The real promise of the Internet of Things is connecting not just powered electronic devices, but the countless other everyday items that until recently have remained stubbornly isolated in the physical world.
Impinj, a 15-year-old Seattle company, is doing just that with its radio frequency identification (RFID) technology—long in development and now finally achieving large-scale adoption. The company recently sold its 10 billionth RFID chip; an eye-popping milestone that co-founder and CEO Chris Diorio says just scratches the surface of the opportunity in front of Impinj.
“We’ve connected 10 billion items in our everyday world to the Internet and are providing the identity, location, and going forward, the authenticity of those 10 billion items,” Diorio says. “That said, our penetration rate is still relatively low compared to the number of connectible items in the everyday world. There are trillions of connectible items.”
Retailers have consumed some 60 percent of those 10 billion Impinj RFID chips since 2010, Diorio says. Pick up a clothing item in a Macy’s, for example, and the hang-tag will likely have a small antenna and integrated-circuit chip attached. A hand-held or ceiling-mounted RFID reader can pick out and locate that specific item, making possible things like real-time inventory control and omni-channel retail models (think online ordering and same-day, in-store pickup).
It has been a long haul, through hype cycles and continued technology development, to reach this level of adoption. As far back as 2004, Impinj and its competitors were anticipating strong demand for their technology to improve the efficiency of the global supply chain, by putting tags on pallets, cases, and other shipping containers. Walmart made a big commitment to the technology in 2005 that didn’t pan out. The global supply chain was already pretty efficient, Diorio says.
“Everybody knew even at that time that the real opportunity was tagging individual items, but it took time—as it does with any new technology—it took time for the technology to be mature enough, to be usable enough, to quite frankly become invisible enough, that people can focus not on the technology itself, but on the data that they’re getting and on the business value that they’re getting,” Diorio says.
Now Impinj, and the RFID industry more broadly, are working to make the data generated by RFID tags easier to consume, and to highlight that business value.
A year ago, Impinj, Google, Intel, and SMARTRAC formed the RAIN RFID Alliance, an industry group similar in purpose to those that advanced communications technologies such as WiFi and Bluetooth. The alliance now has 70 members, including Impinj competitors such as Alien Technology, based in Silicon Valley, and ThingMagic, in Woburn, MA.
The name RAIN—short for radio identification—is an attempt to rebrand the underlying technology and make it more approachable to consumers. “And the link to the cloud there is fairly obvious,” Diorio says.
The business case for the technology has won over many retailers, particularly apparel sellers, which awoke to the promise of tagging individual items with RFID chips in 2010, Diorio says.
The first categories were basics—socks, underwear, t-shirts—that turnover rapidly. “Stores want to know how much inventory they have on hand and how much they have to order,” he says.
Now many retailers are tagging nearly everything in their stores. The tags cost pennies apiece and require no power. Inventory, which used to be a manual process of counting every item in the store, maybe once a quarter, now happens more frequently, accurately, and efficiently. That helps retailers ensure they always have enough on hand to give customers what they’re looking for—but not too much, resulting in unsold inventory.
“They can operate their stores based on data rather than guesswork,” Diorio says.
Inventory is just the beginning. Impinj built a mock retail storefront in Seattle’s Fremont neighborhood to show off the capabilities of RAIN RFID.
On a visit earlier this year, Impinj chief operating officer Eric Brodersen carried a couple of coats into a fitting room. A screen inside lit up with information about the coats. The system can also provide suggestions of complementary items, bringing Amazon-style suggestive selling into the physical world. And it can help shoppers communicate with store workers to get another size or color to try on.
Retailers such as Nordstrom and Rebecca Minkoff last year deployed these smart fitting rooms with help from eBay. Impinj wouldn’t say if its RFID technology was involved.
Another demonstration at the Impinj Retail Experience Center—which the company opened last year—shows how tracking the movement of individual items through a store can yield big insights. Overhead readers can see up to 1,000 tags per second within a 30-foot field of view.
With this new view of their stores, merchandisers can quickly learn which displays are most effective by counting how often items are picked up off of them by shoppers. And suppose one of those items makes frequent trips to the fitting room, but never to the checkout counter. That pattern—made visible by the RFID data—could help clothing designers spot a flaw in one of their designs.
While Impinj spent most of the last decade focused on developing the underlying RFID protocols and technology—the integrated circuits that go in the tags and readers, and the readers themselves—the company is now also building more sophisticated software to make the data generated by RFID more usable and valuable.
Diorio describes it as an operating-system layer, called ItemSense, that can elevate the RFID data and feed it into applications built by third-parties to deliver the kinds of capabilities demonstrated in the Retail Experience Center.
The 175-person company has hired software developers over the last two years and has about 20 openings across the business to meet growing demand, Diorio says. It is moving later this year to the booming South Lake Union neighborhood to accommodate the larger staff.
Impinj has not made public its revenue or profit figures since it withdrew paperwork for a public stock offering in 2012. It announced a $21.6 million funding round that summer. The company said at the time it had raised $135 million from investors including AllianceBernstein L.P., ARCH Venture Partners, GF Private Equity Group, Intel, Madrona Venture Group, Mobius Venture Capital, and Polaris Venture Partners.
While retail was the first and biggest adopter of RFID technology, the tags are popping up in lots of places now. They are in Washington state enhanced drivers licenses; in the automatic tolling system on the State Route 520 bridge; in the lift tickets at Vail Ski Resorts; in running bibs that track race times at marathons; and for tracking automotive parts during manufacturing, Diorio says.
Impinj sees another major customer in the healthcare industry. Hospitals in particular are putting tags on gurneys, wheelchairs, infusion pumps, and other assets that are used frequently. “You go to a typical hospital and they’ve got tons of this stuff because they don’t know where any of it is at any one time,” Diorio says.
Other healthcare applications include tagging pharmaceutical products to ensure their authenticity and integrity. And one hospital has used RFID tags to improve compliance with hand-washing, helping prevent the spread of infections.
These are the applications that get Diorio—a steadfast champion of the technology throughout more than a decade of development—most excited.
“I want to be pushing applications that help people, that reduce loss and waste, ensure the safety of the food supply chain, that prevent counterfeit pharmaceuticals, that do all kinds of good things,” he says.
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