April 17, 2008 – George Everhart is CEO at Alien Technology and shares some thoughts about the market. If you, too, are interested in the channel partner aspect of RFID, visit our new RFID Trade Mart.

What do you see in terms of emerging segments that you believe will impact Alien and RFID in the coming year or two?

EVERHART: Let me make three points about that one. The first one would be that this solution, this technology really delivers horizontal solutions. So, we see solutions in a whole variety of market segments. And because we are partner oriented, or channel oriented, those folks find the solutions and we are glad to have provided our technology to those folks, to deliver those horizontal solutions. That is the first point.

The second one is that the case and pallet in the supply chain in the retail segments, is very big; and while it has been maligned for not growing as fast as folks had wanted it to it still remains big, and I think it is compelling. We are glad we are in that segment. We are lucky to have one of the largest retailers in the world as one of our customers. And we intend to stay there.

The third point, though, would be that there are some segments we are observing, that seem to recognize the value that RFID can bring. One certainly is in the transportation and air transport segment. The use of RFID for baggage tags already is real and that is going to grow greatly.

But, if you look at information and files and folders, actually paper tracking with files and folders, that is exploding through the judicial systems as well as through other companies in terms of how they track that.

A classic example of that, from the judicial system, is that you look at the State of California and they are putting RFID tags on all the major briefing files.

They had a huge problem with attorneys coming into courthouses and getting the briefs; checking them out; leaving them on the table somewhere; walking out and no one knew where they were.

Since Alien works with partners so closely, when you talk about something like transportation, air transport, who starts that process going with the end users.

EVERHART: We haven’t seen one specific pattern. For example, in some cases we actually get contacted by the end user who is assigned to one to look into it. They get Google RFID and Alien pops up and they contact us.

In other instances, we have a partner who has worked already with one airport, starts to get a reputation and then another airport wants to talk to them.

Right. Are you working with airports now?

EVERHART: Yes.

Can you talk about that a little bit?

EVERHART: Unfortunately not. But, fairly soon I think we will be able to talk about the specifics, you know, names, places.

Sure. We have been covering a great deal in terms of the growth of resellers and other source of channeled partners and what they mean to the industry. Does Alien find there are various VARS coming in without an RFID background, that are looking for help in growing their own RFID business?

EVERHART: Yes, I think there are some, yes. But I need to make a point.

Yes.

EVERHART: You look at us, and while we are very active, obviously in RFID, we are still a company of a couple hundred people. And yet we think that we have a federation worldwide because of these partnerships of a little over two thousand people. So, it is like a company of two thousand out there. That is tremendously powerful. Certainly it is great from a leverage standpoint; that it is, variable cost based and fixed cost based, for our model.

Do you see any types of channel partners that are the most active Obviously, people often think of the barcode suppliers as being the early RFID sales force, if you will. Do you see any other types of resellers or IT consultants that have jumped in big?

EVERHART: Yes. This was perhaps an over generalization, but folks who have been involved in wireless and networking, this is obviously a nice fit, because these are frankly wireless networking type of devices. So, that arena absolutely.

And in some cases, those folks are more aggressive than the folks that come from the barcoding side, just because there is still a lot of barcoding out there, it is easy to say that is the mainstream and, therefore, a company might still focus on that and dabble in RFID. Where some of these other companies, all they do is look at the wireless information segment and look at RFID.

A couple of recent announcements by Alien, like the Daisy implementation, really speak well of use of RFID and perhaps you can tell me about Alien’s viewpoint on them.

EVERHART: With any of end user customers, the way we look at it is that we are the technology partner for them. But, there needs to be a solution partner for them as well. And that actually is where our channels and those players come in.

So, what we can do with Daisy as an example, is we can be the expert on how they might deploy. And the good news is we have deployed enough and we have deployed in very big companies. So we have a few scars on our back, if you will. We know what we would do again and we know what we wouldn’t do again. So, we can consult and give services as well as the technology part of it.

What do you see in terms of the level of knowledge level?

I gather you have about 200 channel partners and that certainly is a widespread group. Typically in business people talk about the 80/20 rule, what do you see as far as the level of knowledge that your channeled partners have with RFID?

EVERHART: First of all, let me tell you there are really two classes, two types of partners we have. One are the label converters, who really deal on the tag side almost exclusively. So, they provide tags within labels or for customers. And the others, of course, are the VARs, whatever name you want to call them, but you know, the value added guy.

The value added guys, I would say have a great understanding of RFID. They do some pretty clever things. You know, our readers with the Alien reader protocol, allow them to do some programming on these on these readers and do some creative things. And they do it.

So, I would say they are pretty well qualified, you know,. Looking at your 80/20 point, clearly some of our larger VARs do more business with us. but, I am amazed, day in and day out, we hear these clever implementations of RFID for applications that make me go, ‘How did they ever think of that?’ I mean, it is really, very creative.