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Top 10 RFID Trends of 2006, Part 1
Monday December 18th, 2006
(((Ranking in at a humble, who-cares number 10: privacy and citizenship!)))
#10 - RFID and the Citizen: Passports, Privacy, and Politics
There were a number of developments in 2006 that related to the coexistence of RFID and the public. E-passports, which offer contactless reading and enhanced anti-counterfeiting, became a reality. Dozens of countries around the world began issuing them, heralding a switch from paper-only passports to ones that rely on RFID. Lawmakers took an increased interest in the technology, the most notable examples being the European Commission's initiative to develop RFID public policy and the (ultimately vetoed) bill in California that sought to restrict RFID use in government-issued identification documents. Finally, privacy continued to be an issue this year, though seemingly less so than in 2005 when Katherine Albrecht released her anti-RFID book Spychips.
(((Yes, they really live in fear of this woman. It's kind of awesome.)))
Perhaps the decreased controversy was also due to the industry's more proactive engagement of the issue, as companies like IBM, RFIDsec, and SmartCode released tag products designed specially to protect consumer privacy. Here's hoping that trend continues in 2007 and beyond.
(((Alternatively, wait until there's some relatively prominent arphid privacy-invasion victim with a bloody shirt to wave in public, and watch all PR hell break loose.)))
Related articles:
• Pro-Privacy Tearable RFID Tag Becomes a Reality
• California RFID Restrictions Get Governor's Veto
• Europe Seeks Public Opinion on RFID Policy
• Tag Balances Privacy and Retailer Interests
• US Government Issues 300 RFID Passports
#9 - RFID Pseudo-Scares (((as opposed to the real scares, presumably)))
RFID became the favorite target of computer security academics, professionals, and hackers alike, as they very publicly asserted grave security vulnerabilities in the technology. First, there was the study by researchers at Vrije Universiteit in Amsterdam that concluded ubiquitous RFID might facilitate the spread of malicious viruses and worms. After lots of spilled ink and hand-wringing, this threat was found to be wildly exaggerated, relying as it did on systems implementers to neglect the most basic security precautions that have been in practice for years. Then there was the e-passport cloning hubbub, which turned out to be just that. The author of the "hack" hyped the ability to copy the data of an e-passport RFID chip onto a second, separate RFID chip, and the mainstream technology press fell for it. For a variety of reasons, the fact that an e-passport chip can be copied does not mean a hacker can trivially integrate the duplicated information into a phony passport and use it as his own.
(((I bet the technology press has never realized that they are "Main Stream Media" and can therefore be denounced from the moral high ground of the industry booster press.)))
The unfortunate outcome of both these events was that RFID's reputation as a secure technology was sullied. The silver lining was that the industry had to take a hard look at its technology to verify that in fact it was secure. Going forward, the industry's focus on security will be heightened, and that's a good thing for everyone. (((As a further plus, I got a really good chuckle out of this tortured rationalization.)))
Related articles:
• New RFID Passport Scare – Does it Matter?
• The Industry Reacts to RFID Virus Research
• Study: RFID Vulnerable to Viruses and Worms
#8 - Cover Your Assets
As return-on-investment stubbornly eluded end users under customer mandate, many got creative with RFID by seeking ROI from non-compliance applications. The most common was closed-loop asset tracking, in which RFID is used to better track, manage, and utilize assets within a company's own four walls. Asset tracking provided a much-needed revenue stream for some passive RFID vendors, however it will likely only be a stopgap niche; these vendors still require the widespread adoption of supply chain RFID to survive and thrive in the long term. Furthermore, it has proven difficult to quantify just how large (or small) the asset-tracking opportunity is, since the applications are so diverse and particular to individual end users' processes.
(((This is a trumpet of industry doom warming up here. Commercial RFID doesn't pay. Not on its own. The reason it doesn't pay is that RFID as it presently exists is a giant scheme to move everybody's supply-chain intellectual-property into Wal-Mart headquarters. Even grocers aren't dumb enough to pay out of their own pockets to install arphid spy hardware for Wal-Mart, so they are just plain ignoring the alien orders. They might install a little arphid action inside their own four walls. They're not gonna pay to transform Wal-Mart into the RFID Microsoft. And boy, that peasants' revolt looks fit to mean major-league dot-bust trouble for the arphid biz. It would mean that the whole scheme is coming unhinged.)))
