August 6, 2020
Confidex got a first-class ticket into China when China’s Ministry of Railways wanted to use the contactless tickets of the Tampere-based product development team in train traffic. Efficient production and patented innovations in industrial remote tags set the company on a path to growth.
“In the beginning, we were a group of seven guys founding the company in 2005, with weekly cleaning shifts in Excel. We very soon recognised the need to outsource cleaning and focus on our core competence, RFID technology, which is used to track products and their status in logistics and automated production processes. There are now close to 250 of us, and Confidex is the global market leader in contactless tickets for public transport as well as a pioneer in industrial applications for remote tags”, Confidex CEO Timo Lindström sums up the achievements of the growth company so far.
Confidex, which specialises in RFID (radio frequency identification) technology, caught on to sales and growth when, fairly soon after the company was founded, it also identified the two business areas with global growth potential.
“Reasonably priced, short-term RFID-based tickets for public transport were not yet available on the market, and the same was true for well-functioning UHF, or ultra high frequency, remote tags for industrial use. We set out to develop these products. At the same time, we decided that we do not want to be just a product developer and subcontractor to others, but that we also want to manufacture the products ourselves”, Lindström says.
Entering the contactless ticket market with efforts in China – manufacturing efficiency as a competitive advantage
As the business idea matured, the decision was made to set up a production plant in Guangzhou in southern China.
“China’s Ministry of Railways and the railways of the Chinese state became our first key customer. They required the products to be manufactured locally, so the decision was easy. We have had a plant in China since 2007. With growth, the production capacity has been doubled a couple of times already.”
The value of the China contract was many times the size of the market at the time, so with one contract, Confidex rose directly to market leadership in contactless tickets for public transport. Today, the customer base already includes 110 cities, and tickets account for about half of the company’s turnover.
“Confidex is 100% responsible for public transport tickets in the Netherlands, for example, and in France our customers include the public transport operators of 25 cities. Major customers also include cities such as San Francisco, Brussels, Vancouver, Hong Kong, Istanbul, Dubai, Amsterdam and Helsinki.”
According to Lindström, in the RFID ticket business, what a product should be like is largely defined by standards. Innovativeness has been needed especially in how to optimise the production of large volumes. There is a lot of public competitive tendering in the industry, so price, production efficiency and quality reputation are crucial.
“The minimum delivery batch is typically 150,000 products. We have already produced around two billion RFID products in total to date, thus honing the production chain into top shape so that we can guarantee their uniform quality. High-quality and smart products at a reasonable price are Confidex’s competitive advantages.”
A close patent partnership is important in the continuous assessment of inventions
Unlike in contactless tickets for public transport, in-house product development, innovative technological solutions and their patenting play a key role in industrial remote tags.
Confidex has harnessed the power of patenting to differentiate itself from competitors and build a competitive advantage with the same efficiency and perseverance with which the company has honed its production processes into shape. Unique technical solutions have been carefully protected with patents, and the geographical scope of the patent portfolio is extensive.
“We have been engaged in close patent cooperation with Kolster for ten years. Patent Attorney Sinikka Veittola has been involved from the outset, and the cooperation has become efficient and well-functioning over time”, Lindström says.
Long-standing cooperation enables the patent attorney to internalise the technical solutions, production methods, patent landscape in the field of technology and the company’s business in depth. This creates a continuum, and no unnecessary time is spent explaining the technology, terms and backgrounds.
“It has also been extremely important that we have a patent partner nearby and that communication is not through a remote connection alone. In normal times, I go through inventions face to face with Sinikka in a very concrete way with the help of samples from the product development laboratory while drawing, exchanging ideas and providing arguments”, says Lead of R&D Emmi Neilimo, who is responsible for Confidex’s patent portfolio.
When Neilimo started working at Confidex as a product development engineer about ten years ago, she had her first contact with IPR processes and patenting at an in-house training session provided by Kolster for the product development team.
“Now that I have been responsible for product development and patent matters since spring 2020, it has been invaluable that the patent attorney is familiar with the company’s patent history and the backgrounds of protection decisions over a long period. It has helped my own work. Management of the overall picture and continuous assessment of the patent portfolio are also easier when a single partner has the IPR package under control.”
Freedom to operate and novelty searches are emphasised in a narrow patent landscape
At Confidex, patentability assessment is a systematic and essential part of product development. Most of the inventions protected by patents relate to an antenna structure that improves the functionality of RFID tags, and in particular to sector-specific applications in industry and logistics.
The patent landscape in the field of RFID remote tags can be described as narrow. Many companies have been patenting various technology solutions for a long time, widely and comprehensively.
“It is good that as early as at the brainstorming stage, we can have the first discussions with the patent attorney, assess patentability and, at the same time, our freedom to operate. Product development processes are expensive if they have to be stopped at a later stage”, Neilimo says.
Novelty searches are carried out for inventions at the earliest possible stage of product development, and competitors’ patents are actively analysed.
“It is essential for us that everything that is developed can also be manufactured in large volumes, optimised for production and launched onto the global market.”
From pulp bales to servers ─ customer-specific solutions at the core of patenting
Confidex’s product portfolio already includes several dozen commercial standard products as well as a large number of customer-specific products, amounting to more than a thousand product designs in total.
Confidex has developed into a pioneer in RFID remote tags for the manufacturing industry and logistics, furtively solving the special needs of its customers. These solutions have also given rise to a large stack of patented inventions.
“Here in Tampere, Finland, it is not customary to make a big fuss about one’s own successes, but gradually we have noticed that wow, we are pretty good at making use of the potential of RFID technology and the industrial Internet”, Lindström says without boasting.
Many international brands utilise Confidex’s smart RFID solutions in their own products for identification, positioning and monitoring of status or conditions, such as humidity, temperature or vibration, as well as for wireless data transfer.
For example, all Volvo vehicles have had Confidex RFID remote tags installed since 2009, and the technology is widely used elsewhere in the automotive industry as well. Confidex’s tags can also be found on the sides of Finnish Railways’ (VR) train carriages, racks supplied to industry by the Singaporean logistics company Goodpack, US-based Cisco’s data centre servers, power tools rented out by the multinational company Hilti, as well as on UPM and Metsä Group’s pulp bales.
Megatrends, IoT and the coronavirus pandemic are accelerating growth
According to Lindström, megatrends such as urbanisation, climate change, digitalisation and contactless payment are supporting and accelerating the growth prospects of RFID technology and Confidex.
“Public transport, road toll systems, waste management and transport of goods need to be made more efficient as more and more people pack into cities. We can provide well-functioning wireless technology solutions for these purposes”, Lindström says.
The importance of in-house product development and innovations will increase for Confidex as RFID technology is integrated into ever broader, system-level IoT solutions. New wireless technologies, such as Bluetooth and NFC (near field communication), can also be used for remote identification.
“Identifying system-level RFID inventions is a big opportunity for the future, but it is also a challenge due to their abstract nature. Close cooperation with product development and Kolster is important in order to create patent assets and competitive advantage from these new opportunities as well”, Neilimo says.
Lindström has also identified new business opportunities for Confidex as a side effect of the coronavirus pandemic.
“There is now a lot of demand for contactless tickets in public transport. In addition, RFID technology can be utilised to monitor people for the purpose of curbing the coronavirus pandemic, so that exposed individuals can be identified, tracked and treated. This kind of people tracking also fits well with Confidex’s business strategy.”
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