RFID Blog by the Experts at ODIN technologies

Kevin Mitnick on the MTA

Mon, 25 Aug 2008 14:19:59 EDT

There’s a popular tune at Boston bars close to closing time, called Charlie on the MTA (Mass. Transit Authority). It’s a 1940’s political promo for Walter O’Brien running as someone who wouldn’t raise fares to ride the subway – or the “T”as it’s called in Beantown. The latest controversy on the MTA isn’t about raising fares, but rather fare cards called CharlieCards. The MTA is using High Frequency (HF or 13.56 MHz) RFID enabled cards to carry value for frequent users of the T, and several MIT students have hacked into the RFID cards and published how others could do the same thing.

The MIT students are claiming they did the MTA a favor pointing out the security flaws– a common claim by grey hat hackers (those not malicious like black hats, but not pure enough to be considered white hats since they are publishing how they did it for others to replicate). A complex court battle has ensued in which an initial restraining order was in effect and was just repealed.

I spent the earlier part of my career running a secure data hosting company and understand the need for independent audits of systems, and think RFID needs to be held to the highest security standard however the MIT students clearly went too far by offering, on Defcon’s website, “Want free subway rides for life?”

The best way to show the world how secure RFID can be is to implement properly designed systems (the MTA system puts value on the RFID card itself instead of a secure database) and create a standard encryption process and certification for RFID in absence of being able to use existing ones. The US Government is looking for input to help (?) the industry get there: https://secure.commentworks.com/ftc-TransatlanticRFID/

There are about a dozen subway systems using this NXP MiFare card –the MIT presentation for Defcon (which I’ve seen) lists at least ten of those. All of those municipalities should be calling an RFID expert to learn how to lock down their system and then press charges on anyone who is caught hacking in – the memory of Kevin Mitnick and the time he served seems to be fading.

Let the games begin

Sat, 09 Aug 2008 16:08:57 EDT

Today, 08-08-08, is the start of the Olympic Games in China. Interestingly enough the country best known for it’s uncanny ability to counterfeit anything is combating fraud with RFID. This blog has nothing to do with RFID, however. It’s about answering one question: How do we keep competition pure?

I spent five years training for the Olympics. I finished second in the Olympic trials and won many national and international events along the way. I never took illegal substances to improve my odds of winning. Many of the losses I suffered were at the hands of athletes suspected of using human growth hormones (HGH) or erytropoeitin (EPO). That still infuriates me. The Tour de France, the Baseball Steroid scandal, and the countless people who failed doping tests for this year’s Olympics, all suggest the current system doesn’t work.

Winning is a high unlike any other. It’s pain, focus, and delayed gratification (often for years) culminating in one brief moment atop a podium where the world lays witness to your personal sacrifice and marvels at the results. The last race I entered in my career – the Royal Canadian Henley Regatta -I won handily and remember pausing on the winner’s stand freezing the moment in my mind and playing back the previous five years of pain and suffering. I was thrilled to go out a winner.

The business world has victories as well, but it has a significantly lower scrutiny, yet the penalties are much harsher for cheating than in sports. Leaders from Enron, Tyco and other scandalous corporations had their freedom and dignity stripped away for cheating. They not only can’t participate in business they can’t participate in life. They are animals living in 8’x10’ cages - fed, walked, and let out on someone else’s schedule. They use toilets in full view of others and they seldom see the light of day. It’s a terrifying thought to anyone, but especially to someone who lives to be on a field of competition.

So how do we stop cheating in sports? Incarceration.

Would Jose Canseco have juiced up if he thought he’d land behind bars for five years? No chance. Athletes get benefits and rewards beyond normal citizens because of their God-given talents and hard-earned work ethic. Athletes are heroes to impressionable youth everywhere. The rewards should be balanced with equally harsh punishment for violations of public trust and unscrupulous competition.

Any athlete participating in a national or internationally sanctioned events like the Olympic games, or a national sports league should be subject to incarceration for doping. A ban from competition just doesn’t work. If they cheat, put them in jail.

Go USA!

