October 06, 2006
RFID Acquisitions: Thoughts From Savi Technology CEO
RFID Connection of AIM Global interviewed Vic Verma, co-founder and President/ CEO of Savi Technology. The company was acquired recently by the giant defense contractor Lockheed Martin. The RFID Connection article is a transcript of a podcast, which is also available. A partial summary, plus my commentary, is below.
Verma talks about a number of things, including why Savi agreed to be acquired instead of going IPO. (Alien Technology called off their IPO a couple of months ago, but Savi had agreed to be acquired by L-M just before that.) His answer is that RFID needs for someone to do for it what IBM did for the personal computer. For example:
Nobody wants to build an entire network in order to make the first phone call. On the other hand, once you have a global network, people will buy a cell phone to make multiple calls... there is a need for a global network [for RFID] so people can share the cost of the infrastructure and really just pay per use.
Verma also uses the Apple iPod as an example, to show that their business is not just about producing RFID technology, but packaging it up into a complete, integrated solution for customers (presumably enterprise). This is of course something that a smaller tech company may not be able to do, and which a large company such as Lockeed Martin can help with, and who has credibility.
Now, Motorola just agreed to buy Symbol Technology, and there are positive implications for the RFID industry. Which suggests that Alien Technology will likely have some courtship offers on the table soon, if not already. Lockheed Martin wants to expand out into commercial markets instead of just being in the defense contract market. And it's expected that Motorola wants to implement radio frequency technology in their cell phones, for use in contactless payment systems. It's likely, then, that several other smaller RFID tech companies will be courted by larger companies, possibly in defense, communications, retail or manufacturing.
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