RFID: A New Hope in a New Decade

For all the hype and some pockets of success, RFID's time in the mainstream sun remains five to 10 years off, analysts say. CIO.com's Thomas Wailgum uncovers a few bright spots--and examines what's stopping some businesses from making the most of RFID.

By Thomas Wailgum
Tue, December 01, 2009

CIO — For the past 10 years, radio-frequency identification (RFID) has followed the classic buzzword trajectory that is typically a blessing and a curse for new technologies: Next-generation appeal, bursting hype, rampant confusion and fragmented success.

The peak of the hype for RFID and the start of the turmoil commenced unofficially in 2003, when retailing juggernaut Wal-Mart announced its intention to have its suppliers affix RFID tags to a percentage of the products they shipped to Wal-Mart's distribution centers. The idea, as examined in CIO.com's Tag You're Late: Streamline the supplier-Wal-Mart pipeline and solve the age-old out-of-stock problem.

Unlike bar codes, which today remain the workhorse in most industries, RFID tags don't need to be "seen" to be tracked, and wireless technologies monitoring RFID-tagged stock can provide unprecedented visibility into warehouse and store-shelf inventories. The "RFID Experiment" has been both visionary and a bit of a corporate distraction for Wal-Mart. For its suppliers, it's been an expensive and complex slog, since many hadn't a clue what RFID stood for before '03. (See CIO.com's articles from 2004, 2005, 2006, 2007 and 2008 for more on Wal-Mart's efforts.)

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Despite the Wal-Mart boom and bust, companies outside of retail have employed RFID technologies in strategic and cost-effective ways to track data center assets and expensive laptops, for instance. And consumer-product goods manufacturers, such as Kimberly-Clark, have had varying levels of success with their own RFID programs.

RFID Eating at the 'Trough of Disillusionment'

So, where are we now? According to Gartner's 2009 "Hype Cycle for Emerging Technologies," RFID is at the bottom of the "Trough of Disillusionment." (Next up, if all goes well, is the "Slope of Enlightenment.") Gartner claims mainstream adoption won't occur for another five to 10 years.

No doubt, RFID applications have enjoyed pockets of success this decade in both consumer markets (such as Mobil's Speedpass and E-ZPass tollbooth transponders in the Northeast U.S.) and in business-to-business environments, as companies have become more comfortable with the technology's unique demands and more realistic about the exact types of business problems RFID can help solve and processes it can make more efficient.

A November 2009 report from ABI Research notes that while the RFID market still has its share of challenges (and the global economic recession certainly didn't help matters), three RFID "bright spots" will outpace the overall growth of the RFID market during the next five years.

Those three areas, as detailed in the ABI report are: fashion apparel, being lead by RFID programs at Marks and Spencer in the United Kingdom and American Apparel in the United States; asset tracking and management, such as for spare parts and tools, IT and medical assets, and rental-item management; and active RFID tags, such as for real-time location systems in health care, manufacturing, aerospace and defense, transportation and commercial services.

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