News

RFID Redux: Don’t toss the bar-code reader yet

• By Rich Seeley
• April 27, 2004

The much-hyped Radio Frequency Identification (RFID) revolution may unfold more as an evolution with its full impact coming late in this decade, according to Gene Alvarez, vice president with Meta Group’s Technology Research Services. He sees three levels of progressive adoption, not unlike the general curve for the acceptance of previous new technologies.

As well, in separating the hype from the pragmatic application, he sees three categories of users.

Early adopters, or "leading enterprises" as Alvarez refers to them, include mega-retailer Wal-Mart and its suppliers, which are currently testing RFID tags and readers in pilot projects. But even these pioneering organizations will only put the technology into limited products -- "perhaps a few key stores" -- between 2004 and 2006, Alvarez told ADT. Next come "cutting-edge enterprises," which Alvarez characterizes as companies being driven into RFID by market pressures. As an example, he noted that Target, a Wal-Mart competitor, recently announced that it is moving toward RFID with pilot projects beginning in 2005.

Finally, there are the aptly termed "trailing-edge enterprises," in which Alvarez includes small-to-medium sized businesses waiting to see how the big boys do with their pilot projects. These followers will wait until RFID application models emerge from the leaders and then move to adopt the technology in 2007-2008, he predicts.

At whatever level an organization begins to work with RFID, Alvarez recommends starting small and recognizing the limitations of the technology. He urges IT departments to handle initial RFID projects with care because even small pilot projects can "significantly affect an entire IT infrastructure and application portfolio."

The Meta analyst also cautions against expecting a wealth of information, especially from cheaper versions of RFID. He notes that there are different levels of RFID tags. As with most technology, you get what you pay for.

Alvarez said passive RFID tags are cheaper but offer less information, while active tags with batteries can store more information but are more expensive.

He said most initial applications for tracking shipments and inventories should focus on using the technology to track individual pallets, but not every item on the pallet.

In addition, almost all of corporate America is being careful about rushing headlong into RFID "especially on the heels of the dot-com bust," Alvarez said. If the technology becomes ubiquitous, he expects it will be at least a decade before RFID replaces bar codes.

As for the social/privacy issues, he suggests that any organization beginning to investigate RFID have a privacy officer on their development team. Some consumer groups have expressed fears that RFID could be used to track customer buying and use patterns at "Big-Brother-is-Watching-You" levels. Alvarez said that at least one retailer is working on tag deactivation for customers who do not want it. RSA is also working on ways to block transmission.

But it is not only consumers who have potential privacy issues with RFID, said Alvarez. Corporations will also have to guard their privacy. RFID opens the possibility of a new era in high-tech corporate espionage. He points to a hypothetical case in which a retailer parks an unmarked truck near a distribution center and, using an RFID receiver, takes the competitors’ inventory to gain a competitive advantage.

So as with any technology in the early stages of hype, Alvarez suggests organizations not rush headlong into RFID without fully investigating its potential impacts.