Tagging Metal – more science, less art

Tue, 05 Aug 2008 01:26:33 EDT

Myths have circulated for many years about RFID and art. If you want success with RFID focus more on Marconi than Picasso. The fact is, RFID is based on radio physics and you can use it to your advantage.

In this case, science has come to the rescues of a long standing myth about passive RFID and metals. While RFID does face many challenges operating effectively around metal, it works well when scientific principles are properly applied.

Take for example, the issue of attenuation. The most pernicious barrier to successful RFID reads around metals comes for the propensity of metallic surfaces to attenuate RFID antennas and make them less efficient conductors of RF energy. The metal detunes the antennas and makes them less likely to receive enough RF power to respond to the passive RFID readers.

While not completely immune to attenuation, active RFID systems largely overcome this issue through the use of an onboard power source to emanate tag signals. The problem is much more pronounced in passive RFID systems because they rely on energy from the fields generated by the reader. This is an issue for anyone who intends to cost effectively track IT assets, metal machine parts, steel pipes, material handling equipment or numerous other items.

So how can you overcome attenuation? Recently published research in ODIN labs’ RFID Metal Mount Tag Benchmark evaluates the issue in detail and presents data on 17 of the most innovative and popular RFID tags designed for use on metal. They each use a combination of spacing, dialectic materials and creative antenna designs to achieve strong performance in some tough applications.

The spacing is based on science and demonstrates that tags perform better when encapsulated in non-conductive materials and are offset somewhat from the metal surface. The designs range from small 1 x 1 inch squares to tags with widths exceeding 6 inches. Not surprisingly, some manufacturers have succeeded more than others. In some instances, small tags actually out-perform larger tags showing that the physics of RF design can sometimes offset the advantages of larger tag antenna sizes.

The benchmark runs each of the tags through a battery of scientific tests including metal proximity testing, read distance, material dependence, orientation sensitivity and others. This leads to three positive results for end users. First, it demonstrates through hard science that passive RFID can work on metal items today. Second, it shows what factors are important when evaluating tags for different use cases in metal environments. Third, it provides insight into which vendors are truly developing outstanding tags for use on metal.

These are three good outcomes for everyone considering RFID for applications where metal surfaces are involved. It can also help end users already employing passive RFID but looking for better performance or more options. Best of all, the RFID Metal Mount Tag Benchmark comes with objective scientific data that goes beyond anecdote and art.

Impinj and the Future of Intel’s R1000

Mon, 21 Jul 2008 11:48:03 EDT

What do you do when a direct competitor becomes a strategic supplier overnight? That is the question facing several reader manufacturers who rely on the R1000 reader chip originally developed by Intel. Last week, Impinj announced the acquisition of the R1000 operations in an all stock deal.

Many people know Impinj from its Monza chips where it competes with NXP and Alien providing passive UHF RFID tag silicon compliant with EPC Global’s Gen 2 standard. For a time, Impinj was the darling of the RFID tag market. It had a near monopoly on Gen 2 compatible general availability silicon for companies converting passive RFID tags. Then Impinj decided to release its own passive RFID reader creating direct competition with the three of the four large tag providers.

Not wanting to provide revenue to a competitor in the reader market, these companies and others became wary of components with the Impinj imprint. At best this was an indirect impact on Impinj tag customers and was limited only to those bold enough to sell both tags and readers. The R1000 acquisition takes this classic channel conflict to a new level.

R1000 customers now face the fact that their strategic supplier of RFID reader chips is also a direct competitor with its Impinj Speedway reader. Do these manufacturers want to provide revenue to a direct competitor who can use those funds to out-develop or out-market them? It is the equivalent of Pepsi buying cola syrup from Coke. How can you gain any ground.

Even worse for these reader manufacturers, how do you differentiate your reader when your rival has the keys to the car? Will they fill their own orders first if supply becomes tight making it harder for other reader vendors to build and ship products on time? Will Impinj optimize its readers to the R1000 and not provide the requisite knowledge to customers to do the same?

Alien is in the most precarious position. Impinj is Alien’s fierce rival in RFID reader features, marketing and product lines. Both companies try to be first to market with new features; both are focused exclusively on UHF passive RFID and have aggressive marketing organizations; and both sell tag silicon and readers. Alien made a commitment to the R1000 in 2007 and now may be providing funding to a reader rival who also happens to be a key tag rival.

