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Picks For The Gold Rush

Which companies will be among the winners when RFID finally takes off?
May 06, 2002May 6, 2002 - I got a phone call last week from a gentleman in the United Kingdom who had discovered RFID Journal and had a few questions. He wanted to know about the market size for inlays, the packaging that goes around the antenna and microchip to create a finished RFID tag that can be used in a smart label. The caller -- I'll refer to him as Jack -- works at a semiconductor company. He has a chance to leave and start his own business marketing machines that make RFID inlays.

"The way I look at it," Jack said, "RFID is like the Gold Rush. Lot's of people went to San Francisco and never found any gold. But the guys who sold them the picks and shovels did very well. If there's going to be an RFID Gold Rush, I want to be the guy selling the picks and shovels."

Jack is obviously a smart businessman. His call raised a couple of questions in my mind: Will there be an RFID Gold Rush? If so, when? And if there will be one, why aren't more people like Jack lining up to sell picks and shovels?

Obviously, I believe the RFID industry is poised for great growth. I've spelled out my reasons in early editorials. A tougher question is when will the "gold rush" begin? Lots of people have been saying for years that this is RFID's year. I believe that things will really start to pick up in two years or so. By the end of next year, the folks at the Auto-ID Center will have finished their work and companies like Wal-Mart may begin adopting it immediately. If that happens, the rush will come quickly.

If the Auto-ID Center effort languishes, then it will take a lot longer to establish standards and create systems for sharing information. However, I believe companies will still continue to make progress toward creating low-cost RFID tags. The folks at Matrics already have a very small tag that will sell for about 50 cents in volume (see Matrics Emerges from Stealth Mode). Intel and others are working on tiny, wireless sensors. It's only a matter of time before we reach a price/performance equation that leads to wide-scale adoption.

The next question is why aren't there more people lining up to sell picks and shovels. Another tough question. The answer, I think, is that people don't start buying shovels to resell until the gold has actually been discovered. The RFID business is growing, but not as fast as research companies have often predicted. Once Wal-Mart announces that its asking all suppliers to put RFID tags in the products that they sell at Wal-Mart stores, everyone and their nanny will be buying picks and shovels (and investing in pick and shovel companies).

Of course, by then it may be too late for many companies. The vendors that are in there selling tags to Wal-Mart's suppliers will have an incredible edge. Judging by the amount of traffic the RFID Journal gets from investment sites like Raging Bull, smart investors are already thinking about getting in before the gold rush starts. Like Jack, they are the ones that will do well.

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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