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It's Always Darkest . . .

The markets took a pounding last week. Technology in general, and RFID in particular, could lead the recovery.
By Mark Roberti
Jul 15, 2002July 15, 2002 - The U.S. markets and to a lesser extent world markets are taking a beating. The Dow was off 7.4 percent last week, its worst decline since the week after Sept. 11. The Nasdaq finished the week down 5.2 percent, and the S&P 500 lost nearly 7 percent. I don't like writing about stocks because I'm no financial whiz, but I would like to offer a little perspective.

I have spent most of the past five years doing one thing: reporting on how corporations are using technology to improve their operations – or at least trying to. Lots of commentators have pointed out that companies gorged on technology for five years, and now they're trying to figure out how to get benefits from what they bought.

That's all true. But here's what most commentators overlook: Corporation still have a long way to go to bring their IT systems into the Internet age. What's more, while companies slow down and digest their "shelfware," innovation continues apace. Yes, that's right. I'm talking about RFID. It may not just lead us out of this downturn; it may herald the next boom.

Let's look at the worst-case scenario first: The Auto-ID Center effort founders, either because of bad management, faulty technology or because some members decide to pursue rival technology (which very nearly happened recently, according to reliable sources). Does everything go back to the way it was before that effort began?

I don't think so. Here's why. RFID equipment makers now know that they can capture a large market if they can get the price of tags and readers down. Alien Technology can produce a tag for less than 10 cents, even without the Auto-ID Center. And ThingMagic can produce a reader for about $100. I believe there are still a lot of companies that will implement closed loop, or GTag-compliant, systems to gain internal efficiencies from RFID technology. The growth won't be as spectacular if there is no global standard, but there will still be a ramping up when corporate profits return.

Now, let's look at the best-case scenario: The Auto-ID Center succeeds in creating viable system for tracking individual items using low cost RFID. Will companies start implementing it? You bet they will. Why. Companies like Wal-Mart and Procter & Gamble and Unilever and others have spent millions – I exaggerate not -- on studies to determine where the benefits are. They know there are hard savings if they can make RFID systems work. This is not the same as companies trusting Ariba's claims that its procurement software would cut the cost of processing a transaction from $100 to $10.

If companies do implement RFID systems, they will need a lot more than just tags and readers. They will need software to manage the RFID data and pass it to their enterprise systems. They will need servers running in stores, distribution centers and offices to process and make use of the data. They will need new network equipment, handheld devices, point of sales terminals, marketing displays and systems integrators to make it all hum. Sounds like a boom to me.

I'll be honest with you: My portfolio looks like it went 15 rounds with Mike Tyson. But I continue to invest for the long term. I don't want to dispense advice because, as I said, I'm no financial analyst. Perhaps I drank too much of the Kool-Aid during the days when I covered dotcoms for the Industry Standard. But I'm going to hang in there for as long as it takes, because when the rebound comes, it is going to be swift and steep. And I don't want to miss this one.

Mark Roberti is the Editor of RFID Journal. If you would like to comment on this article or submit your own, send e-mail to mroberti@rfidjournal.com.
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