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Top 10 RFID Developments of 2007, Part 1

This article is the first of a three-part series looking at the top ten developments in RFID over the past year. Today's article looks at trends 10 through 7.
Dec 18, 2007This article was originally published by RFID Update.

December 18, 2007—The RFID industry defied characterization in 2007. Previously hot segments of the industry cooled, but there was a revival in interest and investment in other established applications and technologies. There were several technological milestones and standards developments, including a few that will likely have a strong influence for years to come. RFID technology perhaps received more mainstream media coverage than ever before, but much of it was misguided or simply inaccurate.

RFID Update has chronicled these developments on a near-daily basis. Here we present what we consider the top 10 developments in the RFID industry in 2007, with our insight and links to articles that provide more background information.

#10 -- The Time is Now for Real-Time Location Systems
Adoption was strong for real-time location system (RTLS) technology throughout 2007, and enthusiasm was even stronger. Numerous new implementations -- not pilots -- were announced throughout the year, along with technology and industry developments that portend a bright future. There was especially strong adoption by hospitals and for industrial asset tracking applications, and for various types of RTLS technology. Although overall penetration rates remain low, many potential RTLS users are aware of the technology and have a favorable impression of the benefits it can provide, according to many RTLS vendors and integrators RFID Update spoke with. Awareness and acceptance are typically major obstacles for RFID vendors, so the RTLS segment appears well positioned to sustain its momentum.

Vendors are also flush with funding; the RTLS and active RFID segment attracted more venture capital investment than any other over the past 18 months. Meanwhile, WhereNet, one of the largest and most established RTLS providers, was acquired by Zebra for $126 million, no doubt a record sum for an RTLS company.

Analysts had predicted strong growth for RTLS in 2007 and continue to do so. Expectations will be even higher in 2008. For now, RTLS has done what has been one of the hardest things for RFID technology to do: live up to growing expectations.

Related articles:
#9 -- EPCglobal Ratifies Data-Sharing Standard
The EPCglobal Gen2 UHF standard was supposed to trigger a boom in supply chain RFID deployments. But a funny thing happened on the way to mass adoption: companies found it was difficult to exchange RFID data with their trading partners, and it was difficult to get value from RFID without data integration. Electronic Product Code Information Services (EPCIS) is an open specification to facilitate secure RFID data exchange among trading partners.

From the beginning, EPC technology architects viewed EPCIS as a crucial complement to Gen2 and an essential building block for profitable multi-company RFID implementations. EPCglobal ratified the EPCIS standard in April, and at the time EPCglobal president Chris Adcock said, "In terms of industry significance, I believe that the EPCIS standard may have much more of a transformational impact on the industry than the [2004] release of the UHF Gen2 passive RFID standard." It is too early to tell how much impact EPCIS will in fact have, but its standardization is a major milestone for the EPC movement.

Related articles:
#8 -- Who Says There's No Such Thing as Bad Publicity?
On a single day in February, the Wall Street Journal and popular personal finance and investment site The Motley Fool published a total of three articles that seriously called into question the effectiveness of RFID technology and the viability of RFID-oriented vendors. The Wall Street Journal published a more balanced article a few weeks later, but good news rarely attracts the same attention as bad. Throughout the year changes in the Wal-Mart compliance program were widely reported as a retreat from RFID technology, and disappointing RFID sales by publicly-held companies were cited as further evidence of an industry in trouble.

For RFID vendors, who are struggling to overcome perceptions that RFID is a niche technology with limited business value, negative publicity is a major obstacle, especially considering many potential users already have misperceptions about RFID's costs and capabilities.

In truth, RFID growth in 2007 did not meet the expectations of many vendors and analysts, particularly for supply chain applications. However, the industry did grow, compliance-driven supply chain programs expanded, and there was strong adoption for asset-management applications.

Another sign of the industry's maturity was its thoughtful response to the negative press: Xterprise released a well-reasoned rebuttal to the Wall Street Journal article, while industry association AIM Global launched a public outreach campaign and EPCglobal unveiled Discover RFID, a website devoted to consumer education about RFID.

The industry is too diverse and complex to be characterized solely by what happens in one segment or by the financial results of a few companies, but mainstream media often misses this point.

Related articles:
#7 -- Microsoft Offers Embedded RFID Support
Microsoft released its first major IT infrastructure product with native RFID support, which has important implications for RFID users and vendors alike. BizTalk Server 2006 R2 became the first Microsoft product to ship with RFID support when it was released in September. The software integrates various enterprise applications and data structures, and is the latest major update to the BizTalk software line, which Microsoft reports is used by more than 7,000 organizations worldwide, including 90 percent of the Fortune 100 and 12 of the 15 largest retailers.

BizTalk Server 2006 R2 includes APIs and other features to manage RFID data and devices. Microsoft is positioning the product as a plug-and-play solution to help users integrate RFID tracking capabilities into their supply chain applications. Native RFID support in enterprise IT systems would reduce or eliminate the need for middleware, custom programming, and integration, thereby making RFID easier to use and changing the role RFID integrators play in developing and implementing solutions. Microsoft has already announced several blue-chip RFID customers who use the new BizTalk release and RFID vendors who support it.

A number of industry observers were very bullish on the impact that BizTalk's native support for RFID will have on adoption, including John Fontanella of AMR Research, who called it nothing less than a "watershed moment."

Related coverage:
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