End Users Want an iPod

Dec 12, 2011I wrote last week about large technology companies not investing in radio frequency identification, and missing out on the opportunity to be the "gorilla" in the market (see Who Lost the RFID Industry?). One reader posted a follow-up comment saying that owning the market is an unrealistic "obsession," adding that the RFID industry "will develop step-by-step," and that I "cannot talk it to greatness."

The truth is, RFID companies used to be obsessed with owning the market. In the past, many wanted to sell proprietary systems in the hope of becoming the Microsoft of RFID (which was never going to happen). But no one thinks that way now. In fact, very few firms are focused on becoming the gorilla. And even those that say they have read and embrace the writings of Geoffrey Moore often fail to adopt strategies likely to lead to market dominance.

But this column's focus is really on the second point—that RFID will develop step-by-step. That was my view before I read Crossing the Chasm and Inside the Tornado, Moore's seminal works on technology adoption. But since reading those books, I have come to believe that RFID companies can either slow or speed up adoption, depending on their strategies.

According to Moore, before a new technology, such as RFID, can go mainstream, there must be a problem that no other technology can solve, as well as a global standard, a whole product, a critical mass of users and a gorilla that the rest of the market feels safe to embrace.

The problem is that there is no whole RFID product. End users can buy tags, readers and software, and then hire someone to integrate them, but that involves investing time and money—and, perhaps more important, taking a significant risk. The project might fail, and all of that time and money would be wasted. That is probably the biggest drag on the market today.

A similar state of affairs existed before Apple introduced the iPod. There were hardware and software for downloading songs off of CDs. There were MP3 players for playing those tunes. And there was some software for managing playlists. But all of these things were not integrated by a single company, and MP3 player sales were sluggish. The first MP3 player was introduced in 1998. By 2001, sales had reached a modest 750,000.

Steve Jobs recognized that problem, and set out to fix it. Apple produced the whole product—iTunes would allow a user to import songs from CDs, manage playlists and seamlessly copy them to an iPod. The iPod itself was simple, elegant and easy to use. The MP3 market didn't develop step by step. Apple made the whole product and became the gorilla, and the market took off. The iPod went on sale in late 2001, and sales jumped to 1.6 million units by 2002. Two years later, the company was selling 4 million a year—more than four times the total sales before it entered the market.

Sales of tablet computers were less than 2 million in 2009. After Apple introduced the iPad, the market exploded. IHS iSupply, a market-research firm that describes the pre-iPad tablet market as "a sleepy niche of the mobile PC market" (see Global Tablet Shipments to Rise by Factor of 12 by 2015), expects sales to reach nearly 250 million units in 2015.

Could the same thing happen in the RFID industry? It's difficult to say. Creating a whole product that involves tags, readers, software and integration is a lot more complex than creating an integrated MP3 player. Except for a few companies that offer real-time location system (RTLS) software, few RFID firms sell tags, readers and software. One savvy business could buy the components of the whole product that it doesn't already sell, but this would be challenging, since software companies aren't necessarily good at producing hardware, and vice versa. A systems integrator might develop the software and put the whole product together for a specific industry, such as retail apparel. But I think the more likely scenario would be for a software player to become the gorilla by teaming up with a large tag supplier and a reader manufacturer.

To date, a truly unified solution has not yet been brought to market. It might just be a matter of time before this happens, but I'm not sure that's a given. Many companies are resistant to tight integration with a single partner, worried that this could close off market opportunities with other potential partners. It's not clear to me that any senior executive has the vision to partner with one or two other players to build an "RFID iPod." Most probably think the market will evolve step by step, and that all they need to do is hang in there.

As for the last point, that I "can't talk the RFID industry to greatness," that is, no doubt, true. I'm not arrogant enough to believe that anything I write can move the market. But my job, as a commentator, is to analyze what I see happening and to offer my views. Editorial writers for The Wall Street Journal or The Times of London can't talk governments to greatness, but that doesn't stop them from criticizing policies that they think are bad, and offering their own suggestions. I try to offer the most intelligent commentary I can produce. It's then up to RFID Journal's readership to embrace, reject or criticize my ideas, as they see fit. I love hearing from our readers—even when they don't like what I have written—so keep the comments coming.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog, the Editor's Note archive or RFID Connect.