RFID Adoption Following Hype Cycle to a Tee

By Admin

If we take a step back and look at the RFID adoption as just another high-technology sector, it follows Gartner's famed "Hype Cycle" to a tee.

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This article was originally published by RFID Update.

July 22, 2005—Driven by new research from leading RFID analyst firms AMR Research and ABI Research, there is a flurry of largely pessimistic articles today on the state of RFID, including one sensationalistically entitled The Great RFID Experiment That Wasn't from none other than Forbes. ABI's research, as reported in RFID Update earlier this week, predicts a shakeout in the RFID software space over the next six to nine months, with acquisitions and rollups galore. The premise is that there is an oversupply of RFID application software and increasing overlap in functionality between the offerings of smaller middleware shops like OATSystems and Connecterra and entrenched enterprise software giants like SAP, creating a market inefficiency that is ripe for correction by consolidation. AMR's research, released on Wednesday, is replete with figures gleaned from a survey of 500 companies. RFID Update will look at those figures more closely next week, but the key conclusion is that it will not be until 2008 that mainstream adoption begins. Lacking ROI is the culprit.

What is striking here is not some surprising realization that RFID can't deliver. Rather, the takeaway is just how predictable all this "fallout" was. Since well before the RFID hype wave crested in Q3-Q4 of last year, industry veterans were wary of the increasing hype and associated expectations for RFID technology. They knew then that the technology could not transform the world overnight, that standards take time to formalize, and that it would be impossible to bestow RFID-enabled visibility on the inefficient, opaque supply chain in only a matter of a few years. After all, they often said, it took the bar code decades to gain meaningful traction. RFID simply cannot perform miracles, and those who thought that it would were destined for disappointment. Forbes cites ThingMagic VP of Marketing (and co-founder of the Auto-ID Center at MIT) Kevin Ashton, who never expected 2005 to be the "year of RFID." Instead, he expects only steady growth over the next few years as infrastructure is gradually built out.

If we take a further step back and look at the RFID industry as just another high-technology sector, an even more striking truth becomes evident: RFID adoption follows Gartner's famed "Hype Cycle" to a tee. For those unfamiliar with the decade-old concept, it goes like this (from Gartner's site):

  1. Technology Trigger
    The first phase of a Hype Cycle is the "technology trigger" or breakthrough, product launch or other event that generates significant press and interest.
  2. Peak of Inflated Expectations
    In the next phase, a frenzy of publicity typically generates over-enthusiasm and unrealistic expectations. There may be some successful applications of a technology, but there are typically more failures.
  3. Trough of Disillusionment
    Technologies enter the "trough of disillusionment" because they fail to meet expectations and quickly become unfashionable. Consequently, the press usually abandons the topic and the technology.
  4. Slope of Enlightenment
    Although the press may have stopped covering the technology, some businesses continue through the "slope of enlightenment" and experiment to understand the benefits and practical application of the technology.
  5. Plateau of Productivity
    A technology reaches the "plateau of productivity" as the benefits of it become widely demonstrated and accepted. The technology becomes increasingly stable and evolves in second and third generations. The final height of the plateau varies according to whether the technology is broadly applicable or benefits only a niche market.

In the case of RFID, the first phase -- the technology trigger -- would obviously be the Wal-Mart mandate (and subsequent ones from DoD, Metro, Tesco, Target, Albertson's, and Best Buy). The mandates generated the press, interest, and attention that led naturally to the Hype Cycle's second phase: inflated expectations and the associated frenzy of publicity and over-enthusiasm. One could argue that now, with stubbornly high costs and evasive ROI, unmet expectations have landed the industry squarely in phase three, the painful "trough of disillusionment." The Forbes article title "The Great RFID Experiment That Wasn't" is a perfect example of RFID now being unfashionable.

At this point, two questions remain. The first: Does the fact that RFID has followed the first three phases of the Hype Cycle mean it will continue through to the fourth and fifth, or could sentiment become so mired in the trough of disillusionment that it will forever stall the technology's adoption? Answer: the former. Technology may experience hiccups and setbacks, but its march forward is inevitable. It never gets permanently stuck. Furthermore, Wal-Mart, albeit less zealous about pushing RFID than it was 18 months ago, is reportedly fully committed to the technology and will continue moving forward intently with its initiative.

The second question: If we accept that the Hype Cycle will continue playing out in the RFID space, when will the disillusionment give way to the "slope of enlightenment"? That answer, readers, is for you to tell me.