Unisys sees RFID tipping point in 2006
Unisys, which claims one of the largest global RFID services businesses, expects more enterprises will move from RFID pilot projects to implementation during next year, based on key industry developments. This will see a 400% spike in the outsourcing of RFID infrastructure support next year, Unisys predicted. In turn, Peter Regen, VP of global visible commerce at Unisys said the company expects growth across several of its RFID services division. "In 2006, we expect meaningful growth," Mr Regen said. "It will be an inflection point for RFID services businesses in general." RFID managed services, in particular, will likely grow next year as more companies move beyond initial pilot projects. "The managed service piece we see as a major focus [for Unisys]," Mr Regen said. Thomasville's assembled furniture division, for example, has a "very tight delivery window" from when it receives an order from Wal-Mart, one of its major customers, to when it ships. In June, Thomasville became a new customer for Unisys to provide round-the-clock RFID support because, as Mr Regen said, Thomasville "can't afford for any delays." Another area of Unisys growth, he expects, will be in-transit visibility, which is the ability to track and trace goods. That is, at any given time, knowing the location of a box of goods, for instance, where it's been, where it's going and whether it has been tampered with en route. For enterprises, in-transit visibility, which is supported by data management and analytics, means greater agility in response to supply chain disruptions and changing business dynamics. Mr Regen said Unisys is targeting more integrated in-transit services, which include satellite and cellular tracking in addition to active and passive RFID technology. One key market for these types of in-transit services is the so-called "cold chain," which is the supply chain for chilled goods such as food and medicine. In the cold chain, for instance, extra integrated sensors can track, in near real-time, a good's temperature. The third major are of growth for Unisys is homeland and port security, Mr Regen said. "We see a lot more work from the US," he said. "A lot of the work we're doing we can't talk about publicly." Unisys also is working with other governments, including two in Asia and one in the Middle East, he said, declining to name countries. "We expect to add new government customers next year ... and, in some cases, doing more strategy work, which is pretty significant." For instance, Unisys is undertaking work on a five-year RFID strategy for "one of the biggest ports in the world," he said. Unisys does not disclose revenues or number of customers for its RFID services business. To date, Unisys has handled about 37 RFID projects in total since it got into the segment in 1994. The company's first contract was with the US Department of Defense to implement an RFID system, including systems integration, database development, and hosting and managing database and application support. Today, Unisys has about 130 employees dedicated to its ongoing DoD RFID account, which tracks about 25,000 shipments a day in more than 30 countries. "The total [number of RFID services employees] is meaningfully larger than that," Mr Regen said. Unisys has other public sector customers, as well as in the consumer goods, life sciences and transportation sectors. Leading clients include General Electric, Motorola, Sarah Lee, US Postal Service, US Department of Homeland Security, Purdue Pharma and Thomasville Furniture Industries. Of those, Mr Regen confirmed the DoD and Thomasville Furniture are multi-year contracts. "Many of the others are smaller today with the hopes of becoming much larger," he said. Unisys' largest rivals in the space are IBM and Accenture, Mr Regen said. "And, recently, we're seeing more small players," he said, referring to pure-play RFID service providers such as Extra Prize; R4 and RFID Global Solutions. "Individually, none of them hit the radar screen, but if you put them all together, the pure players are doing an excellent job." Driving the industry's expected growth next year, according to Unisys, are catalysts such as volume availability of Generation 2 RFID product, including software from major vendors. Mr Regen pointed to SAP releasing its new version 4 RFID software next month and Microsoft RFID services being available early next year. Generation 2 RFID refers to a high-volume technology standard that is expected to be ratified early next year by the International Standards Organization as the first global RFID standard - the basis of a large-scale RFID implementation. Also, a number of US states already have laws that require the secure flow of prescription drugs from manufacturers to distributors to pharmacies via a system of tracking and tracing - such as RFID. The first of these laws goes into effect next July in Florida. California, Virginia, Nevada and Indiana are among states with similar laws on their books, with at least a dozen other US states considering similar legislation. Mr Regen also pointed to RFID hardware prices "coming down dramatically" recently. He also cited a survey recently released by the Computing Technology Industry Association that showed 59% of North American carmakers and suppliers surveyed expect to deploy RFID during the next year. And on the retail side, while Wal-Mart has lead the way, Mr Regen pointed to London-based Marks & Spencer Group and its major RFID push, which he said is the largest outside the US, as being an industry catalyst. Marks, which Mr Regen said is the largest men's suit retailer in the UK, already has RFID tagged more than 600,000 of its men's suits and plans to tag all by the end of 2006. "That's a serious production roll out," Mr Regen said. Back in the US, major electronics retailer Best Buy next year will put its RFID mandates into effect. "You put that all together and that's an awful lot of activity," Mr Regen said. "Things are going to happen."