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Doubt from Across the Industry

Observations on the state of RFID have taken a mildly sober tone of late, with many wondering when the long-anticipated industry acceleration and prosperity is going to finally take hold.
May 11, 2005This article was originally published by RFID Update.

May 11, 2005—Observations on the state of RFID have taken a mildly sober tone of late, with many wondering when the long-anticipated industry acceleration and prosperity is going to finally take hold. GEN 2 has been approved, the Wal-Mart mandate is almost two years old, and RFID hardware has improved dramatically. Yet just three weeks ago, AMR Research's Dennis Gaughan concluded that the RFID industry is "stuck in neutral". Gaughan observed at April's RFID Journal Live! conference that while first movers continue insisting that others join them in deploying RFID, the would-be fast followers are still unsure of a path to ROI and increasingly hardened to the "Get Started Now" message.

Then last week, GenuOne announced that it was withdrawing from the RFID application market. CEO Jeff Unger stated that "the RFID application software market is still very much in its infancy and will take some time to develop into a formal marketplace." Also last week, MIT's Technology Review magazine reacted sourly to a $12.2 million fourth round financing closed in April by TAGSYS, a French RFID hardware provider. "RFID has been The Next Big Thing for so long, it's a wonder that industry-watchers can still muster any excitement. TAGSYS is in many ways the archetypal RFID company: toiling for many years, making gradual progress, but still waiting for its core markets to reach critical mass."

This week, RFID Journal noted that after a domino effect of RFID mandate activity in 2003 and 2004, it has been almost seven months since the last mandate announcement, which came from Best Buy. "Is RFID losing momentum?" the article asks.

Perhaps what RFID is losing is hype. The RFID Journal article cites a phrase coined by research firm Gartner, the "trough of disillusionment", when the excited attitude over a new technology's potential shifts to a less-glamorous focus on actually toiling through its deployment. In other words, it is not that RFID industry has significantly slowed; rather, the industry is in the trenches implementing. There is more "doing" and less "talking."

Others point to the fact that the industry is simply experiencing a predictable lull between December's GEN 2 ratification and the introduction of GEN 2 products later this year. End users do not want to invest in RFID now because they worry that any investment will soon be made obsolete by the GEN 2 products expected in Q3 and beyond. RFID providers, on the other hand, are relatively quiet because they are feverishly working behind the scenes to ready those very GEN 2 products.

Despite the recently dampened mood, the larger sentiment remains optimistic: RFID is here to stay. Even GenuOne's Unger said, "It's really a matter of time. We're not any less bullish on RFID." Everyone that RFID Update has spoken with is convinced that the technology's promise is very real, that it is transformative, and that it will change business forever. The only point of contention is --- When?

Read MIT's reaction to the TAGSYS deal
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