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Buyout Makes Sense for RFID Pioneer OATSystems
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| Written by Mel Duvall |
In the early days of excitement around using radio frequency identification (RFID) technology to streamline supply chains, OATSystems emerged as a leading light.
The Waltham, Mass.-based company was able to secure a blue-chip customers list including Procter & Gamble, Kimberly-Clark, and Unilever, by offering those companies applications to meet the Wal-Mart RFID mandate.
Its software provided a key requirement in the mandate, essentially acting as the integration layer between RFID readers in warehouses and stores and the applications that would use the data collected. It also evolved in time to offer retailers and suppliers applications which could more readily offer a payback on their investments in RFID, such as real-time tracking of in-store promotions.
Late last month, the RFID pioneer was acquired by Checkpoint Systems of Thorofare, N.J. Checkpoint specializes in shrink management software and technologies for retailers, such as electronic article surveillance systems – those security tags placed on merchandise that set off alarms if someone attempts to carry a product out of a store without paying for it.
Checkpoint’s goal in acquiring OATSystems is to broaden its offering, so that it can not only help retailers reduce theft, but also improve on-shelf availability.
The acquisition signals another stage in the evolution of RFID. As the big players move into the market, the initial pioneers face a challenge of either trying to survive on their own, partnering or selling out to the more established software vendors. Microsoft, which introduced its mobile BizTalk Server platform for RFID this spring, only added to the pressure.
Checkpoint, which had sales of more than $800 million in 2007, appears to be a good fit for OATSystems. It’s well established in the retail sector and with the integration of OATSystems’ technology, it will be able to offer those customers a complete solution for tracking items from the receiving dock, to the shelf, and out the front door.
AMR Research analyst John Fontanella had this to say about the deal: “Checkpoint sees market opportunity for itself in two different dimensions: helping retailers lose less and sell more.
“While the original aspirations of the OATSystems founders have not been realized, its technology and implementation experience is of great value to a company such as Checkpoint. Now OATSystems can deliver on a much grander value proposition than it could have ever done as an independent company.”
The question now is who might be next? Vue Technology of Lake Forest, Calif., which scored a big RFID rollout with American Apparel earlier this year, might be one to watch.
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