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Microcap & Penny Stocks : SMY - SAMSys Technologies Inc
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To: Montana Wildhack who wrote (141)11/19/2002 10:06:48 AM
From: veliny  Read Replies (1) of 342
 
Hi Wolf

I very much appreciate your posts as I continue to learn about this business.

So let me see if I got this right ....(apologies for the long message below)

From your last response it would seem that Gilette can only justify an investment in tagging if there is enough benefit to them in reducing costs from steps 2 to 5. The assumption being that they control business processes (or have significant influence)within these steps.

At some point there may be a "revenue" or "prefered vendor" benefit if companies like Walmart start mandating this. Which I am sure Walmart is trying to find ways to do. But the reality is there is little hard $ benefit to the Gilette. The Walmart's of the world will try and capture much of the value that is generated from RFID's in the supply chain by continuing to demand better trade terms from companies like Gillette. Some of this value will leak thru to consumers but Walmart will try and keep as much as possible for as long as possible.

So we are back to cost savings within steps 2 to 5. The savings may not be very real if Walmart captures the savings $. So Gilette will need find $ elsewhere in this process and utlimately that is in step 1. Gillette will put pressure on their suppliers so that the component manufacturers adopt an RFID technology that is compatible with Gilette's needs and deliver them component $ savings. This is where it starts to break down from my perspective.

The first issue is the component mfg's tend to be highly fragmented, under capitalized and fiercely independent lot. Trying to get these guys to adopt to a "standard" makes them afraid since they fear they will be "commoditized".

The second issue is that tags and readers will often delivered in combination so only my tags work with my readers. This of course is highly problematic. So it is encouraging that there appears to be some real movement in adopting standards for tags and readers.

So resolution to the second issue is the industry adopting various standards that will govern tags and readers and basic protocols. This will lead to companies specializing in one aspect of the RFID world - tag mfg, reader mfg, etc. Investments will be made to bring production costs down and performance up.

This in turn will allow component mfgs (issue 1) to purchase tags and readers from a variety of sources at a relatively low cost and be safe in the knowledge that whatever they pick will allow them to do business with their best customers.

So as an investor I will be looking for 1. who will be the leading tag manufacturers for those markets that offer the greatest growth opportunities (sounds like Alien is a good candidate) 2.who will be the leading reader mfg (Samsys?) and 3 which companies are leading in the area of software development to bridge the readers to existing supply chain software apps (??)

How did I do...
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