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Microsoft Offers a Lesson for RFID Companies

The mistakes that the software firm made in missing the boat on MP3 players, smartphones and tablets is a cautionary tale for auto-identification giants.
By Mark Roberti
Mar 30, 2015

George Santayana, the famous Spanish philosopher, poet and novelist, famously said, in his 1905 book The Life of Reason: "Those who cannot remember the past are condemned to repeat it." This has led to many similar quotes, to which I would like to add another: "Those technology companies that are wed to the past are condemned to failure."

Throughout history, we see examples of businesses that remain married to old technologies when new ones are quickly replacing them. Makers of gasoline-powered excavators, for example, did not see that smaller, less expensive hydraulic excavators introduced after the Second World War were a threat to their business. Within 20 years, all providers of gasoline-powered excavators were out of business.

Microsoft is a shining high-tech example of a company that has often remained wedded to yesterday's technology for too long. Its revenue was tied mainly to the Windows PC operating systems and the Microsoft Office productivity software. As a result, it failed to recognize that computing was shifting to smartphones and tablets.

In the RFID industry, there are some large players who also make bar-code and electronic article surveillance (EAS) technology. Both of these are yesterday's technologies. That is not to say they will not be around for many more years. They will, perhaps even for decades. But they are in the late stages of the technology-adoption lifecycle. Growth has peaked for both and will likely remain flat or decline going forward, just as revenue from PCs has been declining.

But there is still a lot of money in EAS and bar-code technologies. That means the challenge for the companies that make them lies in how to maximize revenue from these mature technologies while developing the products and positioning themselves to take advantage of the growth that lies ahead for the RFID industry.

The challenge facing the CEO of any successful technology firm is to determine how to put significant R&D and marketing dollars into something that is bringing in little revenue. This is because doing so means taking away resources from the technology that is bringing in a lot of revenue, even if growth is slowing.

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