Magazine Article | February 1, 2006

Is This RFID's Year?

Source: Field Technologies Magazine

The next 12 months are shaping up to be an important time for RFID (radio frequency identification). But, are we expecting too much, too soonfrom this smart label technology?

Integrated Solutions, February 2006
 In the world of RFID so much happened � and didn't happen � in 2005, setting up a really interesting 2006. On the plus side of the ledger, standards issues are largely behind us. This was once thought to stymie adoption of the smart label technology, but a series of events in 2005 knocked down this potential barrier. Perhaps the most important advance was the who's who list of technology vendors that signed on to license Intermec's patented RFID technology. (More good news came from the fact that Symbol Technologies was one of those companies on the list, thus ending what seemed to be inevitably ugly litigation.) Also, a host of technology providers banded together to form a patent pool, which allows for the sharing and cross-licensing of intellectual property. Of course, all of these developments came after the ratification of an EPC Gen 2 standard � a huge accomplishment in its own right.


Some of the best news for the future of RFID came from the company that initially catapulted the technology to the forefront of supply chain management � Wal-Mart. The big box retailer cited data that ultimately supported the company's push for RFID technology within its supply chain. It also served to reinforce the company's commitment to RFID. By January 2006, 200 more suppliers were scheduled to join the about 150 existing suppliers that send pallets and cases to Wal-Mart with RFID labels. Wal-Mart also plans to expand its rollout by doubling the number of stores in 2006 that will have RFID technology in place.

Of course, there are other notations for the positive side of the ledger. RFID yield rates, for example, improved dramatically from as low as 65% in some cases to the reported 100% that some suppliers are claiming. Another big issue � price � was addressed in a significant way as tag suppliers took turns lowering costs. Essentially, these moves resulted in a better than 50% price cut during 2005.

With all of the advancements in 2005, one would think that this was a great year for RFID technology. Well, it was a great year for the technology. But, it wasn't that great for companies that make money selling the technology. In conversations with several technology vendors, they reported that repeat orders for hardware and services in 2005 fell below what they had expected. (It was seen as an indication that early adopters were still deploying RFID on a most minimal scale.)

Also, the dog days of summer seemed to apply to the RFID industry. After gaining great momentum from spring RFID events, RFID World, and RFID Journal Live!, the industry hit a serious lull. Few companies released information on new products or services. Announcements of new customer acquisitions and RFID deployments were rare. And the EPCglobal US Conference in the fall of 2005 was a very sober environment.

So, what will the RFID industry look like in 2006? Is this the year where the technology enjoys rapid adoption, or will it continue in fits and starts? If pressed, I'd point to Gartner's Hype Cycle and conclude that 2006 will fall squarely in the "Slope Of Enlightenment" stage. Experimentation and hard work will continue to lead organizations to understand RFID's applicability, risks, and benefits. This doesn't mean that 2006 will be flat � not by a long shot. Companies outside of big box retailers and DoD will start using RFID in controlled environments. At the same time, current mandates will continue to be expanded.

The slow steady march to RFID's inevitability continues in 2006. If you're waiting for the sprint, that will happen the following year.