Just How Big Will RFID Be?

By Mark Roberti

The lessons learned from the adoption of other technologies suggest that radio frequency identification will be more important than anyone currently imagines.

In last week's column, I wrote, "People tend to be surprised when an emerging technology goes from a slow-growth phase to the hyper-growth phase" (see Is the RFID Industry Ready for Growth?). I'm sure some readers probably rolled their eyes and thought, "Yet another prediction that RFID technology is going to take off."

I can certainly understand that. People have been predicting the mass adoption of RFID since 2003. They've also been underestimating just how important and ubiquitous RFID will become. So let me explain why RFID adoption will begin to accelerate, and then I will get to why I think we are all underestimating its importance.

First, technologies are always hyped. There are great expectations that a new technology will change the world, and then it turns out to be more difficult to deploy than people initially thought. It takes time for technologies to mature, for complete solutions to be developed, even for people to understand how the technologies should be used. Remember when the Internet bubble burst and all the dot-coms went out of business?

RFID is no different. After the initial hype, there was a global dismissiveness about the technology. It doesn't work around water and metal. Read rates are too low. It's too expensive. And so on and so forth. Now, almost 10 years later, the technology has reached a level of maturity—it now works well in most situations, and there are tags that will work on almost any object. There are software applications for many applications, as well as readers in a wide variety of form factors. We are beginning to see complete solutions emerge, and the technology is getting somewhat easier to deploy (technology providers still have some work to do in both these areas). All that is really left now is for one industry to get enough adopters to embrace RFID to reach critical mass. At that point, adoption will take off.

How long that will take is hard to say. My guess is it will be three more years or so before the retail apparel sector adopts RFID on a large scale, and from there other industries will then begin to embrace the technology as well. In a decade, how big will the industry be, and how ubiquitous will RFID be? History suggests that it will be bigger than our wildest imagination.

When RFID was in the hype phase in 2005 and 2006, a gentleman from Europe wrote to me, claiming RFID would flame out just as the Internet did. I pointed out that while Internet companies flamed out, use of the Internet was greater than ever (a point he conceded). Today, the Internet is more important, more ubiquitous and more essential to business than anyone imagined in the heyday of the Internet bubble, or even when I was corresponding with this doubting Thomas.

People underestimated the importance of personal computers. In the early 1980s, IBM estimated the total global demand for personal computers would likely peak at around 60,000 units annually. Demand actually peaked at about 346.2 million units in 2010. IBM underestimated the size of the market by a factor of 5,770.

In 1980, AT&T commissioned famed consulting firm McKinsey & Co. to forecast cell phone penetration in the United States by the year 2000. McKinsey boldly predicted there would be roughly 900,000 subscribers. As it turns out, this was less than 1 percent of the actual number of 109 million subscribers (in fact, there are currently more than 327 million in the United States alone).

I could provide more examples, but you get the point.

There is always some floundering as companies attempt to figure out how to use new technologies. Remember all the millions invested in online market places in the early days of the World Wide Web? Only a handful of those survived. Similarly, there have been missteps in the application of RFID. But people have now figured it out, and we are seeing some large deployments. Marks & Spencer, for example, will consume some 400 million passive ultrahigh-frequency (UHF) RFID tags this year (see Marks & Spencer Leads the Way). And a Bechtel project in Australia is employing 60,000 active tags.

As RFID becomes widely adopted, people will find new ways to use it. I don't yet know what those are, but I can't wait to find out.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog, the Editor's Note archive or RFID Connect.