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The Key to RFID Adoption

The industry got out in front of the market, suggests an expert on how technologies go mainstream.
Apr 01, 2012—Geoffrey Moore is the author of Crossing the Chasm and Inside the Tornado, two best-selling books that explain how new technologies become mainstream. Mark Roberti, founder and editor of RFID Journal, often cites Moore's technology-adoption life cycle, to put the state of radio frequency identification into perspective. Here, Roberti and Moore discuss RFID's road to widespread adoption.

Mark Roberti: It's been nearly nine years since Wal-Mart asked its top 100 suppliers to tag pallets and cases. At the time, everyone thought RFID would be ubiquitous within a few years. Is RFID's path to adoption normal for a new technology?

Geoffrey Moore
Geoffrey Moore: What Wal-Mart did in the early days of RFID was classic "visionary" work, the first stage in the technology-adoption life-cycle model. Next comes the "chasm" period, in which early adopters conduct projects while the rest of the world is in a wait-and-see mode. RFID has crossed the chasm and entered the third stage—niche markets have endorsed certain applications to solve specific problems. That means RFID is not going away. But some new technologies remain in this third "bowling alley" stage forever, in which they are valuable but never become mass-market. So the question is, will RFID enter the "tornado" and become a mainstream technology?

Roberti: RFID is highly complex, involving vagaries of radio waves, changes to operational practices, the integration of data and so on. In addition, we don't have a whole product. In most cases, companies have to buy tags, readers and software from separate companies, and these products are not integrated. Does that suggest RFID will be in the bowling alley forever?

Moore: As long as it has those characteristics, yes. One interesting aspect of RFID technology is that it has a high-volume component and a high-complexity component. The RFID industry invested heavily to drive down the cost of the tag, to encourage higher levels of adoption. But it hasn't paid off, because there's no mass market yet. It first has to invest in making solutions more efficient and easier to use for the niche markets. It's important to stay within the boundaries of the current market and not jump out ahead of the adoption curve.

The right business model depends on what phase of adoption the technology is in. In the early adopter phase, by far the most successful business model is the project model, in which the vendor makes money on each project. When you are in the niche bowling alley phase, the most successful business model is a solutions model, but each solution requires quite a bit of customization. The solution gets standardized around a use case within a specific vertical industry. Within that use case, you have a very reliable whole product that comes from one company or, at minimum, a small group of coordinated partners who deploy the solution over and over to the point where there is very little invention each time a new customer is added.
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