the software open to work with every device and open the door for my competitors? How much do I benefit? Will I gain access to accounts I may not have had in the past? The answer is not easy. To date, the answer varies by vendor—some are making software open and some are not.9

So What about IoT?

With the recent debut of IoT platforms as new market phenomena (circa 2013/2014), IoT Platform execs have wanted nothing to do with RFID. However, the phrase ‘IoT’ was coined by the RFID players and they have been talking about environmental and ‘thing’ awareness since the early 2000s. Yes, the RFID market had stagnant growth a few years back and it might not have looked so cool to be associated with stagnation. Now the IoT players are not so sure about their past perceptions—or are flat out embracing RFID. There are several reasons for this:

1. All those ‘things’ have RFID and/or sensors embedded within them. The IoT platform has to talk to them and just about any other device out there. Shades of RFID middleware?

2. The RFID market is growing across industries, not just retail, with important applications in manufacturing, supply chain, automotive, weather tracking, consumer markets—you name it.

3. Market competition and confusion. Since everybody is an IoT company today, with a hyped-up market, IoT platform providers are in a two-front race: software tools and platforms; and devices—sensors, RFID, and all the things being integrated to. “Yes, we do that,” is the response on the sales call. Of course, the ‘do that’ means having to bring in partners.

8 Recent acquisition of Xterprise by SML or TierConnect/ViZix by Mojix 9 Another lesson from the PC industry—Office for Mac. This seems to have benefited both companies, allowing office users to switch to Apple, thus increasing sales for Microsoft of Office software and Apple PCs. In enterprise software this was a regular mode. The big players such as DEC, IBM, etc. became major partners of software players who did not play an exclusivity partnership, for example, running supply chain software on DEC, HP and IBM. Today, SAP’s HANNA runs on HP, IBM, Lenovo, and Samsung.

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Is IoT Software Different from RFID Software, Though?

There are no absolutes, but let’s look at a few examples—PTC vs. Impinj, for example. PTC’s corporate focus and its customers are product developers who use PLM and CAD/CAM products. An IoT solution for developers, rather than one that fine tunes signals from devices, fits into their world view. Impinj’s job is to understand the signals and provide context—direction, distance, and so on. Impinj expects to connect to business applications—not write them. PTC has no interest in developing hardware and expects to partner with equipment makers who will partner with those types of devices (Figure 3).

Figure 3: Simplified Technology Stack

Yet there will be overlap. Zebra’s Zatar, they say, will work with other hardware; whereas HID’s Trusted Tag® is designed to support developers who use only HID devices. Omni-ID, another hardware company, has software products that sit on top of their devices. Omni-ID acknowledges that sometimes partnership may vary if, for example, they partner with a manufacturing software company that has equipment/device integration (and other IoT capabilities)—a manufacturing execution system. But a great deal of manufacturing software, such as MRP, does not operate on the machine level. Thus an Omni-ID solution may provide that ‘lite’ version of an MES that users and MRP companies have been seeking. Impinj and others do know that the relationships with system integrator partners may vary from deal to deal. This requires dedicated and smart channel management.

In essence, the IoT market is really composed of a lot of layers. In IoT Platforms—Part One: A Framework for Understanding This Maze, you can read about the framework and where things fit in.

Industry Verticals

A key differentiator among solutions is the industry they support. Many users are not looking for platforms at all, but want complete solutions. Savi, A2B, and GlobeRanger (now part of Fujitsu), for example, have developed in-depth solutions for the Department of Defense. Checkpoint’s Oat has applications for Aerospace.10 These are business applications—not platforms—with the benefit of 10 These types of companies do have other vertical solutions, however. These are just examples. Savi, for example, has transportation solutions; Oat has retail, healthcare, etc. and so on.

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having figured out all the device layers. Decades ago the warehouse management software sector, as an example, figured out this relationship and made it a practice to include the barcoding, optical scanning, voice, and equipment integration in their software and include pricing and implementation for these as well. Thus, the RFID solution providers forged ahead with a similar model. Customers who are non-IT will gravitate more to the solution companies, whereas IT buyers will likely gravitate to platforms.11 However, even the so-called solutions players have development environments that are quite user-friendly, such as Savi’s InSites.

Table 1 has examples of some of the leading players in the market:

Company Platforms Description

Acsis, Inc.

Serialization, PartnerTrak, Brand Protection

Various SaaS and on-premise platforms and applications for serialization, partner/asset tracking, and brand protection applications for process industries such as pharmaceuticals, paper, and food & beverage.

A2B UC! Web™

Cloud-based asset locating and tracking solution which supports specific DoD, A&D, and industrial use cases such as inventory management, tool crib control, compliance labeling, and reporting and control. Integrates to large ERPs such as Oracle and SAP. FedRAMP certified (Federal Risk and Authorization Mgmt Program).

Checkpoint Systems

Oat Foundation Suite

Oat Systems, a division of Checkpoint, has several vertical focus areas with their main areas in Retail and Manufacturing, which includes industries such as A&D, Industrial Machinery, Chemicals, and Oil and Gas that rely on part tracking and management, WIP tracking, replenishment, yard management, delivery and distribution of equipment and parts through to automated goods receipts and returns.

Component-Soft

ItemSight

Suite of applications for retail and supply chain visibility. Applications include sample management, source tagging, receiving, and store inventory/shelf visibility. Platform has been honed working with key retailers. Also used by other sectors such as defense and manufacturing.

Globe Ranger

iMotion™ IoT Edgeware Platform

Integrated Development Environment (IDE) with emulation tools to emulate RFID and IoT hardware devices, business intelligence dashboards, and device integration with rich selection of options. On top of this platform, GlobeRanger has created a rich set of complete domain-specific applications for processes that benefit greatly from IoT-based edge-processing solutions. After working on specific customer use cases in defense, service and repair, and procurement, many of GlobeRanger’s apps are ready for use as is and/or can be modified.

