G2 Microsystems Receives 2006 Entrepreneurial
Company of the Year Award from Frost & Sullivan

G2 Microsystems Recognized for Product Advancements and Strategic Business Success in Radio Frequency Identification (RFID) and Wi-Fi™ Semiconductor Technology for Real Time Location Systems (RTLS)

I. Market Overview/Key Challenges

The evolution of the technology has resulted in numerous challenges related to functionality and desired performance levels among early adopters. The market is yet to evolve an industry standard in terms of the return on investment (ROI) and most participants are unclear about the impact of RFID deployments on the enterprise’s profitability. A clear definition of the pay-back period is not easily conceivable, when enterprises are focused on objectives, such as enhanced productivity, efficiency, and optimal resource utilization. The cost of RFID technology is therefore likely to compete with other investments that yield immediate returns.

Considering RFID technology in isolation to existing legacy technologies is expected to prove difficult due to the resistance to change among verticals that that are not traditionally early adopters of emerging technologies. The challenge of technology and process integration needs to be addressed based on consumer specific business cases and necessitates effective integration with the existent IT infrastructure of the enterprise.

The RFID market is still perceived to be in a developmental stage with most market participants unsure of their product and vertical positioning. Technical partnerships and marketing alliances are therefore a mainstay of the competitive landscape enabling market participants to overcome customization and interoperability challenges.

II. Award Categories & Relevance

The RFID industry is currently in the initial developmental and growth stage of market development. The technology adoption has been restricted to specific applications and verticals due to various challenges such as complexity of the technology, cost of investment, integration with existent infrastructure and interoperability across standards.

The relative nascence of the market is characterized by high levels of competition with market participants relying on technical innovations to gain product differentiation. While market participants are looking to introduce solutions that are have the technological edge, a significant number of successful case studies have involved solutions that have a customer centric focus that matches existent and emergent market needs.

Market participants capable of developing scalable solutions that possess the flexibility to remain relevant to changing market needs are likely to capture significant market shares in terms of the expected market potential. Business partnerships and technical alliances are a key feature of the competitive landscape since the diversity of customized needs within niche market opportunities necessitate partnering with different players in the RFID value chain.

III. 2006 RFID & RTLS Entrepreneurial Company of the Year Award

    
2006 RFID & RTLS Entrepreneurial Company of the Year Award
Award Recipient: G2 Microsystems Inc

Award Description

The Frost & Sullivan Award for Entrepreneurial Company of the Year is presented each year to the small company that demonstrated superior entrepreneurial ability in its industry during the research period. This Award signifies the company's identification of a unique and revolutionary product solution with significant market potential. Additionally, the Award certifies that the company's marketing strategy is sound and poised for success.

Research Methodology

Entrepreneurial ability is assessed using mostly primary research with top manufacturers and end-users in the industry. Frost & Sullivan’s analyst teams perform extensive interviews with the company in question to evaluate its business, products, and marketing plan. In addition, primary research with leading manufacturers is performed to benchmark the Award recipient's strategy for growth against established players' strategies. Also considered are elements such as strategic alliances, expected time to market, and the senior management team. Primary research with end-users is also conducted to evaluate and compare the value of the Award recipient’s product solution.

Measurement Criteria

A recipient that is chosen for the Frost & Sullivan Award for Entrepreneurial Company of the Year must match the following criteria:

• The company must have fewer than 300 employees.
• The company must have identified a brand new and completely unique product solution.
• The product solution must have significant market potential - at least $200 million - and a high probability of reaching its potential in the next 2-5 years.
• Financial and employee based resources to ensure a large probability of success. Financial resources include backing from VCs, IPOs, and funding from large corporate partners.
• Protection from competitors: patents, large product development lead time, strategic alliances with key component suppliers, etc.
• Strong plans for marketing: strategic alliances for distribution, relationships with key customers, voluminous positive-press in the media, endorsements from industry experts, etc.

The Frost & Sullivan Award for Entrepreneurial Company of the Year 2006 is presented to G2 Microsystems in recognition of the company’s proactive development of a unique product solution using Radio Frequency Identification (RFID) and Wi-Fi technology.

G2 Microsystems is a privately held company engaged in the manufacture of integrated circuits for mobile resource management enabling tracking applications across verticals such as automotive, chemical, oil and gas, healthcare and transportation. The company’s G2C501 solution is expected to enable a commercially viable RTLS platform that ensures expanded functionality at the optimum level of investment.

Strong Emphasis on Product Functionality Driving Market Expansion

The company’s G2C501 System-on-a-Chip (SoC) product development is concentrated on providing integrated support and a low-power solution for active RFID applications. The uniqueness of the G2 solution enables the tag to leverage on the Wi-Fi infrastructure that exists within each enterprise. The company’s SoC solution enables track and trace applications based on Received Signal Strength Indicators (RSSI - values provided by 802.11 access points), Time Delay of Arrival (TDOA), and Location by Proximity methodologies. The strategic focus on the IEEE 802.11 network ensures optimizing investments within existing location points thereby eliminating the need for separate proprietary networks. G2’s product strategy reflects percipient business acumen of the adoption challenges existing in the present market scenario. Lower cost of ownership is expected to be a significant adoption factor for the migration towards complete deployments.

