Shaking all over

By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 8/23/2005

Is there a shake out coming in the RFID industry?

Some think so and believe the signs are already there.

For instance, last month RedPrairie (262-317-2000), an early leader in RFID solutions, realigned its sales resources and approach to the RFID market.

RedPrairie isn’t exiting the RFID market. Rather, it is integrating RFID as an essential component of its other products. In other words, the company recognizes that RFID is moving from a feature that people are willing to pay for to functionality that end users expect, just like they expect support for bar codes and voice recognition.

“We’ve been in RFID from the early days,” said Tom Kozenski, product marketing leader for distribution products. “But the major retailers appear to be resetting expectations and taking a deep breath. We’re moving as fast as the physics will allow and as fast as our customers are asking us to move.”

RedPrairie is not alone. Other leading supply chain execution (SCE) and ERP vendors like Provia (616-285-3311), MARC Global (866-703-8279), Manhattan Associates (770-955-7070), SAP (610-661-1000) and Oracle (800-672-2531) are integrating RFID into their core products.

That may spell hard times for smaller, best-of-breed providers of RFID solutions. “This space is primed for a shakeout in the coming six to nine months,” says Erik Michielsen, director of RFID and ubiquitous networks for ABI Research (516-624-2500). “There will be rollups, acquisitions and consolidation.”

Driving this shakeout will be the need for an integrated solutions approach to RFID in the supply chain. Right now, the market is fragmented, with dozens of start-ups providing a piece of the solution, says Michielsen. End users won’t be truly successful with RFID unless they can bring those pieces together, or work with a solution provider that can do it for them. That’s where the big technology providers see their opening.

“Big players, like Microsoft, IBM, SAP, Manhattan Associates, Cisco and Sun, are already established suppliers to the end users,” says Michielsen. “They’re moving down the information stack to the data coming off the RFID readers.”

In fact, there’s a precedent: in 1999, there were dozens of technology providers offering supply chain visibility and event management solutions until big supply chain execution providers like RedPrairie and Manhattan Associates integrated that functionality into their products.

“The smaller players that survive will be those that can continue to innovate and differentiate themselves,” says Michielsen.