11 And separate hardware selections. Business buyers traditionally are looking for a whole stack solution. IT or developers tend to like to purchase or at least understand and/or evaluate the different choices of each layer.

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Company Platforms Description

HID Global

Trusted Tag® Services Platform

A cloud platform developed to enable partner/channel applications in healthcare, security, retail, and other areas. The technology turns NFC-enabled smart phones into verification devices. It is a partner application development platform for Internet of Things (IoT), authentication, and proof-of-presence.

Impinj ItemSense

Beta release of real-time analytics that convert raw UHF RFID data streams (coming from fixed readers) into item-level intelligence such as changes in location or status of items in a retail store, healthcare setting, or other environment.

Intelligent InSites

Intelligent InSites

Multiple-device platform and cloud applications for healthcare and hospital settings. People and asset tracking, room scheduling, environmental monitoring (temperature, CO2, humidity, oxygen tanks), safety, and workflow applications—all developed after working on many customer use cases. Has rich partner network and is device agnostic—active and passive RFID, ZigBee, and all sorts of equipment and systems within the hospital.

Mojix ViZix

Full IoT Integrated Development Environment (IDE) and applications. Key capabilities include CEP (complex event processing) engine, rules engine, and analytics/visualization. Ability to record and play back IoT data of things and people in motion. Can sit on top of Mojix reader hardware as well as other readers and devices.

Omni-ID ProVIEW

ProVIEW is an integrated system that provides RFID/visual tags that carry read/write data. These are supported by business applications that provide tracking, worker instructions, inventory accuracy, and manage process flow between suppliers and manufacturing and within the plant.

PTC

ThingWorx, Axeda, ColdLight

PTC has not traditionally been in the RFID business, but has invested heavily in IoT recently, making three major acquisitions. This has given them an IoT development platform, device cloud, and real-time predictive analytics and machine learning. Axeda and ColdLight have been recently rebranded under the ThingWorx moniker.

RFID Global Solution

Visi-Trac

Provides real-time visibility/track and trace for inventory and assets within the enterprise or across the supply chain. Works with various RFID, RTLS, and sensor devices. Vertical-specific applications have been developed in industries such as high tech, manufacturing, and healthcare.

SMARTRAC SMART COSMOS

Developed to enable the partner network. Cloud-based services for system integrators, IT departments, and software engineers to rapidly innovate new solutions that connect physical objects to the digital world.

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Company Platforms Description

Savi Savi Insight

Multi-device IoT applications with location-based services, apps, and analytics library. Represents a device-agnostic IoT/RFID breakout strategy on top of Savi’s network architecture. Applications are ready-to-go, as is, or with modest modification based on specific customer use cases in Transportation and Logistics, but can also be configured for different use cases.

SML Intelligent Inventory Solutions

Clarity Clarity drives retail execution from factory floor to store front door. Developed with specific customers.

Stanly Healthcare

Various modules

Stanley Healthcare’s Real-time Visibility Platform connects to a myriad of devices in the hospital and across the supply chain. It also connects to patient solutions such as Epic and has full applications for nursing staff, stockroom management, etc. Today they integrate to many hardware solutions.

Note: the AeroScout product line is being discontinued.

TAGSYS FiTS FiTS (Fashion item Tracking System) provides supply chain-wide inventory tracking from source tagging to stores, supporting both DC and store operations.

Tyco Retail Solutions

TrueVUE

IoT business intelligence platform that integrates data from many store systems including RFID, POS, security and surveillance, traffic counters, video analytics and other sensor data for reporting, visualization, loss prevention, inventory intelligence, and more.

Zebra Zatar Cloud-based IoT infrastructure enables connection and management of devices and enables IoT applications to use those devices.

Table 1: IoT Solutions in the Convergence

There are many more firms in the market; this is just a sampling. The companies in the table above, to note, are not mere startups just riding the wave of IoT, but stable long-term players.

RFID vs. IoT? Is It Simply Marketing?

At some level this may be the case. End-users/buyers of technology that are looking for that top-to-bottom solution—devices, middleware and apps—might gravitate more to the RFID solutions market. Those who are thinking more about their software and development may look to IoT platforms.

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For tech companies, we have some strong recommendations:

1. Start now to think about channel conflict and develop a position and strategy. This will be, if it is not already, a major issue. Having a strong opinion in combination with a few NIHs (not invented here syndrome) and a little arrogance may lead to losing an important partner. And in this market there are some really big multi-year deals to win or lose.

2. Define and clarify your solution. Even for industry watchers who often talk on and off the record to these companies, it has been a little difficult to understand the intent and direction.

3. Communicate your architectures and functions in technological and process terms. Today ‘solutions marketing’ advocates have gone a little overboard in telling customers what their problems are: “Your market is complex,” or “There are risks in your supply chain,” and so on. Customers know that—that is why they are coming to your firm. Tell them what you do and how you do it—clearly.

4. Improve your marketing. The market is loaded with unappreciated obfuscation. That does not educate buyers and does not serve your company’s sales opportunities as well as you think.

Customers are confused. And providers are stepping up competition since, as in all markets, there are leaders, those in the middle of the pack, and those adrift and struggling. However, we don’t expect clarity of positioning—IoT vs. RFID—for a long time. Unfortunately, this approach just does not serve the market, your company, or your customers well. And with so many companies vying for the business, competition is intense.

Certainly, there is a face-off in the market. Like in sports, there will be many opportunities for rematches.

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References:

RFID: http://www.chainlinkresearch.com/rfid/index.cfm

The Internet of Things: http://www.chainlinkresearch.com/IoT/index.cfm

ChainLink Research – All Rights Reserved 2015

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