Where Is the RFID Ecosystem?

Silicon Valley has been the birth place of so many high-technology startups because it has a lot of critical elements that the RFID industry simply lacks.
Published: November 20, 2018

I’ve been watching the Science Channel television series Silicon Valley: The Untold Story. What emerges out of the episodes I’ve seen is a clear sense that Silicon Valley became the center of technological innovation because it developed a unique ecosystem that did not exist anywhere else during the 1950s. It makes me wonder if the lack of a similar ecosystem is responsible for radio frequency identification technology not catching on more quickly.

The Silicon Valley’s ecosystem started with the founding of Stanford University in 1885. The first valley startup, ironically, was based on radio technology. Ciro Elwell launched a company to broadcast voice over radio waves, rather than just the dots and dashes of Morse code. Stanford’s president helped to fund the startup, and the university’s first big customer was the U.S. Navy.

The university, money and military contracts are a big part of the ecosystem that drove Silicon Valley throughout the decades. Frederick Terman, an electronics engineering professor at Stanford, encouraged students William Hewlett and David Packard to start a company (Hewlett-Packard) in 1939. After World War II, Terman encouraged the U.S. military to invest in electronics research at Stanford, turning the college into the MIT of the West.

According to Steve Blank, an entrepreneur who discusses Silicon Valley’s history on the series, Terman encouraged students to use IP developed at Stanford to launch companies, and he urged professors to sit on boards and advise the startups. In the 1950s, a number of companies were launched to develop microwave products for the military.

Around the same time, William Shockley, inventor of the transistor and the former research director of the U.S. Department of Defense’s Weapons System Evaluation Group, started the Shockley Semiconductor Laboratory. Eight of his employees later left to form Fairchild Semiconductor, and two of those eight—Robert Noyce and Gordon Moore—went on to found Intel.

In the 1960s, a few wealthy investors began funding companies. Eventually, in the early 1970s, the first venture capital firms, including Kleiner Perkins Caufield & Byers (KPCB), were launched to fund startups. Eventually, Stanford graduates founded some 70,000 businesses. Since all of the graduates lived in and around Palo Alto, Calif., and since Stanford would continually supply new engineers to work in companies, Silicon Valley became the place for technology startups. It was a place where entrepreneurs could meet people who could fund them, find new employees and get the help they needed to succeed.

The RFID industry has no such geographical center and no university churning out experts in RF engineering. The military has purchased RFID systems, but it has not funded research into improving RFID systems, nor has it invested anything like the massive sums invested in microwave companies (whose products were used to spy on the Soviet Union). This is one reason, perhaps, why RFID has not taken off as quickly as some expected.

What do you think? I would love to hear your opinion. Feel free to comment below.

Mark Roberti is the founder and editor of RFID Journal.