$250M IBM Division in Pursuit of Sensors

By Jacqueline Emigh  |  Posted 2004-11-02

$250M IBM Division in Pursuit of Sensors

When IBM launched its $250 million Sensor and Actuation Solutions division in September, RFID was only one thought in mind, said Robert Mayberry, who heads up the new division as vice president.

Actually, the S&A division started out at IBM as an incubated emerging business opportunity, in the same tradition as other technologies—such as Linux and life sciences—that later became big businesses for the company.

For the past 18 months, S&A has been focusing on RFID, through pilots and deployments at places such as the Metro department store chain, the U.S. Department of Defense and the International Postal Corp., Mayberry said during an interview with eWEEK.com.

Read more here about IBMs S&A division.

IBM has also been using RFID internally, to track and trace wafer carriers at its chip production plant in Fishkill, N.Y.

But RFID is merely one of many sensor technologies that the new division will pursue, according to Mayberry. "RFID is one type of sensor, but other sensors can be used in biometrics, chemical and petroleum monitoring, and manufacturing, for instance," he said.

In fact, IBM is already working with Chevron Corp. to monitor temperatures and the types of fluids inside oil pipelines with the use of embedded sensors.

After being beamed out over a satellite network, the information is used in middleware and a billing system to optimize use of the pipeline and automate the billing of usage fees. It can also be remotely accessed in real time by mobile field workers, outfitted with PDAs, Mayberry said.

What spurred IBM to pump $250 million into the new S&A division, anyway? Mayberry pointed to a combination of two factors: projected customer demand for sensor devices, plus previous investments by IBM into a variety of technologies that are expected to play roles in sensor-driven applications.

In fact, The Yankee Group has projected that the RFID market alone will approach $1 billion by the end of 2004, and over $4 billion by 2008.

Harbor Research, another industry analyst firm, foresees the existence of 1.2 billion devices in the "smart sensor" category by 2005.

"We want to take what weve been doing with capturing and processing business rules—along with our WebSphere, DB2 and Tivoli software—and extend it all out beyond the four walls into [intelligent] devices," Mayberry said.

Next Page: Pervasive and autonomic computing.

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The S&A division will also exploit R&D by IBM into pervasive and autonomic computing, according to the IBM vice president. In the organizational sense, the division is part of IBMs Pervasive Computing business.

"But this isnt just about software or hardware. Its about our consulting services, too," he said.

Indeed, the IBM Global Services consulting arm is heading up systems integration work in the current RFID implementation at Metro, the fifth-largest manufacturer worldwide, he said.

In its current phase, the Metro deployment is being carried out by 20 CPG (consumer packaged goods) makers at 250 retail stores, as well as in back-end distribution. Ultimately, all of Metros 2,400 locations are expected to be involved.

"IBM has a huge business in retail. Its only natural for them to want to extend RFID backward from the POS [point of sale] to the supply chain," said Christine Overby, an analyst at Forrester Research.

At the same time, IBM Business Consulting Services has been working with the Defense Department under a three-year contract to help manage and support policy around the use of RFID by 43,000 defense suppliers.

Meanwhile, IBM is also working with the International Post Office to build an RFID-enabled quality management system. The system is aimed at speeding global mail delivery, as well as helping postal operators in North America, Europe and the Asia Pacific settle their accounts more quickly.

More than half a million test letters will be sent this year, and IBM anticipates that the system will be fully operational by next year, according to Mayberry.

The test letters carry RFID transponders that are automatically read as they pass through reading stations in the international post office system, letting postal personnel track how long it takes the pieces of mail to travel from one country to another.

Beyond IBMs current RFID implementations, how might sensor technologies be used in the future? Mayberry shared a few examples. In the manufacturing market, he said, sensors will be embedded into programmable logic controllers, for monitoring manufacturing execution "from the plant floor to the top floor."

In the transportation industry, on the other hand, applications might range from luggage tracking to preventive equipment maintenance.

"Mechanics will be able to tell more easily which $5 bolt to change in a $5 million aircraft," Mayberry said.

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