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Out of the Trough

More companies are seeing a clear return on investment, indicating the RFID industry has definitely emerged from the "trough of disillusionment."
By Mark Roberti
May 08, 2006Each year after RFID Journal LIVE!, our annual conference and exhibition, I have written about what the event has revealed about the state of the RFID industry and RFID adoption. Last year, I wrote that end users were more knowledgeable about the technology and more realistic about the barriers to implementation. At the time, there were doubts about whether RFID would truly transform the supply chain (see Reality Sets In). We were in what Gartner calls the "trough of disillusionment," in which the initial hype about a technology gives way to the realization that it can't do everything promised. However, we have clearly emerged out of the trough and are now climbing the "slope of enlightenment," the next stage in Gartner's hype cycle.

This year's event, held this past week in Las Vegas, was our largest yet—attendance grew from 1,600 people last year to more than 2,500 (2,522 to be exact), an increase of more than 50 percent. What's more, 56 percent of registered attendees were from end user companies, and nearly 60 percent had never attended RFID Journal LIVE! before. These statistics indicate RFID is moving well beyond a core group of early adopters.

We asked attendees to answer questions when they registered. A surprising 73 percent of end user companies said they plan to purchase RFID hardware, software or services within the next 12 months. Nearly 30 percent said they plan to spend more than $1 million within the next 12 months. Of that, 9 percent plan to spend $10 million or more, which indicates some companies are ready to begin major rollouts. Another 40 percent expect to spend between $100,000 and $1 million, showing that there's a sizeable group still in or about to begin pilot programs. Several vendors exhibiting at the event told me they had visits from end users who appeared ready to commit to making significant purchases for rollouts.

Adoption is still being driven, primarily, by large companies. About 55 percent of registered attendees were from companies with more than 1,000 employees. But there was also a mix of medium- and small-sized companies (21 percent of attendees were from companies with 100 to 1,000 employees, while 24 percent reported fewer than 100 employees). And more than 130 end user companies sent teams to the event.

Many attendees were high up on the learning curve, and early adopters expressed some frustration that there aren't more companies adopting the technology and engaged in the process of creating standards. "My point of view is that we're already way behind in the implementation [of RFID], and we need to pick up the pace dramatically," said Jim Noble, vice president and CIO of Altria Group, the parent company of both Kraft and Philip Morris.

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