The focus on asset tracking also opened end users' eyes to the full gamut of available technologies, beyond just the passive RFID required by mandates. Vendors of active RFID and real-time locating systems (RTLS) benefited as they landed business in the healthcare, logistics, and manufacturing industries. RTLS saw a further boost as G2 Microsystems introduced a new chip that brought down the price, energy consumption, and form factor of tags. These positive developments did not go unnoticed by investors, who bought equity in firms like RF Code, Ekahau, and Ubisense. Also, by far the biggest deal of the year was juggernaut defense contractor Lockheed Martin's acquisition of active RFID leader Savi Technology for a cool $425 million.
Related articles:
• RTLS Provider Ekahau Secures $16m to Fund Growth
• Active RFID Provider RF Code Nails $30m Deal
• Smaller, Cheaper, Longer-Lasting RTLS Tags Hit Market
• New Chip Could Transform Active RFID Market
• Lockheed Martin to Buy Active RFID Leader Savi
• RTLS Provider Ubisense Lands $3m Funding
• Report: RTLS Market Worth $2.7b in 2016
• Report: Active RFID Market $6.78b in 2016
#7 - Perennial Favorites: Wal-Mart and the DoD
It was the mandates by Wal-Mart and the US Department of Defense that in 2003 veritably birthed the RFID industry as it exists today. However, neither created the expected market boom. Wal-Mart suppliers purchased the bare minimum amount of RFID products and services to comply, while the DoD mandate got off to a slow start. (((So much for the dictates from the commanding heights.)))
Despite the disappointment, both mandates continued in 2007 to be two important – arguably the most important – drivers of the industry. Wal-Mart reiterated its commitment to the technology even as Rollin Ford replaced RFID visionary Linda Dillman as CIO. (((Speaks for itself, really.))) The company reinforced words with action in September when it announced plans to expand the RFID footprint to an additional 500 locations before the end of next month. And in recent weeks, there have been rumblings that the company may widen its mandate to include even more suppliers for 2008.
For its part, the DoD mandate took a major step forward as ODIN technologies equipped 69 facilities in the continental US with RFID. With an infrastructure now in place, RFID tagging by suppliers is expected to accelerate.
Related articles:
• Wal-Mart to Expand RFID Rollout by 500 Locations
• Wal-Mart RFID Initiative to "Continue Unabated"
• RFID Visionary No Longer CIO at Wal-Mart
• RFID Deployment at DoD Completes First Phase
• ODIN Wins $7m RFID Contract from DoD
Top 10 RFID Trends of 2006, Part 2
Wednesday December 20th, 2006
#6 - HF vs. UHF
The debate about which flavor of RFID is preferable for item-level tagging – high frequency (HF) or ultrahigh frequency (UHF) – had existed in 2005, but it really peaked this year and will persist into 2007. HF proponents argue that their technology is tested and proven, especially around challenging materials like metal and liquid. UHF proponents argue that theirs can perform just as well around those materials, with the added benefits of costing less on a per-tag basis and avoiding dual infrastructure (HF for item-level, UHF for case- and pallet-level).
RFID chip manufacturer and UHF proponent Impinj took the lead in the debate in February when it released new tag antenna designs based on "near field" UHF to demonstrate that the conventional wisdom – UHF cannot be used around metal and liquid – was mistaken. In March, RFID solutions provider ODIN technologies fanned the flames by releasing a benchmark which asserted HF as the appropriate choice for item-level tagging of pharmaceuticals. This assertion notwithstanding, the pro-UHF vendors with Impinj at the helm campaigned to make their case all year long via webinars, white papers, and live demonstrations.
Ultimately, little public response came from the HF camp, and Impinj et al. seem to have made major progress. Last month, pharmaceutical packaging giant O-I demonstrated an RFID-integrated packaging solution for item-level pharmaceutical tagging that can use either UHF or HF technology. A year ago UHF probably would not have been an option. Furthermore, O-I's demo showed UHF to perform much faster than HF on an apples-to-apples comparison. While O-I did not explicitly endorse UHF, the highly publicized demo seemed like a not-so-subtle hint by the company about which technology choice is preferable.
