RFID Industry Outlook
Jeremy Grant Mehmet Agyuz
202-295-8919 202-295-2372
j grant@stanfordeagle.com magyuz@stanfordeagle.com
The Promising but Plodding RFID Industry
Use is Growing, but Big Boom in Supply Chain, Inventory Still 3-5 Years Away
Summary: Radio Frequency Identification (RFID) technology promises to be a transformational
technology, replacing barcodes and other supply chain management technologies with cheap chip-based
tags that can be instantaneously and accurately read from significant distances. The hype on RFID
technology has been deafening, with industry experts and media pundits proclaiming that an RFID
revolution is just around the corner.
We believe RFID is an exciting and promising technology – and firmly believe that most of the
excitement and promise in supply chain adoption is still 3-5 years away. A variety of factors – not-quitefully-
baked standards, high cost of RFID tags and systems, reliability and accuracy issues, and reluctant
adoption by end-users – has conspired to hold the technology back, and we continue to believe that RFID
is not poised for a supply chain breakout in the near-term.
That’s not to say the technology won’t grow, only that growth is likely to underwhelm lofty investor
expectations. Gartner Dataquest forecasts a growth rate of 31% from 2007-2012 and we forecast an 18%
growth rate in U.S. government applications. But all signs suggest that RFID will emerge as a
complementary technology – but not a replacement technology – to barcodes in the supply chain sector.
That said, we do see a number of areas that should be short-term catalysts for the sector. Our detailed
analysis of U.S. government projects forecasts that Department of Defense (DoD) and border
control/credentialing projects will drive 2008 government RFID spending by 72.9% to $287 million – but
shows that spending in 2009 and beyond will be relatively flat.
Among publicly held companies, we believe Zebra Technologies (ZBRA, Hold, $39) and Intermec,
Inc. (IN, Sell, $18) both offer investors exposure to a wide array of RFID product offerings – but note
that RFID comprises a small percentage of their revenues and believe that this is unlikely to change in the
near-term. L-1 Identity Solutions (ID, Hold, $14) is likely to issue more RFID government identity
cards than any other vendor. ID Systems, Manhattan Associates and Checkpoint Systems are three
companies focused on supply chain and inventory management, with a substantial RFID focus.
A number of large industrials also have a significant presence in the RFID market, including: Motorola
(via its Symbol/Matrics unit), Lockheed Martin (via its Savi unit) and Roper Industries (via its
Transcore unit). On the chip side, Intel, TI, NXP and Infineon are all notable players.
Private companies of note include Alien Technology, Impinj, ODIN, ASK, ThingMagic and Hi-GTek.
All are names worth watching, either as candidates for acquisitions or public offerings.

Table of Contents
I. RFID Overview........................................................................................................................ 5
Investment Thesis.................................................................................................................... 8
II. Market Opportunities for RFID............................................................................................. 9
U.S. Government Markets – a $1.4 Billion Opportunity ........................................................ 9
Beyond the U.S. Government Market – an $11 Billion Opportunity ................................... 11
III. Project Profiles..................................................................................................................... 14
DoD Passive RFID ............................................................................................................... 14
DoD Active RFID................................................................................................................. 16
Western Hemisphere Travel Initiative (WHTI).................................................................... 18
Passport (a.k.a. PASS) Card ................................................................................................. 20
Enhanced Drivers License (EDL)......................................................................................... 21
CTTP (NEXUS/SENTRI) .................................................................................................... 22
FAST ................................................................................................................................... 23
FDA Counterfeit Drug Prevention ....................................................................................... 24
Other Government Applications........................................................................................... 25
IV. Technology Trends and Markets........................................................................................ 26
V. Covered Company Profiles................................................................................................... 29
Zebra Technologies Corp. ..................................................................................................... 30
Intermec, Inc.......................................................................................................................... 31
L-1 Identity Solutions............................................................................................................ 32
VI. Public Company Profiles..................................................................................................... 33
Avery Dennison..................................................................................................................... 34
Axcess International .............................................................................................................. 35
Checkpoint Systems .............................................................................................................. 36
ID Systems ............................................................................................................................ 37
Manhattan Associates............................................................................................................ 38
Roper Industries .................................................................................................................... 39
Verichip Corp. ....................................................................................................................... 40
Vuance.................................................................................................................................. 41
VII. Private Company Profiles.................................................................................................. 42
Alien Technology.................................................................................................................. 43
ASK...................................................................................................................................... 44
Hi-G-Tek ............................................................................................................................... 45
Impinj ................................................................................................................................... 46
ODIN Technologies .............................................................................................................. 47