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Lockheed Looks for a Savi Buyer

The defense contractor seeks to sell off its 433 MHz RFID tag and reader division, which plans to shift its marketing and product-development focus to the commercial sector.

By Claire Swedberg

Nov. 11, 2011—Citing Savi Technology's need to grow in commercial sectors—as opposed to the military, on which the bulk of its business has traditionally been focused—defense contractor Lockheed Martin intends to sell its 433 MHz RFID tag and reader division. Lockheed Martin expects the sale to take place within the next year.

"While there have been a host of events that have led to this point," says Heather Kelly, a Lockheed Martin spokesperson, "the decision to sell Savi reflects a solid business rationale that recognizes that there are fewer opportunities with Savi's products in our core Lockheed Martin market areas."

latest company news about Lockheed Looks for a Savi Buyer   0
Savi's William Clark
When Lockheed Martin purchased Savi Technology in 2006, Kelly says, the U.S. Department of Defense (DOD) provided a strong demand for Savi's RFID readers and tags, as well as its proprietary software to track objects on which tags were affixed (see Lockheed Martin Buys Savi). Savi, based in Alexandria, Va., has been the primary provider of active RFID solutions for the DOD, particularly in the agency's In-Transit Visibility network, which monitors the movements of containers and products through the supply chain by means of 433 MHz active RFID tags, readers and software.

That business peaked in 2008, says Bill Clark, Savi Technology's CEO, about two years after Lockheed Martin acquired the company. As the U.S. military's demand for active RFID technology declined, she explains, along with the economic downturn, Savi has been increasingly refocusing its efforts to include the commercial sector.

"The market for Savi products and services remains attractive," Kelly states, "but is developing in markets outside LM's core market interests."

The DOD's use of RFID has not declined, according to Mark Lieberman, the automatic-identification technology (AIT) program manager at the Defense Logistics Agency (DLA), headquartered at Fort Belvoir, Va. What has changed over the past few years, however, is the department's increased reliance on reusing active RFID tags, he says, resulting in less of a demand for new tags. What's more, he notes, "current DOD contracts for RFID tags and infrastructure items are awarded to multiple suppliers providing competition for government business. There was a time when Savi was the sole supplier of tags and infrastructure end items to DOD."

Savi invented the 433 MHz RFID technology underlying the ISO 18000-7 standard—which was first ratified in 2006—and launched a number of licensing programs aimed at providing hardware developers with a way to access a portfolio of Savi patents under reasonable and non-discriminatory (RAND) terms (see Savi's New Licensing Program Slashes Costs for ISO 18000-7). In 2009, the company spearheaded the formation of the Dash7 Alliance, a consortium comprising RFID users and approximately 20 RFID technology companies that market products complying with the standard (see Dash7 Alliance Seeks to Promote RFID Hardware Based on ISO 18000-7 Standard). One company that competes in the government sector is Identec Solutions, which has been providing the DOD with 433 MHz active tags and readers for three years. "The opening of this market to other vendors like us did change the market dynamic quite a bit," says Gerhard Schedler, Identec's president and CEO.

Savi Technology provides its products not only to the DOD, but also to NATO and, in the private sector, to Dow Chemical and other Lockheed Martin business segments. For instance, Kelly says, Savi's products, including active RFID tags and software, are being used as part of Lockheed Martin's "Flight Line of the Future" strategy. "Lockheed Martin uses Savi Technology in support of the F-35 production line," she states.

Savi's shifted focus to the commercial sector comes under fairly new leadership, as Clark became the company's CEO in January of this year. Moving forward, he expects the firm to continue expanding into the commercial sector with products based on an enhanced version of the 18000-7 standard, targeting end users in the commercial market that require active RFID solutions for tracking high-value assets. The company has submitted a proposed enhanced version of the standard to the International Organization for Standardization (ISO), Clark says, which includes a higher data rate than the current 18000-7 standard, as well as the ability to transmit sensor data, hop transmissions from tag to tag and utilize multiple channels (the current standard supports only a single 500 kHz channel).

The Dash7 Alliance, meanwhile, has submitted its own new standard to ISO for review. Its proposed standard, known as ISO 18000-7 Mode 2, also focuses on the commercial rather than government sector (see Dash7 Alliance Working on New Specification, Tags for ISO 18000-7). Mode 2 would allow the integration of 433 MHz active and 13.56 MHz passive RFID technologies onto a single tag, and—like the enhanced Savi version—would support a higher data rate, multiple channels and peer-to-peer (tag-to-tag) transmission, thereby making possible a variety of new applications. RFID products based on the Mode 2 specification are already commercially available, such as those produced by a company called Agaidi, and used for a project in Finland (see Helsinki Airport Puts 'Guidance Display Card' to the Test).

Savi left the Dash7 Alliance early this year, following the company's decision to pursue its own enhanced version of the 18000-7 standard, rather than the association's planned Mode 2 proposal. "Our emphasis is on the combination of our technical acumen and our marketing strategy," Clark says, in order to target companies tracking high-value assets. Savi had provided funding for marketing, he adds, and had paid its staff to serve on the Dash7 Alliance. "Our view was that if the standard association was going to gain traction, the overall membership had to take some of that [financial] responsibility."

The Dash7 Alliance has its own focus on the commercial sector as well, says Mark Morrissey, one of the association's board members and the marketing manager at Semtech, a semiconductor firm that manufactures chips for 433 MHz tags. "Our perspective," he explains," is that what we're doing at Dash7 Alliance is much bigger than the DOD." With the DOD's reduced demand for active 433 MHz RFID tags, he notes, companies like his are turning their attention to the commercial sector, and to focusing on building- and home-automation applications. "Wars don't last forever; policies do change," Morrissey says. "Savi recognizes that it needs to reach out beyond the DOD." The alliance anticipates that Savi may rejoin the group in the future, he notes, adding, "Their contribution would be welcomed."

"Savi has a very bright future," Clark says. "In technical markets, there's a large trend toward assets becoming smarter." What's more, he adds, the business sector is increasingly fueling the adoption of technologies that can make companies operate more efficiently.

When it comes to finding buyers, Clark says, "Our intention is to sell Savi to a buyer that will continue the business on a path to success, continue supporting current customers and its contractual commitments." Until then, he states, "business is continuing as normal. Savi will continue to meet all commitments, as well as support future needs."
Pub Time : 2011-11-14 10:31:30 >> News list
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