So what are R1000 customers thinking about today:

1. They do not want to provide revenue to a reader rival
2. They do not want to be stuck with an undifferentiated product from a key rival
3. Without Intel’s industry clout and financial backing, they worry about adequate supply and continued engineering enhancements

If Impinj were to retire the Speedway and focus on the R1000 and its Monza tag chips, it could return to being a silicon supplier; the favored supplier on both sides of the passive RFID equation. This would eliminate the first two concerns listed above. With the backing of an aggressive entrepreneurial company such as Impinj, the product just may do better than under the innovative but more staid tutelage of Intel.

Either way, Alien faces the clearest choice. Impinj faces the toughest choice. Retire a reader product they have invested in heavily in order to maximize R1000 sales or try to support multiple platforms and channel conflict simultaneously.

Mojix leading an innovation revolution, or a lone voice in the dark?

Sat, 05 Jul 2008 08:08:13 EDT

The ODIN team recently analyzed the much talked about Mojix system and I asked them to give their thoughts on it, Chris Fennig was the primary contributor this week.

The geek in all of us was titillated and jumped in with our normal approach: (1) listen to what the vendor claims and (2) test to determine what the system can actually deliver.

We honed in on four technical features:
• interference rejection,
• dynamic amplification range,
• max insertion loss and
• shadowing effect.

In many ways, the Mojix system passed our initial evaluation. They are doing some very interesting things from an RF perspective. Although it clearly takes knowledge of physics and RF to get the most from the system.

It was an interesting week of testing which gave us great insight on the value of their technology. Once again we were learning in our controlled environment so we could best put our knowledge to use for our clients, rather than learn on their dime. It’s a head start that will pay off shortly when we deploy the first production Mojix system.

After seeing the system firsthand, our engineers can honestly say that Mojix represents the first new product offering they’ve seen since shortly after the Gen 2 air interface protocol was ratified in early 2005. Sure they’ve seen readers get smaller, cheaper, dumber, bigger, smarter, but they hadn’t seen any fundamental change, until now.

One of our team members Chris Fennig posed the question, “What does lack of disruptive innovation reflect about the RFID industry?” Chris was reminded of an article written in the New York Times about NASA’s Shuttle program entitled, “For Parts, NASA Boldly Goes…on Ebay.”

NASA, which helped incubate the chip industry through the 1960’s, uses Ebay to procure decades old technology to maintain its status quo. The rationale is simple: “If it has worked before, it will work today.” This type of thinking seems to have crept into the RFID industry and Mojix will capitalize on the situation.

Although RFID designers may be using the latest Intel chipset, is anybody analyzing the fundamental technology assumptions? The ODIN labs suggested a variation of the Mojix system to colleagues back in 2005. When we asked a respected RFID design veteran at a leading reader vendor his opinion, he informed us that the FCC would not allow such an approach, because insertion losses due to cabling could not be overcome. Mojix has proven this position false.

We hope that Mojix will spur other technology vendors on to question the old assumptions, take risks and create new variations of RFID technology. One thing is certain, a significant percentage of RFID opportunities require customized form factors to capture business value. Today, our engineering team has only four basic categories of raw materials to work with: fixed readers, handheld/wearable readers, reader modules and Mojix.

Not a bad market position for a technology vendor to assume. What new technology category will other companies contribute now that the RFID market has crossed the chasm?

Making hay out of a feeding frenzy

Fri, 27 Jun 2008 23:30:39 EDT

Last week OAT Systems was acquired by Checkpoint. As one banker remarked – “let the games begin”. Many companies could have acquired OAT, and in fact the word on the street was that there were about half a dozen that tried. Why so many and why now?

OAT CEO Michael “Midas” George orchestrated a great exit for the OAT founders and venture capitalist. He was smart enough to know that the RFID market has crossed the chasm, and that there are only a handful of RFID pure-plays that are legitimate acquisition targets. Does the OAT sale signify the start of a buying frenzy?

