While radio frequency identification (RFID) is no immediate threat to the popular UPC bar codes that we all have known for decades, the latest burst of activity in this sector suggests that RFID is coming soon. And is progressing faster than analysts predictions. Compliance mandates issued by giant retailers like Wal-Mart and Target, as well as the U.S. department of defense (DoD), along with other government and industrial organizations, has provided sufficient fuel to accelerate its adoption and push it on to the shelves of stores, product assembly lines, inventory management in the defense establishments, anti-terrorism solutions, baggage handling at the airports, and a host of other applications. Furthermore, as it evolves, it is likely to create many new applications that were unthinkable with traditional bar codes.

Thus, it is not surprising to see attractive market projections made by several research firms. For instance, according to Venture Development Corp., global shipments of RFID systems (hardware, software, and services) reached nearly $965 million in 2002 and is expected to touch nearly $2.7 billion by 2007. Similarly, according to a study by Allied Business Intelligence Inc., the RFID market will jump from $1.4 billion annually last year to as much as $3.8 billion in 2008. By the same token, International Data Corp.'s study indicates that spending on RFID technology used to track goods in retail supply chains will grow to nearly $1.3 billion in 2008. Last year, about $91.5 million was spent on chip-based tags and related hardware, software and services, according to IDC.

Although, these market projections look appealing, there are many hurdles that must be overcome before the technology makes any noticeable gains in the commercial world. Some experts are of the opinion that price of RFID tags will play a significant role in driving the technology into mainstream applications and are looking at 5 cents in large volumes as the price point for RFID tags. Incidentally, with 5 cents as target, a consortium in Japan has undertaken a project to develop inexpensive chips for use in RFID tags. Meanwhile, leveraging its self-adaptive silicon technology, analog and mixed-signal IC developer Impinj has readied a low-cost, long-range, field rewritable system called Zuma. Unprecedented, it enables users to write data to tags at long range, thereby greatly enhancing the functionality and value of RFID deployments in the supply chain. As a new entrant into this arena, the developer promises to comply with a single, open, worldwide RFID standard.

But, lower price alone will not play a major role in its success. “Five cent tags are a component to the overall success of RFID but they are not one of the top five most important elements,” says Erik Michielsen, principal analyst at ABI Research. He adds, “Without proper commitment, planning, and partnering, inexpensive RFID hardware is not sufficient to make a sustainable long-term difference with consumer packaged goods suppliers looking to benefit from RFID.”

Consequently, as makers struggle to lower cost, developers such as tag creators, scanner manufacturers, software middleware developers and system integrators must work closely to expedite the standardization process. For without a standard and universally interoperable tags and readers, the chances are dim.

Realizing the importance of a standard in gaining momentum, last October EPCglobal was established as a non-profit joint venture of the standards organizations EAN International and the Uniform Code Council Inc. EPCglobal is overseeing the development of the electronic product code (EPC) standard. Many companies have become members of the EPCglobal's hardware action group, as well as software action group, to expedite the development and rapid ratification of a global, interoperable EPC standard using ultra-high frequency (UHF) RFID technology. In fact, the group is working on a new generation UHF Gen2 standard.

While in the United States EPCglobal is working toward a standard RFID solution, overseas International Organization for Standardization (ISO) is doing its part to generate a universal RFID specification. Even today, different regions around the world are using a variety of frequency bands to address the problem. It's about time that these organizations work closely, so that the end result is a common standard for tags, readers and writers, and other service providers. It also is a better chance for the technology to proliferate around the globe much faster than expected. The market potential is enormous.

It will be interesting to see how the RFID solution evolves in the next few years and co-exists with traditional bar codes.

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