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Technology Stocks : Racom Systems (RCOM) -- Ignore unavailable to you. Want to Upgrade?

To: Gutterball who wrote (190)	7/31/1998 4:39:00 AM
From: Gutterball	Read Replies (1) \| Respond to of 468

INTRODUCTION There are two mega trends in the smart card industry effecting Racom today: the struggle for smart card standards #reply-5159102, #reply-3964027 and vertical consolidation #reply-4238507. SMART CARD STANDARDS - The struggle to establish smart card standards will delay the time it takes Racom to come into its own by at least three, maybe five years #reply-5159102. Presently, we see the standards issue as a quest for dominance between smart card solutions like Visa and its Java Open Platform operating system #reply-4367610; Mondex and it proprietary operating system MULTOS #reply-4338632, #reply-4342741; Philips and its MiFare system #reply-3961208, and others like American Express and Proton #reply-5349700. While these major players sort out who will be the Mother of all smart cards, this maneuvering to define smart card standards has begun to slow down deployment of certain Auto Fare Collection (AFC) initiatives Racom has undertaken; e.g., DC Metro, #reply-4442025 and London Underground #reply-4123365. The issue of a transit/bank card has even crept into the San Francisco project of which I understand Cubic is a bidder #reply-4457204. Two years ago, Racom contemplated going toe-to-toe with Siemens over standards #reply-3939795, but not having the resources to sustain meaningful representation in any fray, Racom has since chosen to leave the standards issue to the Big Hitters and in the mean time focus on closed systems and OEMs #reply-3929585. The recent announced alliance with Access Control #reply-5262985 is the first OEM to come on board since this change in technical trust was announced. VERTICAL CONSOLIDATION - In companies where product life cycles are short, the quest to deliver new products is never ending. In large companies with well established distribution systems, paying millions for a small company to make billions by selling its newly acquired products through an extensive distribution network has become the rule rather than the exception in sustaining rate of growth. Of course, these large companies are looking for innovation that enhances their product line. And if it enables the acquirer to leapfrog technology to a higher, the better. Large companies with deep pockets (e.g., Microsoft, Intel, Cisco, and of course, Hewlett Packard) can afford to invest like venture capitalists. As such, they often buy technological innovators just before their products are ready to hit the marketplace. This allows them to enter at a position of low development risk and simultaneously cruise below the government's anti-trust radar. It's hard to make an anti-trust case if the acquired company has no sales. Until Ramtron's conference call 07-24-98, it wasn't clear what the stellar technology may be that Racom was sitting on, other than its RF/ID FRAM patents and several RF/ID applications that hadn't moved beyond pilot projects. But thanks to that call, we now have a handle on the "apple in the eye" of a would be suitor. Recall, Fujitsu's 64K FRAM announced 12/97 #reply-4484196. At some point this year, it's development became a priority for Ramtron. In fact, Ramtron admitted in the call to de-prioritizing Fujitsu's 1 Mb FRAM in order to get the 64K chip out the door first #reply-5311939. This 64K chip is expected to go into a third generation design for Cubic's GO-CARD which Racom will earn a royalty on and be ready sometime early next year. Considering Racom has developed a multi-application contactless smart card #reply-5310057 that this chip could readily be plugged into and that Ramtron was encouraging Rohm to bring its 64K FRAM on-line, it is evident that Both Ramtron and Racom are focused on a superior contactless multi-application card that will be a "death star" to the competition. Clearly, this 64K FRAM design trumps Motorola's recent intent to develop a 32K EEPROM multi-application smart card #reply-5107165 and leapfrogs it by a generation in the process. Any major player looking to use vertical consolidation to tip the balance in their favor, certainly sees Racom as an "apple in their eye".