OAT was getting growing traction with partners like IBM and Oracle, but those behemoths were not the ones catalyzed by the reality they might miss the RFID blast-off int he next 12 months. IBM and Oracle will buy, but not now. They, like Cisco, will buy RFID companies in two or three years. They’ll each buy a company which has material revenue but they will pay $200-300 million for the privilege.

Smaller players like Checkpoint need to buy now before extensive value is built up and the one or two targets left have been bid up out of reach. They need vision and intellectual capital. Look at what Zebra (NASD: ZBRA) has done the past year. They have only about $440 million of current assets (with $90 of that locked up in inventory) to purchase companies with, so they have to bargain hunt and buy things on the cheap. They also know they need a complete RFID strategy to win. While they have not publicly disclosed they bid on OAT if they did, you could bet they wouldn’t win in a bidding war.

So is this the start of a feeding frenzy? In a word - yes. If there were six companies bidding on OAT, or even four or five, there are not six companies in the market that have proven clients, great growth history, and defensible intellectual property. Supply and demand says if they don’t buy now, someone will end up a loser.

Small and mid-cap companies who want to be serious players in the RFID industry will buy this year. End-users are buying based on complete solutions. Witness the Checkpoint "One-stop for retail RFID" moniker. More and more companies want automated support and monitoring. Middleware is dying and RFID work-flows are winning. Companies that want a $50-200 million RFID business in the next several years need a clear go-to-market strategy that is centered around easy to sell and easy to scale solutions. This means buying pieces that complete the solution puzzle. So OAT was the first course in the M&A buffet, will the next company be out of this World or a struggling Globe trotter looking for a home? Only time will tell.

A good week to build a hero...

Mon, 16 Jun 2008 12:33:34 EDT

After a hectic couple of weeks on the road I met up with my family on Nantucket for Father’s Day weekend. The weekend turned into a time of unexpected reflection on the meaning of Father’s Day. I didn’t even think about RFID, so I’m not going to write about it.

In Nantucket we stay right across the street from Tim Russert’s place. Russert was a host on Meet the Press, and wrote two books on the meaning of being a father. It seems tragically fitting that he died on Fathers Day weekend. It was also the weekend my wife’s family decided to spread her Uncle’s ashes into the harbor, where her grandparents were also dispersed.

Saturday morning when I flew in the sunshine was brilliant. It was one of the bluest Nantucket skies I’d ever seen. We went to the ocean – despite my kids wanting to go to the much less intimidating pond. At the beach we played wiffle ball, I tried to teach my daughter (5) to skip rocks, and we let the undertow pull sand over our feet as it raced off the shore back to the ocean. We hunted for shells and got sunburned. They left a little less afraid of the ocean. It was the perfect day being a Dad.

Sunday was an appropriate contrast. My wife, Christen, and I took the kids to mass at St. Mary’s of the Island, where Russert often attended. The homily focused on fatherhood and was dedicated to Russert. After mass we met Christen’s family at a secluded spot near Monomoy on Nantucket Harbor. The family arrived close together as a steady drizzle and low fog enveloped the island, providing the kind of backdrop that will etch the moment in everyone’s memory forever. My wife’s cousin read a letter his father wrote before he died. At the risk of minimizing his eloquence the message was not to wait until you are gazing at the face of death, regretting your life to think about what might have been. As he looked back on his life he longed for discipline and commitment.

Tim Russert knew what was important about being a father. The lasting gift he gave dads everywhere was his prose. He paid homage to his own Dad in the book Big Russ and Me, sharing the many life lessons his Dad passed on to him. After the book became a best-seller so many letters poured in about other dads that Russert decided to compile them into a second book ( Wisdom of our fathers ).

This weekend’s theme was clear; a man should never pass up the opportunity to be a Dad. Even if he has no biological children, there is always the opportunity to be a great father. Fathers have an obligation to bring joy, hope, encouragement, discipline, courage, confidence, and morality to the world. It’s not always easy but it is always rewarding. The toughest part of being a dad often requires sucking up the sting of pain while doing what is in the best long-term interest of your kids, or your employees, or your students.

If you’re a man take this week to encourage someone; make them feel better about themselves, teach them to overcome a fear, why good manners are important, explain empathy, or just show them how to skip rocks. Consciously find an opportunity to set a great example. It will benefit you as much as them..

