Home Internet of Things Aerospace Apparel Energy Defense Health Care Logistics Manufacturing Retail

Who Lost the RFID Industry?

Just as Xerox could have owned the personal-computing sector, several major IT companies are missing the opportunity to make billions of dollars from radio frequency identification.
By Mark Roberti
Dec 05, 2011On page 98 of Walter Isaacson's biography of Apple founder Steve Jobs, the author quotes Jobs as saying, "They just grabbed defeat from the greatest victory in the computer industry. Xerox could have owned the entire computer industry."

Jobs was referring to the fact that engineers and software experts at Xerox's Palo Alto Research Center (Xerox PARC) had developed the first graphical user interface and mouse for manipulating data on a computer screen. Apple wound up being the first business to come to market with a computer utilizing the concepts developed by Xerox PARC, after Jobs visited the center and convinced Xerox to let him see how the system worked.


It got me thinking about the market for radio frequency identification technology, and the fact that none of the major information technology providers are investing in it. It's difficult to say that any particular company completely fumbled a golden opportunity to own the RFID market, but several firms could have—and probably still can—become what author Geoffrey Moore describes as the "gorilla" in a technology market.

IBM was the first to develop ultrahigh-frequency (UHF) RFID systems, which offered a longer read range than high-frequency (HF) solutions, but then sold its patents to Intermec in the mid-1990s. IBM also developed some middleware for linking RFID readers to back-end systems, and could have developed RFID applications and pretty much owned the market—but the company has not been active in the RFID world for the past few years, though it continues to work on projects when customers request that it do so. (IBM probably has the most to gain in this market, since it sells business-consulting and software-integration services, software and middleware.)

SAP was an earlier pioneer in radio frequency identification. In 2002, after I had just launched RFID Journal, I was invited to SAP's Sapphire event in Orlando, Fla., to see a prototype application that employed intelligent software agents from a company called BiosGroup to react to RFID data and make inventory decisions in order to avoid out-of-stocks (see SAP to Demo RFID Replenishment, SAP's Supply Chain of Tomorrow and Agents Key to RFID Supply Chains). The idea was that the software would "learn" as more events occurred and additional data was captured, and then intelligently respond. But BiosGroup was sold to NuTech Systems in 2003, and SAP never did much in the RFID market beyond developing middleware that could allow its enterprise resource planning (ERP) software to send and receive data to and from RFID devices.

Oracle has not done much in the RFID arena either, aside from enabling its warehouse-management application to receive RFID data (see Oracle Speaks of RFID Plans). And Microsoft, after developing its RFID BizTalk Server (see RFID News Roundup: Microsoft Releases BizTalk Server 2006 R2 and Microsoft Announces Availability of BizTalk Server 2009)—a popular platform on which other companies have built RFID applications—has largely been a passive player in the market for the past several years.

USER COMMENTS

Peter EGLI 2011-12-06 03:50:10 AM
Lost? The latest "monkey" story suffers like its predecessors from 3 distinct issues: 1. Considering that a) approx 80% of tags are made in Asia and b) that market develops in the direction of being commodity and c) that applications cover a huge spectrum, it is naive to believe that anybody can "own" the market 2. Many companies have as an objective to generate revenues, not to own a market and there are limits to patience, waiting for results 3.The "Number One" ranking, the "Winner takes it all" ideas are obsessional. Have a look at the debt structure of (leading- they are all, no?) listed pure RFID vendors. One can not talk the RFID industry to greatnes but it will develop step-by-step.
Mark Roberti 2011-12-06 08:42:02 AM
Please read Geoffrey Moore's Crossing the Chasm and Inside t Thanks for your comments. There is a fairly large contradiction in your comments. You suggest that RFID tags and readers will be commoditized and that is a reason why one or two companies won’t dominate. Commoditization usually leads to a few large players because they can mass produce items more cost effectively than many smaller players – economies of scale and all that. All companies have an objective to earn revenue. But earning revenue means investing. All companies spend money developing new products. This money is a sunk cost that is only earned back when the product sells. The easy thing to do if you are a CEO is buy up an established company with revenues, which can be expensive, or invest in a competitive version of an existing product that is selling. Microsoft lost $5 billion trying to compete with Google. Was that smarter than going after the still immature RFID market? I don’t think so. When Steve Jobs decided Apple should get into the iPod market, MP3 players were selling poorly and small players were probably losing money. Was that a reason not to get in? Of course not. I highly recommend that you read Geoffrey Moore’s books Crossing the Chasm and Inside the Tornado. Moore argues that the market for new technologies WILL NOT take off until there is a dominant player. I think he’s right. It is true that there are many applications across many industries, and no one or two players can own all of RFID. But I think we will see gorillas emerge in the tag and reader markets and I think there will be software companies that will dominate specific industries, such as retail, manufacturing and health care (specifically for real time location of assets). I think the point you are missing is that companies can make markets, rather than waiting for them to evolve. There was no significant market for MP3 players or tablets until Apple created the iPod or iPad. Apple created those markets. Similarly, a major IT company could create the apps that drive adoption in RFID. But don’t take my word for it – read Geoffrey Moore.
Curt Carrender 2011-12-06 10:21:52 AM
Amtech and SCS Great article as always. If you are interested, you can find that Amtech was selling at least three UHF RFID systems prior to IBM beginning any development of their system. These Amtech systems were primarily marketed toward transportation solutions. Also, SCS or Single Chip Systems had a single ASIC solution pointed directly toward supply chain solutions prior to the IBM effort. Both Amtech and SCS had products in customers hands prior to the the IBM effort, which was a development effort, not a commercial project.
R Stimbra 2011-12-07 01:01:00 PM
Geoffrey Moore Fan In reply to the comment above. Geoffrey Moore is a great resource for business wisdom. I've been following him since Crossing the Chasm and Escape Velocity is an amazing book. You can find out more info about Geoffrey at http://www.geoffreyamoore.com or http://www.escapevelocitybymoore.com

Login and post your comment!

Not a member?

Signup for an account now to access all of the features of RFIDJournal.com!

PREMIUM CONTENT
Case Studies Features Best Practices How-Tos
RFID JOURNAL EVENTS
Live Events Virtual Events Webinars
ASK THE EXPERTS
Simply enter a question for our experts.
TAKE THE POLL
JOIN THE CONVERSATION ON TWITTER
Loading
RFID Journal LIVE! RFID in Health Care LIVE! LatAm LIVE! Brasil LIVE! Europe RFID Connect Virtual Events RFID Journal Awards Webinars Presentations
© Copyright 2002-2016 RFID Journal LLC.
Powered By: Haycco