The technical innovation of integrated circuit architecture within the G2C501 solution alleviates the need for high power requirements that have a significant impact on the battery life. The power management design and low duty transmission duty cycles ensure an extended battery life since the consumption is based only on the reporting and application requirements. The focus on extending the battery life of the tag is expected to be a key measure of success within vertical and application markets that are challenged with the high power demands of existent Wi-Fi networks.

Key Measures of Success

The G2C501 has been positioned to cater to the asset tracking and RTLS markets that are expected to witness highly positive growth rates in future. G2’s present concentration within verticals such as automotive, healthcare and transportation is expected to result in a significant market presence. The existent vertical focus is strategic since these markets represent strong business cases and early adopter investments.

The high emphasis on uniform product functionality across standards platforms such as 802.11, EPC and ISO addresses challenges of standardization and the individual investments required for related compliance. The solution’s adaptability to different standards is expected to facilitate immediate adoption rates and sustainable market shares in future.

Environmental sensing within transit and logistic applications is expected to hold significant market potential within verticals such as pharmaceutical, consumer product goods (CPG), high-tech electronics and the food supply chain. The increasing interest in RFID for cold chain legislative compliance is also expected to further G2’s market visibility in light of G2C501 SoC’s programmable sensor capabilities.

Investor Confidence – Endorsing Future Profitability

The expectant success of G2 Microsystems is reflected in the investor confidence that the company has witnessed in the recent past. Significant investors in the G2 venture include Siemens Venture Capital, UPS Strategic Enterprise Fund, Starfish Ventures and DB Capital Partners, the private equity and venture capital arm of Deutsche Asset Management (Australia) Ltd. G2’s R&D presence in Australia and the headquartered base in USA enables the company to leverage on the geographic presence in terms of talent and market potential. The company’s sound financial backing and strategic market presence is expected to positively impact future profitability.

Propelling Adoption and Sustaining the Competitive Edge  

The company has 16 patents under approval and significant R&D investments that are likely to ensure G2’s product differentiation and competitive advantage. The G2C501 solution is expected to be priced at $12 for large order sizes. The competitive price levels are a result of the company’s strong emphasis on product development aimed at reducing the total cost of ownership. The high level of integration eliminates the need for external circuitry and thereby ensures optimal prices and form factors. The G2C501 evaluation kit facilitates prototyping and testing of the solution design and is expected to overcome initial consumer apprehensions prior to G2’s full-scale commercial production plans by the end of 2006.

Technical and Marketing Alliances

The G2 solution also ensures functional compatibility with widely adopted RTLS platforms due to strategic partnerships and alliances. Technical and marketing partnerships with leading market participants are critical since the company’s solution represents a part of the overall RTLS network. The company has entered into technical alliances with key partners such as Microsoft and Cisco Systems. The G2C501 chip has also been incorporated into RTLS solutions from market participants such as Ekahau and Pango Networks. The company has received significant positive press including endorsements from its technical and marketing partners within the RFID, RTLS, and Wi-Fi markets.

Conclusion

The G2 solution successfully addresses key market challenges involving high costs and power consumption concerns that have traditionally impeded the growth rates within the active RFID markets. The flexibility and functionality of product design across various standards and technology platforms ensures compatibility of G2’s solution with present and emergent application needs. Frost & Sullivan recognizes the futuristic strategies and technical capabilities of G2 Microsystems which are expected to result in future market shares within the active RFID and RTLS markets.

About Best Practices

Frost & Sullivan Best Practices Awards recognize companies in a variety of regional and global markets for demonstrating outstanding achievement and superior performance in areas such as leadership, technological innovation, customer service, and strategic product development.  Industry analysts compare market participants and measure performance through in-depth interviews, analysis, and extensive secondary research in order to identify best practices in the industry.

About Frost & Sullivan

Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership services, and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community by providing comprehensive industry coverage that reflects a unique global perspective and combines ongoing analysis of markets, technologies, econometrics, and demographics. For more information, visit www.frost.com.

About G2 Microsystems

G2 Microsystems designs and markets ultra low-power, system-on-a-chip ICs that provide active asset tracking and sensing leveraging existing wireless IEEE 802.11 network infrastructures.  Our SoCs significantly reduce the Total Cost of Ownership of deploying global asset tracking systems so that businesses can achieve greater utilization of their mobile assets and improve operational efficiencies.   

G2 Microsystems is a privately-held semiconductor company, with headquarters in the U.S. and research and development based in Australia.  Major investors in the company include Siemens Venture Capital, UPS Strategic Enterprise Fund, Starfish Ventures and DB Capital Partners, the private equity and venture capital arm of Deutsche Asset Management (Australia) Ltd. G2 Microsystems can be contacted at their US corporate headquarters in Campbell, Calif. at +1-408-626-4812 or at www.g2microsystems.com.

 

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