Ravi Pappu

CAMBRIDGE, Mass. — Five years ago, ThingMagic was presented with a challenge from Massachusetts Institute of Technology's famed Auto-ID Lab — develop a radio frequency identification reader that could work with any RFID tag.

At the time, the Cambridge, Mass.-based ThingMagic was operating as a "halfway house" between academia and industry, helping companies take their research and turn into the basis for viable business plans, according to cofounder Ravi Pappu.

Working with MIT's Auto-ID Lab, a research and development facility focused on radio frequency identification technology funded by companies in the retail industry, was standard for ThingMagic, but this particular request intrigued Pappu and ThingMagic cofounders, who started the company in 2000. RFID technology was just beginning to be utilized by the retail industry as a tracking device that enabled companies to follow their goods by means of tags that were embedded in the items and readers that utilized wireless technology to transmit information about the product.

What was so intriguing was that most readers were then being developed with proprietary technology in conjunction with tags, rendering the readers useless with other devices. ThingMagic set out to create a reader platform with open standards that could read multiple tags.

Within five months, a prototype was made and a company was reborn. "We realized we were at the beginning stages of what we perceived to be a huge market," said Pappu.

Indeed, estimates have the RFID market ballooning from its current approximately $300 million market to anywhere from $2 billion to $7 billion within two to three years. Retailers as varied as Wal-Mart and the U.S. Pentagon have embraced the technology and it is anticipated that, with emerging standards and decreasing costs, spending in the market will continue to increase. According to the RFID Journal, which cites a report by Allied Business Intelligence, a research firm, industries that will drive spending in the RFID market include consumer packaged goods and retail, automotive, military and homeland defense.

All of which makes ThingMagic's timing and instinct dead on. This past February, ThingMagic, which has 50 employees, raised $6 million in funding from Cisco Systems and Nicholas Negroponte, the chairman of MIT's Media Laboratories. The company had already raised $15 million in July 2005, bringing its total investment to $21 million.

"They wanted to be involved in the next big thing," said Pappu of the Cisco investment. "They understand that networking will play a critical role in RFID and they chose us."

In a release at the time, Mohsen Moazami, vice president of retail-consumer products distribution of Cisco Systems, said, "Like the Internet, RFID is an infrastructure-driven technology. It requires easily managed network solutions that scale, are non-disruptive, and have low cost of ownership. Cisco is an active member and supporter of the RFID industry. We partner with a number of industry leaders, including ThingMagic, that specialize in networked RFID solutions, making this investment a natural fit for our RFID strategy."

Other investors in the company include the Tudor Group, the Exxel Group, Inventec Appliances, Morningside Technology Ventures, and Top Line Capital LLC.

The company recently released its Mercury4 RFID reader platform, its fourth generation reader. Among its 30 customers are 20 reseller partners, which the company realized would allow it take advantage of larger networks, as well as companies like Sensormatic Electronics Corp. and Proctor & Gamble. The company has over 10 patents and according to Pappu it is filing for additional patents "all the time."

Most recently, the company signed what Pappu calls its "landmark deal" with Tesco, the huge, United Kingdom-based international supermarket chain. "It was a big deal," said Pappu. "It showed the world that RFID has come of age and that a small company in Cambridge, Massachusetts can design mission critical technology."

It also lends credence, according to Pappu, to ThingMagic's vision. "The previous generation of RFID didn't believe that this [open standards] would be the wave of the future," said Pappu. "Selling this vision is important. We are well versed in our technology and can explain and communicate our view. That has been our success."

The other trick, said Pappu, is the challenge of making the technology so ubiquitous that "no one perceives that it is a huge challenge. But for scientists like us, hard problems are a good thing."

At least it is for Pappu. He came to the United States in 1991 from Hyderabad after receiving a bachelor's degree in electronics and communication engineering from Osmania University, to get his master's degree in electrical engineering from Villanova University. He then went on to get a master's degree from MIT in media arts and sciences before pursuing his doctorate, which he received in 2001.

It was that year that ThingMagic decided to become one of the sponsors of the Auto-ID Lab so that it could work with other companies to standardize the technology. A number of other high tech companies as well as end users — such as Proctor & Gamble and Wal Mart — were also involved. "We were trying to build technology that was cheap and scalable," said Pappu. "We were the reader company."

ThingMagic was able to keep itself afloat its first five years by taking on consulting projects while working on the RFID reader. The lab provided the company with its first clients and by 2003 ThingMagic's reader was on the market. By 2005, the company made its first bid for funding. "We became a product company," said Pappu. "We needed to get our inventory in place and invest in the future of RFID." 

ThingMagic's reader, which Pappu said was the first to use Intel processors, is now deployed all over the world, in Japan, Europe and India. Its reader "talks" to tags by getting the data and passing it over a network to an enterprise application. As opposed to barcodes, which need to be seen to be read, RFID tags can be embedded deep inside a pallet and can still relay information about an item. Also, in addition to identifying an object, which a bar code can do, the technology allows unique information about the object to be relayed. 

All this sounds very futuristic but Pappu actually believes the RFID market is where the television market was in 1935 — 10 years after it was invented. "We continue to invent the future of RFID," he said. "I would be fooling myself if I said I knew where it will evolve."