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RFID Growth Strong Despite Mountains to Climb
Jul 26, 2005 12:44 PM  By Mark E. Hazen, EWT Editor

In the July 12 issue of Emerging Wireless Technology, our Top Story focused on the strong growth that is predicted for RFID technology markets. Many prominent researchers support this:

  • Datamonitor—RFID is a booming market. Large companies and governments worldwide are expected to spend $6 billion on RFID hardware, software and services by 2010.
  • Venture Development Corp.—Strong short view with a Compound Annual Growth Rate (CAGR) of 35.6% for hardware, software and services combined through 2008, with 2004 revenues at $1.7 billion and 2008 revenues at $5.9 billion.
  • Research and Markets—RFID industry figures will rise from $1.95 billion in 2005 to $26.9 billion in 2015, driven by many new applications dealing with supply-chain management and security.

The growth of RFID markets is, in spite of the “mountains of concern,” relating to their use. A recent June 2005 report of the Government Accountability Office (GAO) discusses some concerns and issues that have been brought to light by various federal agencies regarding the implementation of RFID technology. Key areas of concern covered in this report include security, privacy, cost and benefits, reliability, availability and environmental impact. The table summarizes these and other RFID implementation and utilization concerns.

Concern Issues Solutions
Security Unauthorized reads (eavesdropping), data protection, cloning, replay, disposal Strict security practices, encryption, authentication, published best-practices for eliminating fraud
Privacy Related to people more than products, tracking, profiling, secondary use of information, violates anonymity, disposal Make persons aware of RFID use and intent, strict security on collected data, published disclosure policies
ROI Low tag costs but high implementation cost to build infrastructure; high hardware, software and service costs; big concern for medium and small businesses faced with the need to comply—mandated push instead of market pull Apply best practices learned from government and large commercial operations, ROI includes reduced product loss, reduced labor, faster supply chain, tighter inventory control, and long- and short-term planning
Reliability Read collisions, dead tags, damaged tags, obstacles, radio interference, false negative and positive reads, temperature, humidity Specifications for proper placement, read orientation, handling, reader installation, reader use, frequent calibration and validation
Supply Tag supply becomes strained as RFID usage spreads Tag standardization by application, accurate market analysis and planning
Environmental impact Recycling/reuse, contaminants such as silicon, adhesives, nickel, silver, copper, aluminum, non-reusable shipping containers Planning for reuse where possible, EPA or other agency regulation
Standardization Immature technology, open-loop full supply chain management Worldwide standardization of tag data formats, software, hardware (i.e., EPCglobal Tag Data Standard)

How can RFID markets grow in spite of these concerns? The growth of RFID utilization at the commercial supply level and within federal sectors is, for the most part, the result of push, not a benefit-based pull. These levels must comply with mandates for implementation. Large retailers, for example, who enjoy a clear ROI through inventory control and costs savings, require of their suppliers that tags be affixed on, or embedded in, all shipping containers and, soon, even on individual products. At the supply level, ROI is more elusive and a greater concern. The ROI at the federal level is realized in improved data collection, organizational efficiency and improved national security.

So, regardless of mountainous challenge, solutions are being realized and employed, or not, but the RFID swell continues. Most technologies of the day share the same set of concerns and it doesn’t stop them×Internet, cell phones, credit cards, wired or wireless. That’s the way with technology—something always drives it, overcoming the “mountains of concern.”

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