SCDigest editorial staff

The News: Q1 financial results from RFID-related vendors such as Symbol Technologies, and Zebra indicated recent RFID-related buying by customers is still soft, but most still see a rapid ramp up coming soon.

The Impact: The news indicated most companies are taking a measured pace to RFID analysis, adoption, and roll-out.

The Story: We’re in “earnings season,” and Q1 financial results from most of the public companies with strong interests in RFID again showed modest end user buying activity in the most recent period, while most of the companies did see signs of a spending uptick in coming quarters.

Symbol Technologies, for example, saw RFID revenue in Q1 grow to $7 million from $4.5 million a year earlier, and had several new wins, including one at a retailer believed to be Albertson’s (see Wal-Mart, Albertson’s, Sign RFID Reader Deals, Bear Sterns Reports. Still, management was cautious about continued revenue growth for the rest of the year.

“We really don’t have the visibility” to coming RFID deals, said Sal Iannuzzi, Symbol president and chief executive officer “We see a lot of potential deals and pilot programs,” he added, but that it was still too early to say when those might turn into actual purchases.

Meanwhile, tag providers Paxar and Avery Dennison said RFID tag/label growth were running ahead of internal plans, with Paxar citing business with U.K. retailer and RFID pioneer Marks & Spencer as contributing to its results, while Avery Dennison said it had been selected to provide so called “in-lays” – RFID tags not embedded in a paper label construction – to Kimberly Clark, the consumer goods giant that has been an active RFID/EPC participant.

The first quarter also saw an announcement by RFID tag and reader provider Alien Technology that it would begin the process for going public. Alien is believed to have won business in the quarter from Wal-Mart for fixed RFID readers.

Yet, the level of real implementation and buying activity remains uncertain, with many variables, including the pace of Wal-Mart and DoD roll-outs, how rapidly Albertson’s and other retailers will drive their programs, and the use of RFID in non-retail/EPC applications.

The market research analysts at investment banker Bear Sterns, for example, note this challenge. Analyst Phillip Alling both somewhat scaled back previous projections for expected royalty revenue Intermec and its “Rapid Start” licensing program, based on a more tepid short term market, but reiterated in a recent research note that he remains “convinced that RFID technology adoption is increasing in momentum for widespread adoption in the retail supply chain and an expanding list of other applications.”

Do you sense actual RFID activity is increasing or not? Why? Do you think we will see a rapid take-off at some point, or more consistent ramp over many years? Let us know your thoughts.