Who’s to Blame for the Relatively Slow Pace of RFID Adoption?

Some say it is the end users who are too cautious about investing, but it may be solution providers unwilling to invest in marketing their products.
Published: December 9, 2018

I was speaking with the CEO of a midsize RFID company last week. He complained about the slow pace of adoption of radio frequency identification technologies, and put the blame for this problem squarely on the shoulders of end users. “Companies have become too conservative,” he said. “CEOs are afraid to miss their quarterly numbers and they don’t want to take chances. Innovation has disappeared.”

I offered a different take, however. First, I said, the pace of adoption might not be any slower than for other technologies. The PC was invented around 1980, yet it wasn’t until the mid-1990s that sales really began to accelerate. Passive UHF RFID was introduced in 2005, and we won’t hit the 15-year mark for that technology until 2020, so adoption might be on a similar path to that of PCs.

Second, it’s possible that the problem is not CEOs being unwilling to invest in the technology, but CEOs being unaware of the technology’s power. Typically, technology companies spend about 15 percent of their total revenue on marketing (see Marketing Budgets Vary by Industry). Some, including Salesforce and Oracle, spend 20 percent of their revenue. There is no RFID company of which I am aware that spends anywhere close to that. If I had to guess, I would say most spend less than 2 percent on marketing, while many spend almost nothing.

In his book Escape Velocity, Geoffrey Moore wrote that companies should budget the same amount for marketing that they do for product development. So if a company spends $300,000 developing a new RFID reader, it should budget $300,000 for sustained promotion of that product as well. I can say with a high degree of confidence that this has never happened in the RFID industry—ever. Most companies develop a new product, then put out a press release… and that’s the end of it.

This means most potential buyers of RFID systems don’t know what solutions exist in the marketplace, what new products have been launched that might meet their needs, or even which companies sell RFID tags, which sell readers and which sell software. That means companies seeking an RFID solution must spend a long time doing a lot of research to figure out if there is a solution that will meet their needs.

I receive several emails every week from executives who are frustrated because they can’t figure out whether there is a suitable solution for the business issues with which they grapple. I do my best to help, but the industry cannot scale if it is relying on one person to connect buyers and sellers.

I understand that RFID companies need to make tough decisions regarding how to use their resources, just as potential buyers of RFID technology have to make tough decisions about whether or not to invest in new technology solutions. I suspect the lack of rapid adoption is due both to user cautiousness about investing and the lack of promotion being done by RFID companies, but as the benefits of RFID are proven every day, it will eventually catch on and grow rapidly. Of this, I am sure.

Mark Roberti is the founder and editor of RFID Journal.