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Top 10 RFID Trends of 2006, Part 2

This article is the second of a three-part series looking at the top ten trends in RFID over the past year. Today's article looks at trends 6 through 4.
Dec 19, 2006This article was originally published by RFID Update.

December 19, 2006—#6 - HF vs. UHF
The debate about which flavor of RFID is preferable for item-level tagging -- high frequency (HF) or ultrahigh frequency (UHF) -- had existed in 2005, but it really peaked this year and will persist into 2007. HF proponents argue that their technology is tested and proven, especially around challenging materials like metal and liquid. UHF proponents argue that theirs can perform just as well around those materials, with the added benefits of costing less on a per-tag basis and avoiding dual infrastructure (HF for item-level, UHF for case- and pallet-level).

RFID chip manufacturer and UHF proponent Impinj took the lead in the debate in February when it released new tag antenna designs based on "near field" UHF to demonstrate that the conventional wisdom -- UHF cannot be used around metal and liquid -- was mistaken. In March, RFID solutions provider ODIN technologies fanned the flames by releasing a benchmark which asserted HF as the appropriate choice for item-level tagging of pharmaceuticals. This assertion notwithstanding, the pro-UHF vendors with Impinj at the helm campaigned to make their case all year long via webinars, white papers, and live demonstrations.

Ultimately, little public response came from the HF camp, and Impinj et al. seem to have made major progress. Last month, pharmaceutical packaging giant O-I demonstrated an RFID-integrated packaging solution for item-level pharmaceutical tagging that can use either UHF or HF technology. A year ago UHF probably would not have been an option. Furthermore, O-I's demo showed UHF to perform much faster than HF on an apples-to-apples comparison. While O-I did not explicitly endorse UHF, the highly publicized demo seemed like a not-so-subtle hint by the company about which technology choice is preferable.

Unless the HF camp actively shores up support and levels a major pushback, and assuming innovation around near field UHF continues, UHF will continue turning heads and changing minds in 2007. Whichever technology "wins", the hope is that the debate settles soon; some analysts are concerned that it is confusing end users and putting them off from adopting the technology.

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#5 - Item-Level Surprise
Impinj CEO Dr. William Colleran told RFID Update early this year that the reason his company began experimenting with near field UHF was because it was seeing unanticipated demand for item-level tagging. "If you had asked me six months ago when item-level tagging would take off," he said, "I probably would have said sometime in late 2007. But this item-level tagging thing is starting to happen now, starting to take on a life of its own."

Indeed, the rise in item-level tagging has been one of the pleasant surprises of 2006, an area where RFID adoption has actually exceeded, instead of disappointed, expectations. Many had predicted that it wouldn't occur in meaningful volume until at least 2008. But industries like apparel, consumer electronics, and pharmaceuticals have become eager to track and trace their goods, which are often high value, high volume, and targets of theft or counterfeit. In the Netherlands, the world's first fully item-level tagged store opened in April. Every single book at Boekhandels Groep Nederland's SmartStore in the city of Almere has an RFID tag attached.

Standards organization EPCglobal responded to the trend by hosting an event in March where 23 vendors demonstrated their proposed technological solutions for item-level tagging. As a result of the event, two new item-level standards groups were formed within EPCglobal, one for UHF, the other for HF.

The industry is still a long way from a commercially available five-cent tag, the milestone many thought would catalyze item-level tagging. But at least item-level tagging as a concept has already been embraced by a few industries, which, as they expand their adoption, will spur tag prices to fall and other industries to follow suit.

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#4 - The Great IPO that Wasn't
Alien Technology, a provider of RFID products and services and one of the names most closely associated with the supply chain RFID opportunity, in April filed to go public on the NASDAQ. With ticker symbol RFID, Silicon Valley-based Alien was going to be the first pure-play, publicly-traded RFID company. It was an exciting prospect for the entire industry, as it suggested that RFID "had arrived." Furthermore, it promised to raise the industry's profile, offering both institutional and lay investors a vehicle by which to participate in the growing RFID market.

Alas, a number of factors worked against a welcome embrace by Wall Street. The company's fundamentals were less than stellar. Its S-1 filing revealed that the company did only $20 million in sales in 2005, more than half of which came from services, a revenue stream far less scalable and ultimately less profitable than the manufacture of tags and readers. Furthermore, the overall climate for new public offerings was sour; a number of other companies pulled their IPOs within weeks of when Alien did, on August 4th.

In the weeks following, rumors ran rampant of layoffs, a company sell-off, and even bankruptcy. Fast forward four months, however, and the company seems to have hunkered down and put the episode behind it. In October, Alien announced the long-awaited opening of its Fargo, North Dakota-based tag manufacturing plant as well as the introduction of its Gen2 chip product. And just this week, it announced a $10 million venture in Korea to position it for RFID demand across Asia.

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