Alien Faces Risks

By Renee Boucher Ferguson  |  Posted 2006-07-24 Print this article Print

But, as with any IPO, there are risks involved. Chief among them for Alien is the uncertainty of widespread adoption of RFID in the markets the company has chosen. "To date the adoption rate for RFID technology has been slower than anticipated or forecasted by both us and certain industry sources," the company said in an updated July 12 prospectus.
"Near-term adoption … depends in large part on large organizations with market influence such as Wal-Mart and the U.S. Department of Defense encouraging the use of RFID technology in their supply chains."
Conversely, "Any delay, slowdown or failure by organizations to implement RFID systems throughout their supply chains, or [to adopt] them more slowly than we currently anticipate, could adversely affect our business," Alien said in its IPO prospectus. Alien Technology may be on track here. Wal-Mart and the Department of Defense have been trendsetters in the RFID industry, issuing early mandates that their top 100 suppliers tag pallets and cases of goods with RFID-enabled tags. Wal-Mart has since engaged its top 300 suppliers—in addition to a number of volunteer suppliers—in an RFID program, and another 300 will join the rollout in January. The Department of Defense is shipping RFID-tagged goods to war theaters in Afghanistan and Iraq, and is continuously expanding its stable of RFID-enabled suppliers. Coincidentally, on the same day that Alien filed its IPO plans in April, Wal-Marts new CIO, Rollin Ford, confirmed that the company planned to "sunset" its Gen 1 tags and readers on June 30, moving fully to the Gen 2 standard. Once Wal-Mart is accepting only Gen 2 tags (although it is allowing suppliers that have large quantities of Gen 1 tags to deplete their supplies), the theory is that there will be a domino effect: Suppliers will in turn have to implement Gen 2-based infrastructures, and other retailers will follow Wal-Marts lead. "Collectively, the two announcements [Aliens IPO and Wal-Mart leaving Gen 1] highlight continued industry maturation around RFID standards, scalability and interoperability," reads an April 14 research note from ABI Research. Check out eWEEK.coms for the latest news, reviews and analysis on mobile and wireless computing.


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