Unless the HF camp actively shores up support and levels a major pushback, and assuming innovation around near field UHF continues, UHF will continue turning heads and changing minds in 2007. Whichever technology "wins", the hope is that the debate settles soon; some analysts are concerned that it is confusing end users and putting them off from adopting the technology. (((Maybe, but it could also be argued that competing standards increases the likelihood that somebody will figure out what RFID is actually good for. Hint: it probably means making the industry less of a big surreptitious secret.)))
Related articles:
• Major RFID Innovation for Pharma Item-Level Tagging
• Vue Brings UHF Item-Level RFID to Pharmacies
• RFID Vendors Unite Behind Item-Level UHF
• Report: Both HF and UHF RFID Will Exist at Item Level
• Report: HF Wins First Round of RFID Frequency Battle
• Tagsys Releases Gen2 Tags for Item Level
• Impinj Launches UHF Tech for Item-Level Tags
#5 - Item-Level Surprise
Impinj CEO Dr. William Colleran told RFID Update early this year that the reason his company began experimenting with near field UHF was because it was seeing unanticipated demand for item-level tagging. "If you had asked me six months ago when item-level tagging would take off," he said, "I probably would have said sometime in late 2007. But this item-level tagging thing is starting to happen now, starting to take on a life of its own."
Indeed, the rise in item-level tagging has been one of the pleasant surprises of 2006, an area where RFID adoption has actually exceeded, instead of disappointed, expectations. Many had predicted that it wouldn't occur in meaningful volume until at least 2008. But industries like apparel, consumer electronics, and pharmaceuticals have become eager to track and trace their goods, which are often high value, high volume, and targets of theft or counterfeit. In the Netherlands, the world's first fully item-level tagged store opened in April. Every single book at Boekhandels Groep Nederland's SmartStore in the city of Almere has an RFID tag attached.
(((Unfortunately, item-level tagging also involves the keenest privacy threats. "Hey you. Yeah, the one with the Noam Chomsky book in your bag. Let's see your papers. Up against the wall.")))
Standards organization EPCglobal responded to the trend by hosting an event in March where 23 vendors demonstrated their proposed technological solutions for item-level tagging. As a result of the event, two new item-level standards groups were formed within EPCglobal, one for UHF, the other for HF.
The industry is still a long way from a commercially available five-cent tag, the milestone many thought would catalyze item-level tagging. But at least item-level tagging as a concept has already been embraced by a few industries, which, as they expand their adoption, will spur tag prices to fall and other industries to follow suit. (((Of course, that economy-of-scale was supposed to work for the pallet-tagging biz, too.)))
Related articles:
• Marks & Spencer to Expand RFID Item Tagging
• Bookstore Item-Level RFID Tagging Boosts Sales
• VDC: Pharma Item-Level RFID to Set Precedent
• New RFID Standard Groups at EPCglobal
• First RFID Item-Level Tagged Store Opens
• RFID at the Item – For Some, Sooner Than Later
• EPCglobal Tracks Item-Level RFID
• EPCglobal to Compare Item-Level Solutions
#4 - The Great IPO that Wasn't
Alien Technology, a provider of RFID products and services and one of the names most closely associated with the supply chain RFID opportunity, in April filed to go public on the NASDAQ. With ticker symbol RFID, Silicon Valley-based Alien was going to be the first pure-play, publicly-traded RFID company. It was an exciting prospect for the entire industry, as it suggested that RFID "had arrived." Furthermore, it promised to raise the industry's profile, offering both institutional and lay investors a vehicle by which to participate in the growing RFID market.
Alas, a number of factors worked against a welcome embrace by Wall Street. The company's fundamentals were less than stellar. Its S-1 filing revealed that the company did only $20 million in sales in 2005, more than half of which came from services, a revenue stream far less scalable and ultimately less profitable than the manufacture of tags and readers. Furthermore, the overall climate for new public offerings was sour; a number of other companies pulled their IPOs within weeks of when Alien did, on August 4th. (((Or, just maybe, the guys on Wall Street balked a little at ponying up big bucks for a UFO-friendly outfit called "Alien Technology.")))
