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2006: The Year RFID Vanished

This article is the first of a four-part series from Dennis Báthory-Kitsz, who predicts that this year will be the one RFID vanishes.
Jan 18, 2006This article was originally published by RFID Update.

January 18, 2006—No, RFID isn't vanishing from use. What's vanishing is an atmosphere of crisis and divisiveness. This year, RFID will become nearly invisible in its lack of controversy. In fact, when the history of 2006 is written, these will be the headlines: RFID Hype Vanishes ... Standards Conflicts Vanish ... Mandates Vanish ... Privacy Issues Vanish ... Companies Vanish ... Gen1 Vanishes.

Whoa, you say, that's not all good!

Depending on your perspective, it is. Along with our own research, RFID Update talked with ten experts: Kevin Ashton, vice president of marketing at ThingMagic; Jeff Jacobsen, president of AWID; Cliff Horwitz, chairman of SAMSys; Carl Brown, president of SimplyRFID; Dennis Gaughan, RFID research director with AMR Research; Chantal Polsonetti, vice president of manufacturing advisory services at ARC Advisory Group; Bret Kinsella, vice president of operations and marketing at ODIN technologies; Bill Hardgrave, director of the RFID Research Center at the University of Arkansas; Dean Frew, CEO of Xterprise; and Tom Hartmann, RFID manager at Topflight Corporation.

The common prediction for the RFID experience in 2006 is more of the same--but broader, faster, and cheaper. Label and hardware prices will fall, product demand will grow, and implementation will increase.
  • The term "mandate" and the resistance it encountered will both disappear from the RFID vocabulary. Supplier implementation arose as a cooperative idea that was misheard and misspoken, and created an immediate resentment. In 2006, it will finally begin to achieve its collaborative purpose.
  • The business case for RFID, the long-suffering elephant in the room, will suddenly be "discovered." From supply chain efficiencies to retail promotional data, from reducing out-of-stocks to process automation, from consumer satisfaction to asset tracking, companies will begin to realize the technology's broader benefits. The vendor community will be key to proving the value proposition. RFID will no longer be a technology in search of an application.
  • As the mandate psychology fades and RFID finds both broader acceptance and vertical markets, the Wal-Mart and Department of Defense initiatives will no longer be the lead stories. It will become clearer that RFID is a synonym for neither supply chain nor retail, and the driving activities will also include aerospace and pharma.
  • Three surprises will arise out of pharma, making it potentially the most important RFID development of the year. First, the pharma initiatives with FDA pilots and mandates will creep up, precipitating a year-end rush for companies to get on board. The second surprise will be ownership of the data and the intellectual property and usage disputes that will follow into next year and beyond. The last will be solutions to the problem of metal and liquid tagging based on new transponder technology.
  • If design missteps are avoided and careful attention is paid to security technology and implementation, privacy issues will settle from a media blaze into the occasional small wildfire. Post-2006 item-level tracking, however, will re-stoke the fires.
  • Shortages in all forms of Gen1 technology will start being felt by mid-year, and the technology will be retired by year's end. This will leave early adopters stranded, but the industry hope is that these adopters will have learned so much from their Gen1 experience that Gen2 implementation will be relatively effortless.
  • Standards conflicts will vanish as greater hardware and software capabilities make up for the differences between the US, European, and Asian markets. On the other hand, neither widespread hardware interoperability nor "plug-and-play" will be achieved in 2006, and the complexities of open-loop systems and larger installations will become obvious--and not solved this year.
  • Applications for the management, interpretation, and analysis of RFID-generated data will start to appear in force by year's end, and with it will come stronger RFID adoption and a price war on labels and hardware. However, finished labels will hover at--but not likely drop below--the 10-cent mark for most customers.
  • Transportation companies will begin to play in the RFID space. Potentially one of the broadest markets, transportation will include parcel and freight, postal services, and warehousing and distribution, along with vehicle and asset tracking.
  • Companies will crash and burn, and others will be swallowed up in an industry-wide consolidation. Middleware companies will feel the pinch as familiar total-enterprise integrators take on their applications area. A lack of vendor allegiance will encourage further collapses and acquisitions.
  • Opportunities in vertical and niche markets will increase dramatically as what is learned from early RFID initiatives is put into practice. Custom tags and encasements will become more widespread, and the integration of active and passive technologies will begin, marking first steps toward a post-2006 total wireless sensor network.
  • Finally, the RFID hype will vanish as companies get down to the work of using the technological tool they've adopted.
In the next three installments, we'll have a look at these 2006 predictions in more detail.
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