As much as I don’t like the Yankees, I’ll never forget the story Derek Jeter tells about how his Dad told him with hard work he could do anything. All the while his teachers were lamenting to Mr Jeter he had to straighten his son out and get him more grounded, he’s running around telling people he’s going to play for the Yankees. Dad’s like Jeter’s are how heroes are made.

Happy Father’s Day, Pops, thanks for being a great Dad!

Assessing RFID Benefits and Costs in Retail – why people miss the obvious

Thu, 05 Jun 2008 09:42:19 EDT

Report from Citi Investment Research Retail Technology Conference – Part II

During the discussion at the Citi Investment Research Retail Technology Conference last week, a top retail executive commented on how RFID tags were still too costly for his business. That prompted Citi’s top retail analyst, Deb Weinswig, to ask about tag cost impact on RFID business cases. There is no doubt that the precipitous reduction in tag costs is making the technology more affordable because tags become the dominant ongoing cost of most RFID systems. However, the more prescient question is what costs can you eliminate by adopting RFID.

It is surprising to me how many retailers are resistant to RFID and rely on simple tag cost analysis without even considering the benefits side of the equation. I suspect the issue is that they don’t fully understand their full cost of operations, are measured only on costs and not on benefits or are not aware of the breadth of value RFID can enable.

A simple analysis would suggest that a 10 cent tag is about 9.7 cents more than the existing label cost and therefore the item must be expensive enough that the margin erosion won’t matter. The reasoning suggests that 9.7 cents doesn’t matter if the sale price is $100, but it matters intently for the $5 item. What is wrong here is the view that item costs are all you need to know. I thought the concept of total cost and landed cost had caught on, but apparently there are still some gaps out there.

If your $5 item is handled 6 times at a cost of 5 cents each time the cost increases by another 30 cents. What if you could cut the handling time and cost by 50%? The total cost of the product would be 15 cents less. If that 15 cent savings is attributed to a 10 cent tag, the value is clear through simple math. In fact, the benefits are far more compelling than 5 cents an item. If your cost of handling is in the several dollar range per item which is more common, then the 50% reduction has an order of magnitude savings over that 9 cent investment.

RFID early adopters have seen profound returns on investment. Cost of handling may be reduced by 2 – 12 times because RFID is faster than other means, you can track many items simultaneously and even track items without any human intervention. RFID capabilities also lead to ancillary benefits such as fewer out-of-stock lost sales.

How much would a 10% reduction in out-of-stocks contribute to your organization? How much would that contribution be if you add it to reduction in handling and inventory counting processes? How much more would you save if you had to write-down less obsolete inventory? The benefits pile up while tag costs remain static.

When you think about RFID, think about it as a catalyst technology. It can reduce costs across a number of areas and also break down barriers that inhibit customer purchases. It can help you bring goods to market faster by reducing supply chain inefficiencies. It can help improve inventory accuracy and availability to reduce lost sales from out-of-stocks. RFID can free up store personnel allowing them to spend more time with customers and less on inventory tasks. Combine this with good data analytics and you have retailers reaping benefits whether the tag cost is 1 cent, 5 or 10.

Is Retail is Missing Half of the Equation?

Fri, 30 May 2008 12:11:18 EDT

I had the opportunity this week to speak at the Citi Investment Research Retail Technology Conference. Citi’s Deb Weinswig is consistently rated by Institutional Investor as the top retailing / broadlines analyst on Wall Street so it was no surprise that she had industry heavyweights in the audience. Top executives from Macy’s, Saks, J.C. Penney, and several other retailers discussed their technology initiatives at length.

It is clear there is still a strong focus on investment in better analytics and assortment planning enabled by software from companies such as SAS, MicroStrategy and ProfitLogic. This is important. Retailers need to collect, harvest and analyze copious amounts of data to make better decisions. These decisions have a direct impact on revenue and profit. If the wrong lines and assortment are chosen or even the wrong lines and assortment by region, the result is excess inventory and excessive mark-downs which can devastate earnings.