In the weeks following, rumors ran rampant of layoffs, a company sell-off, and even bankruptcy. Fast forward four months, however, and the company seems to have hunkered down and put the episode behind it. In October, Alien announced the long-awaited opening of its Fargo, North Dakota-based tag manufacturing plant as well as the introduction of its Gen2 chip product. And just this week, it announced a $10 million venture in Korea to position it for RFID demand across Asia.
Related articles:
• Alien Opens RFID Tag Plant, Releases Gen2 Chip
• IPOs in RFID: If Not Alien, Then Who?
• Alien IPO Filing "Imminent"
• Alien Worth $577 Million
Top 10 RFID Trends of 2006, Part
#3 - Pharma Fits and Starts
Tracking individual bottles of expensive, high-volume drugs has long been considered the low-hanging fruit for item-level RFID tagging. The pharmaceutical supply chain is highly fragmented, full of mom-and-pop wholesalers and distributors. (((Who, naturally, are eager to collaborate in their own swift annihilation by Wal-Mart.)))
Opportunities are rife to siphon off shipments of expensive drugs for resale on the black market, costing the industry billions annually. (((Yeah, and imagine the joy if you were a cocaine producer and could arphid-tag your own bundles. No more of those embarrassing incidents when a kilo of coke disappears in the supply-chain tunnels between Tijuana and San Diego.)))
Worse, introducing bogus drugs into the supply chain, also easier than it should be, can have a far graver cost than dollars: human lives. For these reasons the US Food and Drug Administration has advocated RFID as a technological salve to pharmaceutical supply chain security, though it has never gone as far as mandating the technology's usage.
This year saw RFID adoption by the pharmaceutical industry take a few steps forward, then a step or two back. A handful of major pharmaceutical manufacturers and distributors began piloting or deploying the technology. Pfizer shipped RFID-tagged Vi*gra, (((check out that anti-spam precaution; Jeez, what kind of world has this become when the press has to bow the knee in public to those sex-drug racketeers))) and GlaxoSmithKline tagged the HIV drug Trizivir. Cardinal Health launched an end-to-end supply chain pilot, and pharmaceutical packaging giant O-I introduced a solution that allows pharmaceutical manufacturers to embed RFID tags within drug bottles. (((Empty bottles that permanently scream: "I'm Diazepam!" Sounds like great fun for an after-market art project.)))
While these developments are all positive, they don't cumulatively amount to the level of progress hoped for and expected by many at the top of the year. Furthermore, in the last couple months there have been two sobering developments. First, the results of Cardinal's pilot proved mixed, leading a company spokesman to conclude, "While our pilot demonstrated that using UHF RFID technology at the unit, case, and pallet level is feasible for track-and-trace purposes, a great deal of additional work needs to be undertaken by stakeholders across the industry to address significant challenges. Until those challenges are addressed, direct distribution of medicine continues to be the best near-term approach to maintain the highest levels of security and efficiency in the pharmaceutical supply chain."
Second, just two weeks ago a US federal judge issued an injunction that lifts an FDA-mandated pedigree requirement for drug shipments. While RFID had not been a requirement for the pedigrees, industry observers agreed that pedigree enforcement generally was a positive step toward the ultimate adoption of RFID-based e-pedigrees. With the FDA pedigree requirement now postponed, momentum behind RFID e-pedigree adoption may be slowed.
Despite these setbacks, the argument for pharmaceutical-tagging remains largely unchallenged. Also, according to sources, more positive announcements are expected in early 2007.
#2 - Gen2 Delights
EPCglobal's Gen2 standard was ratified at the end of 2004, but it wasn't until this year that vendors brought Gen2 products to market in meaningful volumes. The improved performance of these products over their Gen1 predecessors is, according to nearly everyone, dramatic.
Early positive reviews came from RFID solutions provider ODIN technologies with the January release of its Gen2 tag benchmark, which reported strong performance by the evaluated products. Later in the year, Wal-Mart made a number of public statements about the "step change" in performance from Gen1 to Gen2. Procter & Gamble vice president Richard Cantwell said in his keynote at the Baird RFID investor conference that Gen2 "is significantly better than Gen1" in P&G's experience. When ODIN last month came out with a second tag benchmark, chief operating officer Bret Kinsella told RFID Update that the company had observed improved performance in Gen2 tags even since the January benchmark. (((Gen2 tags work better, but they're also a lot more complicated and harder to make cheaply.)))
