Neomedia Techs (WKN:910212) Strong Buy?

Wal-Mart & RFID Meeting news...read carefully>>>>

news.com.com/2100-1008-5101416.html?tag=nefd_hed

Wal-Mart Stores and its largest 100 merchandise suppliers plan to meet this week to plot the implementation of a new high-tech inventory-tracking system, a project expected to send ripples across the retail industry.

The meeting, scheduled for Tuesday near Wal-Mart's Bentonville, Ark., headquarters, follows the megaretailer's announcement in June about its foray into a technology known as RFID (radio frequency identification). At the time, Wal-Mart asked its top 100 suppliers to join the effort and, starting Jan. 1, 2005, attach RFID tracking "tags" to the millions of cases and containers they ship to the company.

Among the companies congregating in Bentonville for a full briefing from Wal-Mart are industry giants Kraft Foods, Procter & Gamble, Tyson Foods and Unilever, a Wal-Mart representative said. Some big names in information technology will also be in town, with IBM, Intel, Microsoft, Philips Semiconductor and SAP participating in an RFID "tech expo" Wednesday.




News.Commentary
Think big on Wal-mart ID tags
Wal-Mart suppliers must ask the
retailer and themselves some tough
questions about their RFID initiatives
to reap long-term benefits.




RFID tags, which contain special microchips and antennae, are designed to automatically relay to computers precise information about the contents of product packages and containers. The technology is expected to reduce much of the manual labor and human error involved in tracking inventory via bar codes and could save Wal-Mart close to $8.4 million annually, according to investment research firm Sanford C. Bernstein.

But less clear are the benefits for Wal-Mart's suppliers, many of whom already have highly accurate inventory systems, according to a recent report from IT analyst firm AMR Research. It's a critical question, given that large suppliers will spend an average of $13 million to $23 million to comply with Wal-Mart's plan, AMR Research estimates.

"Other than maintaining positive relationships with Wal-Mart, almost no company attending the symposium could readily identify immediate value in implementing the technology," the report states.

A spokesman for the retailer dismissed the notion, insisting that the technology will be a boon to suppliers as well as to Wal-Mart. "Analysts always have to come up with something," Wal-Mart spokesman Tom Williams said.

The benefit to manufacturers comes only when RFID is deployed in stores to decrease stock-out situations, AMR analyst Kara Romanow said. But because of costs and privacy concerns, that could be 10 years away or more, experts said.

Procter & Gamble, which has been deeply involved in the testing and development of retail RFID systems for the last several years, is optimistic that RFID will be more than just another cost of doing business with the world's largest retailer.

"We see that this technology has huge benefits, even at the case and pallet level, in helping us to track our product and helping us understand how long does it take to get through the supply chain," a P&G representative said.

"This criminal element has introduced counterfeit pharmaceuticals into the mainstream drug chain," he said, "and media, from TV to page 1 of The Washington Post to pharmaceutical trade publications, sees this as a major story. Just this summer, some 200,000 tablets of Lipitorr, the best-selling cholesterol-lowering medication, were found to be counterfeit and recalled, but only after reaching major retail stores. The FDA wants desperately to intercept illegal packages," said Greene, "but has admitted it lacks the resources and technology to do so."

Greene believes the FDA "took a major step forward" when it announced plans in March to require bar codes on unit dose packaging for medications to help improve patient safety. Further, he said, the FDA's Counterfeit Drug Task Force's recent report outlined options for an anti counterfeiting program, citing data collection technology as key, including use of fluorescent inks, invisible bar codes and RFID tags. The report, said Greene, noted that tracking at the individual package level, in addition to the case/pallet level, would be best.

PaperClick Links Consumers, Camera Cell Phones and Packaging Information
Chas Fritz, chairman, founder and chief visionary of NeoMedia, said its PaperClick technology used via a camera cell phone (see "NeoMedia's New Killer Wireless App for Nokia Camera Cell Phones Turns Internationally-Popular Toys Into Internet-Enabled Business Tools," Business Wire, Sept. 8) can overcome the problem of training consumers about what security features and information to look for on packages.

"With PaperClick," he said, "just a picture of a code on a package links consumers to a Web site, which can provide up-to-date information on what to look for on the package." Fritz said NeoMedia is looking into several other product authentication solutions "based on our patented and proprietary technology" for reading both overt and covert information and features through PaperClick.

He said this includes RF-ID, which uses electronic chips (called "tags") to hold information similar to data held by UPC/EAN bar codes, but which can also track specific parts, pieces or items from manufacturer to user, through the supply chain RF-ID tags can communicate automatically, without human intervention, with scanners, readers and computers (see "NeoMedia Patents Form Critical Link for RF-ID," Business Wire, Sept. 16).

"Linking cell phones with PaperClick to RF-ID is not here today," said Fritz, "but it's a technology to look for in the not-so-distant future.

"NeoMedia believes we have the most comprehensive approach to address the growing menace to drug manufacturers, legitimate distributors and, most importantly, to the consumer," Fritz said. "This week we are in Washington for meetings, and are actively developing strategic relationships in both the public and private sectors to help us enlist PaperClick solutions in the war against counterfeit prescription drugs."