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Insider's BLOG from the RFID Experts

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RFID Reader Maker ThingMagic Acquired by Trimble – who’s next?

  
  
  
  

Trimble (TRMB) announced today that it had acquired RFID readerPicture1 company ThingMagic and will consolidate the operations into the Advanced Devices unit.   With over $1 billion in annual revenue and $275 million in cash, Trimble has the resources to build ThingMagic quickly as RFID adoption accelerates.  Two questions immediately arise:

  • Will ThingMagic now focus in Trimble’s core markets in construction, utilities and natural resources or will it continue to serve a broad customer base, including OEMs?
  • How will Trimble build a distribution network for ThingMagic to drive greater unit volume?

We saw Sirit acquired in March by Federal Signal which had some market segment overlap and financial stability to help the company grow.  With reader volumes low in 2009, the Sirit acquisition timing seemed right for a good deal.  Similarly, we have seen ThingMagic release some employees recently and suspected the team would need additional capital to execute its business plan.  We won’t speculate today whether this was a good deal for Trimble, but this is good for the industry. 

While estimates for Thing Magic’s fixed reader volume is low, its modules have a good reputation for performance and provide customer choice in a narrowly served market.   Continued funding from a well-capitalized parent should provide ThingMagic customers with confidence about its long-term viability.

The key issues in the RFID reader market today are scale and distribution.  If Trimble’s capital can enable ThingMagic to expand manufacturing volume and cut marginal unit cost, the market should react favorably.   Module pricing needs to come down, but do so in a way that manufacturers can still make money. 

The flip side of this coin is the approach the company will take to expand its distribution.    If you are making more units, you need channels in place to sell them.  This is a big constraint for many reader manufacturers today and has been the biggest determinant in success in 2010. 

Which RFID company will be next?

The question is whether the ThingMagic acquisition is the start of a trend.  We have seen RFID companies shut down over the past year and others acquired.  What companies do you see as likely acquisition targets in 2011?  Leave your comment below.

Follow me on twitter:  www.twitter.com/bretkinsella

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