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The End of RFID Middleware?

It's time for RFID middleware providers to try a new approach.
By Timo Nurminen
Jan 16, 2006Despite favorable media coverage and steady growth, the RFID middleware market is facing a new set of challenges that have caused many industry insiders and software vendors to seriously rethink the role of middleware in the overall evolution of RFID. The past has clearly shown middleware, in general, to be software created in the early stages of a given technology, intended to link separate systems and allow them to communicate. Eventually, middleware becomes redundant, and RFID middleware is no exception.

RFID middleware, simply put, is a software layer residing between the RFID hardware and the existing back-end system or application software. It extracts data from the RFID interrogators (readers), filters it, aggregates it and routes it to enterprise applications such as a warehouse management system (WMS), enterprise resource planning (ERP) software or a manufacturing execution system (MES).


So far, RFID middleware has been the main focus of RFID-related software development activity taking place globally. Indeed, the first wave of RFID middleware providers was able to reap profits quite unseen in the software business since the dot-com heydays. Only a few years ago, the average selling price of a single enterprise RFID middleware software license was easily $125,000 or more per installed site, making it very expensive to bring this new technology into the supply chain management. For a relatively simple piece of software—in terms of required functions and capabilities—it bore a horrendous price tag for early adopters.

The simple fact, today, is that RFID middleware can be purchased for as little as $5,000 to $20,000, and with enough functionality to run most RFID applications. It is becoming increasingly difficult for vendors to convince their clients of the necessity to pay high license fees for pure RFID middleware. German automotive manufacturer Volkswagen made a forceful point by developing its own RFID middleware completely in-house, much to the dismay of many commercial software vendors.

Stubbornly refusing to accept the steady erosion of license revenues, many middleware software vendors have been tempted to resort to the very traditional methodology of building more complexity into their products in a vain hope of stemming further price reductions. Many of these newly added functions are far from essential for the average RFID deployment. Nonetheless, they have had the unintended result of bringing many small to midsize RFID software vendors into direct competition with such enterprise software giants as SAP, Microsoft, Sun Microsystems and Oracle. This has greatly increased the predicament of pure RFID middleware providers, as these global corporations are far better equipped to compete for the clients in the long run.

Adding further to the woes of commercial middleware vendors is the emergence of open-source movements seeking to produce standardized RFID middleware, free of charge. Such movements believe that core middleware functionality is the same for most uses of RFID. As such, they believe it can be commoditized into a base open-source software platform, bringing down the cost of RFID deployments and, thus, reducing the barriers of entry.

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