However, too many retailers are inadvertently missing half of the equation. They are building data mining infrastructure to analyze after the fact or after the event data while relying on 1980’s technology and practices to collect that data. The result: inaccurate data that is not timely and is labor intensive to accumulate. Barcode has been the workhorse of retail operations since the late 1970’s, but it is now the bottleneck. It slows processes, keeps store staff in the backroom instead of assisting customers, and restricts the locations that data is collected.

A key enabler of more accurate, faster and less costly data collection is RFID. Did you know that one U.S. retailer reduced weekly store inventory count time by over 80%? A European retailer has achieved similar benefits in store inventory counting and another 30% improvement in distribution receiving operations. A third has reduced its inventory underage by 18% and thereby creating an opportunity to cut out-of-stock missed sales by over 5%.

All of these benefits were enabled by RFID. There is no magic here. RFID is the data collection mechanism that can truly fulfill the promise of the high powered analytics engines with better and more timely inventory visibility and improved operational performance.

One CEO at the conference asked me if I could foresee an end to cycle counts as RFID becomes more widely used. Think about that. Today, RFID is being used to reduce cycle counts by more than 80%. That is compelling by any measure in itself and will justify most business cases immediately. For those looking for more, the answer is yes.

New RFID technologies are making fully automated cycle counting more likely without any human intervention. This is a dream scenario for analytics engines which could then crunch actual real-time data. It is also a dream scenario for retailers who need to cut labor costs while simultaneously improving stock availability and customer service. But even if cycle counts are still required and the time is reduced by 80%, the value is already there today waiting to be captured.

When you manage by past data your decisions are only as good as the accuracy and timeliness of that data. You manage by trends and averages instead of by actual events. As retailers attempt to become more responsive to customer demand signals and bring products to stores in 3-4 months instead of 8-10, they need inventory immediacy and accuracy.

By automating and accelerating inventory identification, tracking and processing, retailers can focus on what makes them money – merchandising and customer service – instead of fretting about what costs them money and slows their ability to bring new products to market –inventory and supply chain. RFID is the key to that automation and the ideal complement to data mining and analytics capabilities that are now up and running. Think of RFID as the other half of the equation that helps the data analytics enable even faster and more accurate decisions.

Niche RFID Hardware, a good idea from TAGSYS

Wed, 21 May 2008 21:36:44 EDT

Many people have been heralding the advent of RFID "solutions" recently. There is significant evidence that people want to buy a complete widget. The argument goes taht simplicity will get them on the RFID bandwagon. While there may be a good argument that commercial off the shelf (COTS) solutions are still a small market compared to the customized solutions, that is a topic for another day. Today let’s talk about the gap and it has nothing to do with accounting or subways in the UK.

At ODIN technologies we founded the business on two things: performance and ease of use. The logic is simple. If the RFID systems are not accurate and reliable, they will be of little use. If they aren’t easy, then organizations will resist them or use the technology suboptimally. Either way, RFID would be handicapped. While the RFID solution movement is attractive because it addresses ease of purchase (if not always ease of use), it will only be successful where performance can be assured.

This brings me to TAGSYS. A couple of weeks ago the company introduced a new line of UHF RFID tags designed for specific solution applications. They want to make sure that the tags meet performance requirements of specific solutions. Our engineers brought the DocTRAK tag in-house to give it a try on file folder applications. The result: a tag well tuned to dominate a niche application.

ODIN’s RFID engineering team put the DocTRAK through scientific testing and compared the results to the three most common UHF file tracking tags. The DocTRAK tag outperformed its peers in nine of the 12 tests conducted. It demonstrated a notable performance advantage when there were large numbers of files being read simultaneously and there was little or no spacing between them. Interestingly, the same characteristics that caused the tag to trail competitors in three of the tests were due to the qualities that enabled it to excel in the core application evaluation.

The implication here is that we have a tag tuned and marketed for a niche application. It may not be superior for pallet tracking through a warehouse, but it will serve exceptionaly well for file tracking applications. While most tags try to be all things to all applications, they fail at many. Congratulations to TAGSYS for providing a tag that meets niche performance requirements that can allow others to build COTS solutions to address specific business needs.