Many believe that Gen2's strong performance could finally vault RFID adoption out of the "science project" phase. (((And into the "total financial meltdown" phase.))) The news is only expected to get better as competition heats up among the RFID chip providers. Recall that Impinj's year-long reign as sole Gen2 chip provider ended this fall, as Texas Instruments, STMicroelectronics, NXP (formerly Philips), and Alien all rolled out competitive Gen2 chip offerings.
In addition to being roundly praised all year long, Gen2 received another major boost in July when it was officially incorporated into the ISO standard for passive UHF RFID. While largely a formality since the standard already included a very similar specification, the official ISO designation cemented Gen2 as the global standard for passive RFID.
Related articles:
• ODIN Releases Global RFID Tag Benchmark
• Alien Opens RFID Tag Plant, Releases Gen2 Chip
#1 - The Industry Itself
No annual wrap-up would be complete without stepping back to take stock of the industry itself. Since the Wal-Mart and US Department of Defense mandates of 2003, the industry has been waiting and hoping for the so-called tipping point, the moment at which adoption reaches enough critical mass among early adopters to induce the mainstream to follow suit. Demand for the technology spreads rapidly, and the rising tide lifts all boats. (((Did you ever try to go out and buy a kilo of "tipping point"? It's like trying to go out and buy a six-pack of "chaos theory.")))
Needless to say, this moment did not come in 2006, and probably will not in 2007. But rather than dwelling on the negative, it is reassuring to observe just how far the industry has progressed in a short amount of time. (((No no, come on – let's dwell on the negative just a little!)))
In 2004, even before the RFID hype had subsided, there was already industry acknowledgement that widespread adoption faced a number of obstacles. The oft-cited examples were nonexistent standards, intellectual property disputes, poor technology performance, privacy concerns, and lacking ROI. (((Those five dark angels have killed many a tech baby in its crib.)))
Of this list of five, it is safe to say that three have largely been overcome, and that a fourth is getting there. Gen2 is a successful, effective standard upon which an ever-expanding marketplace of products is based. It has also demonstrated very robust performance gains that will render obsolete the extensive tinkering needed to make early pilots behave.
As for intellectual property, Symbol and Intermec settled their disagreements, and many vendors have signed on to Intermec's licensing program. Additionally, the RFID Consortium aims to facilitate IP licensing via a patent pool model that has proven successful in other technology industries. (As an aside, Alien sued Intermec earlier this year, bringing IP concerns momentarily back to the fore. But since June there have been no major developments, and the industry seems to have reacted with a shrug.)
The public consternation over privacy has not fully abated, but there has been solid progress. The industry has engaged the issue more actively and responsibly than a few years ago, when it seemed to hope the concerns would just go away on their own. (((Why the hell they thought that privacy would silently "go away" really makes me wonder for their sanity. Don't these hucksters realize they're gonna get arphids scattered all over THEMSELVES? Did they ever, like, sit down and have lunch with their colleagues from Verichip? Did they see that mad, mad gleam in their eyes?)))
That leaves ROI – or lack thereof – as the intractable puzzle still begging for a solution. Unfortunately, there appears to be no silver bullet. (((See – we're a computer industry that actually *consumes more money than it generates.* So, you know, roll out the IPO!)))
It will require a combination of falling prices, business case discovery, and developments in data analytics. (((Or, Wal-Mart could just make their monster RFID data archives into public domain, and turn them into a general platform for development instead of a competitive advantage... but no, no, it's much smarter to impose RFID on the weaker and feebler members of the market while making them pay for it.)))
But the good news is that at the end of 2006, industry focus is trained squarely on this issue. Judging by past success, there is every reason to believe that the collective effort of the industry will soon overcome this obstacle as it has the rest. (((Yeah, what exactly is it really good for? A really fascinating question! Will the RFID industry find that out before it floats belly-up to the top of the fishbowl? Stay tuned!)))
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