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ABI Reaffirms Retail Supply Chain RFID Opportunity

In reaction to recent high-profile articles in the mainstream business press that offered pessimistic slants on RFID adoption in the retail supply chain, ABI Research today released a statement asserting that the long-term retail supply chain opportunity for passive UHF RFID does in fact exist.
Mar 13, 2007This article was originally published by RFID Update.

March 13, 2007—In reaction to recent high-profile articles in the mainstream business press that offered pessimistic slants on RFID adoption in the retail supply chain, ABI Research today released a statement asserting that the long-term retail supply chain opportunity for passive UHF RFID does in fact exist.

"Some media commentators have begun talking down the market for passive RFID tags within the retail supply chain," reads the statement. "But ABI Research, while acknowledging that passive label markets have grown more slowly than hoped, has reiterated that they will ultimately reward those who have patience."

ABI joins a chorus of analysts, industry watchers, vendors, and end users that have reacted strongly to a February 15th story in the Wall Street Journal, Wal-Mart's Radio-Tracked Inventory Hits Static. In an open letter to the editor, CEO of RFID solutions provider Xterprise Dean Frew described the story as "one-sided" and "wrong", while investment firm Baird stated in the February edition of its RFID Monthly, "While we viewed the overall content in the article as factually correct, we believe there exist several points beyond the article that suggest RFID momentum continues to move forward." Even Wal-Mart's CIO Rollin Ford took issue. Last Wednesday the WSJ published a letter from Ford, which opened, "We were baffled by your Marketplace article on Wal-Mart's use of Radio Frequency Identification and, judging by the calls we've received, so were many of our RFID-enabled suppliers. They, and we, know the fact of the matter is that RFID is increasing efficiency and providing customers with a better shopping experience."

The WSJ's negative coverage was certainly not the first time concerns had been raised about supply chain adoption of RFID. Indeed, since the Top 100 Wal-Mart suppliers went live in January 2005, the industry has not seen adoption take off as projected in 2003 and 2004. ABI Research's assertion, therefore, should be considered more than merely a response to the Wall Street Journal, but rather an affront to the doubt and pessimism that was already plaguing the industry.

There is a caveat, though: patience. That is, ABI expects the high-volume demand for passive RFID tags and technology will materialize, but it will take more time. Prices still need to come down, and some technological and physical challenges remain.

Despite that, ABI points to item-level tagging as an area that is seeing passive RFID uptake already, even given the technology's costs. "End users are finding strong value positions for high-volume passive UHF item-level tagging at current price points." RFID chip supplier Impinj said the same throughout 2006, and just last week announced a $19 million round of funding aimed at going after the immediate item-level opportunity (see Impinj Secures $19m to Pursue Item-Level RFID).

Another area of promise is in reader technology. A number of vendors have announced Gen2 reader chips, which will reduce the cost and form factor of RFID readers dramatically. Most notably, chip giant Intel last week announced the R1000 reader chip, which will be in volume production within weeks and is already being incorporated into the technology of 20 reader vendors (see Intel Announces Gen2 RFID Reader Chip).

Perhaps the growth in item-level tagging combined with a decline in reader prices will see those that heed ABI's call for patience rewarded sooner rather than later.

Read the statement from ABI Research
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