RealTime IT News

A Symbol-ic Move to RFID

Wireless systems maker Symbol Technologies has bought into the radio frequency Identification industry, buying Matrics for $230 million in cash.

The deal is expected to close in the third quarter, pending regulatory approval.

The acquisition gives Symbol a presence in a hot technology area that uses wireless chips to relay inventory quantities at the individual-item level directly to store owners and warehouse managers. Currently, major retailers like Wal-Mart are in field tests to figure out the best way to implement the technology, which promises to cut down on supply chain management (SCM) inefficiencies.

Several factors inhibit RFID's use by retailers, governments and other institutions. One is a standard method of data collection between different RFID systems, though electronic product code (EPC) has started to emerge as a de facto specification within the retail industry. The standard is being used by companies like Wal-Mart, Target, Home Depot and Procter & Gamble.

Symbol, which styles itself as a mobility enterprise solution provider, targeted Matrics for its EPC-compliant line of products, which range from RFID chip readers to antennas to the chips themselves. To date, the only RFID technology in the Symbol portfolio is bar-code scanners that can also read RFID tag information.

The Matrics line will be incorporated into Symbol's Capture, Move, Manage (CM2) strategy combining data capture, mobile computing, wireless infrastructure and systems software for the enterprise.

However, RFID is only a part of that CM2 strategy, not the end-all-be-all, said Todd Hewlin, Symbol senior vice president of global products. Customers are looking for a product line that provides a complete enterprise mobility system.

"I think the big thing you've been seeing in the market so far is that RFID has been in a lot of field trials, where customers are getting comfortable with the standards, comfortable with the [returns on investment]," he said. "What we see from our customers is that an inflection point is coming where we believe the market is going to tip towards full-scale deployments that contain capture, move and manage."

The acquisition is the second announced merger since the company cleared itself of charges levied by the Securities & Exchange Commission (SEC), which was investigating the company's accounting since May 2001. Last month, Symbol bought up Trio Security, a mobile user authentication and single sign-on software developer.

On June 3, Symbol announced they had settled with the SEC and the New York U.S. Attorney's Office, agreeing to pay $37 million to resolve a class-action lawsuit filed by Symbol shareholders and $3 million to the U.S. Postal Inspection Service Consumer Fraud Fund. Separately, but part of the class-action lawsuit, the company agreed to pay an addition $98 million (mostly in stock) to the members of the class-action lawsuit.

The agreement closed a trying period for Symbol, which saw many of its founding executives resign last year. In July 2003, Jerome Swartz, the company's founder and chairman of the board, left the company to be replaced by Richard Bravman, the CEO. Five months later, Bravman was out, resigning to "facilitate a favorable conclusion" to the SEC investigation.

During that time, the company was also embroiled in a patent infringement case with rival Proxim Technologies. A judge ruled in Symbol's favor and awarded the company roughly $23 million.

With many of its patent and legal troubles behind them, expect Symbol to continue its expansion into areas that fill out its CM2 strategy of providing software, hardware and services.

"We're constantly making the evaluation of 'Do we build it internally, do we partner for it or do we buy it?' " he said. "So you're going to see us continually making those decisions."