Projected Growth of RFID

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Widespread adoption and integration of RFID (radio frequency identification) technology might be bit closer than we think. RFID technology uses radio frequencies to transfer data from a tag on an item or group of items to a reader, giving users the ability to track and inventory items more efficiently.

According to a report compiled by Gartner Inc., a research and analysis firm specializing in the global information technology industry, worldwide spending in the RFID industry will surpass $3 billion by the year 2010. “Worldwide RFID spending is expected to total $504 million in 2005, up 39 percent from 2004,” the report states. “RFID will begin to experience broader industry adoption with business value-focused implementations toward the end of 2006 when new license revenue totals $751 million. By 2010, Gartner forecasts worldwide RFID spending to surpass $3 billion.”

“For adoption, I think the tipping point, or where the RFID technology will become cost efficient enough for wider usage, will be somewhere 2007 or early 2008,” said Edmund Shuster, co-director of the Data Center at MIT. “I think seeing $3 billion in spending by 2010 is very feasible.”

The Gartner report goes even further, stating, “Businesses are beginning to discover business value in places where they cannot use bar coding, which will be the force that moves RFID forward. As the innovators’ trials become public, broader deployments across emerging sectors, not just consumer goods and retail, will become evident in 2006 and 2007.” Current development and implementations of RFID technology has also sparked the demand for greater education and certification in the industry.

“Basically, looking at the RFID industries, as well as associated technologies, our research shows a looming skills shortage with respect to individuals knowledgeable in implementing RFID solutions based on a number of statistics as well as anecdotal information,” said David Sommer, VP of Electronic Commerce at CompTIA. “What the RFID+ certification does is it sets a foundational curriculum for individuals involved in installing, maintaining and troubleshooting RFID solutions.”

The RFID+ certification beta exam, which ended at the end of last year, had a “statistically significant” audience, proving the validity in offering widespread certification, according to Sommer.

“The airline service, a multi-billion-dollar-a-year industry, has already begun to use RFID tags to track its inventory,” Shuster said. “Anywhere where you can find a need for better use of inventory and where you would want to carry less access inventory, RFID technology should see usage in these markets.”

Shuster added, “I think you’ll see some activity in the integrated circuit market as well, for example. Before they are cut into individual circuits, the wafers are transported in a special case and the idea would be to tag the case to prevent theft. Anywhere there are high value items that would be theft prone or that has a sizeable aftermarket should see growth in tagging as well.”

In retail, theft and other causes of shrinkage are the greatest detractors from the bottom line. Of course, for every item stolen or lost, a multiple of that item must be sold additionally in order to reach the same profit level. “This is why Wal-Mart and other retailers have been so concerned with the RFID tagging of merchandise sent to their warehouses and stores, especially when so much theft occurs from within the company,” Shuster stated.

In requiring RFID tags from its suppliers, Wal-mart aims to protect not only its bottom line from the effects of theft, but also its customers from higher prices. As the technology becomes more affordable, it is likely that smaller retailers, as well as third-party logistics and shipping companies, will adopt the technology as well. In addition to this growth of inventory management through RFID technology, possibilities in general retail use are being drawn up for RFID tags and readers inside the stores themselves.

“Stores that have become so impersonal because of their sheer size could benefit from some sort of interactive shopping experience developed through the use of RFID tags placed on products,” Shuster said. “For instance, if you were looking at a pair of jeans or something, maybe a screen in the dressing could read the tag on the pants and suggest a specific belt or a matching shirt to go along with that specific pair of pants.”

Opposing the advancement of RFID technology in a scenario that involves a deep level of personalization and personal data is the debate between a company’s need for consumer information and preserving the privacy of individual consumers. After all, RFID tags do not need a line-of-sight to work, and products tagged at a store could theoretically be tracked as far as the individual consumer’s home.

“It’s an issue that will have to be discussed,” Shuster said. “I firmly believe in our country’s ability to hold open forums between the retailers or manufacturers and the consumers in our country. I believe a very happy medium will be found with little trouble.”

Assuming that this discussion concludes favorably for RFID technology, the possibilities for expedited shipping processes and interactive retailing experiences are limited only by the creativity of RFID technicians and the executives that want to see RFID revolutionize their business models.

–Patrick Evans,

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