Top 10 RFID Developments of 2007, Part 2

This article is the second of a three-part series looking at the top ten trends in RFID over the past year. Today's article looks at trends 6 through 4. Be sure to see for trends 10 through 7.
Published: December 19, 2007

This article was originally published by RFID Update.

December 19, 2007—#6 — Intel Introduces Chip That Could Commoditize RFID Readers
Intel introduced its first RFID reader chip, the R1000, which consolidates several RFID reading and data processing functions that had historically been performed by multiple processors connected together on a circuit board. The Intel release is significant for two reasons: first, it reduces the components, complexity, and cost necessary to produce a Gen2 UHF RFID reader. Intel estimated the chip could lead to reader costs falling by half. A bold prediction to be sure, but less so when one considers Intel’s role in the history of PC development.

The second reason the R1000 is significant is that Intel’s investment to develop and produce the RFID chip suggests the company has confidence in the strength and growth of RFID technology. Similar votes of confidence were seen in Microsoft’s release of its first major RFID product (see Part 1 of this series for details), while IBM, SAP, and other large technology providers continued their RFID developments.

The Intel product gives reader makers the option of using a key component from a stable and well-respected supplier, which in turn enables them to focus their development efforts on adding value in other areas of the reader hardware. The result? Cheaper and more sophisticated Gen2 readers across the marketplace.

Reader makers and software developers also got a boost from an unrelated development: EPCglobal’s ratification of the Low Level Reader Protocol (LLRP) standard, which creates a common interface for reader integration.

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#5 — Wal-Mart: Price Leader, Yes; Thought Leader, ?
Wal-Mart strives to be the price leader in its retail operations. It has been viewed as retail’s RFID adoption leader as well, but may have been dethroned on that front by Europe’s METRO Group in 2007. As Wal-Mart was announcing changes to its implementation plans and a narrowed focus, METRO was expanding its store-level RFID deployments and announced a major, ongoing item-level tagging program. “This is the real thing. METRO has pulled the big lever for production RFID,” Ashley Stephenson of technology provider Reva Systems said at the time.

During 2007 METRO said it would install store-level systems at 200 locations in Germany, would deploy a variety of EPCglobal standards-based item-level tagging applications for garments, and approved third-party RFID equipment for use by its partners to meet RFID tagging and reporting requirements.

As usual, every RFID-related move Wal-Mart made or didn’t make led to considerable coverage, analysis, and worry among suppliers and technology providers. The company took exception to a Wall Street Journal article that it claims misrepresented its RFID activity (see Part 1 of this series for more on that). In May, the company said its RFID activity would proceed at a more moderate pace than originally planned. In October, Wal-Mart brought clarity to its plans in presentations at events in Chicago and Taiwan. The company announced three new RFID initiatives, for putaway at a distribution center, promotions tracking, and category management. These programs relate to specific applications, products, or locations, and do not represent a high-volume expansion of RFID activity.

Wal-Mart also began discouraging suppliers and technology marketers from using the word “mandate” to describe its RFID programs, although terminology alone is unlikely to affect how companies feel about requirements to add tags to merchandise.

Judging by new solutions offerings and marketing messages, many RFID vendors appear to be shifting their attention away from mandate-driven (oops, there’s that word again) sales opportunities. There was a heightened focus on promoting closed-loop applications like asset management and work-in-progress (WIP) tracking, which have repeatedly demonstrated strong ROI and can be implemented without guidance or cooperation from trading partners.

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#4 — Vendor Focus Shifts from Broad to Deep
There was a gold rush mentality in the RFID industry after Wal-Mart, Best Buy, METRO Group, and the U.S. Department of Defense announced compliance tagging programs, followed not long after by the release of the EPCglobal Gen2 standard. It seemed every company with experience in either RFID, bar code labeling, packaging, or data integration had repositioned itself as a solution provider for the compliance/Gen2 market. But the market wasn’t big enough to feed all those mouths. Some companies withdrew altogether, but most others repositioned and focused on targeted, near-term opportunities, both within and outside Gen2 supply chain applications.

This focus was very much in evidence in 2007, which was marked by more nuanced marketing. Alien Technology, the poster child for high EPC expectations, expanded its distribution channel and announced several project wins outside of supply chain and compliance applications. Several manufacturers introduced packaged solutions that bundled RFID software and application-specific software to meet needs they identified in targeted vertical markets. Overall, there was less talk of tag prices, technology prowess, and specific features such as anti-collision algorithms, and more emphasis on how complete solutions could solve business problems for specific vertical markets and applications — particularly for pharmaceutical distribution, which many see as a large, near-term emerging market.

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