What do you get when you have an overall economic slowdown, combined with a dramatic slowdown in the market’s number one driver of RFID activity?
Real financial troubles for many RFID vendors, especially those that were highly leveraged to the Wal-Mart/retail supply chain market that has just never come together anywhere near or as far as most were expecting.
Add to that the fact that in this environment, venture capitalists, which back many RFID start-ups, are likely to be very reluctant to put more money into their struggling investments, as they may have done in better overall economic times.
As a result, we can expect to see substantial consolidation among RFID vendors, say the investment analysts at RW Baird, who closely follow the RFID industry.
“We believe survival is becoming more of a paramount concern to many companies. We, however, continue to expect an industry shakeout as market dynamics place continued pressure on an overly populated market,” Reik Read wrote in a recent blog post last week.
He adds: “We believe RFID vendors, both active and passive, are being mindful of the critical need to preserve cash given the severity of the macro environment, and limited access to additional capital as venture investors and banks have become extremely cautious with lending/investing practices.”
As a result, overall market weakness, lack of access to capital, and the fact that too many companies occupy a technology space with too little revenue, we can expect to see an “industry shake-out,” Baird believes.
“As this shake-out unfolds over the next 1-3 quarters, we expect a few of the smaller industry players will be acquired by larger players as they seek to fill solution or technology gaps,” Read says.
So which vendors will make it?
(RFID and Automatic Identification Article - Continued Below)