RFID's New Mantra: Scalability, Interoperability, Performance

With increasing focus on Gen 2 specification, radio frequency ID markets show healthy transition to next phase of implementation, ABI reports

With increasing focus on Gen 2 specification, radio frequency ID markets show healthy transition to next phase of implementation, ABI reports

Oyster Bay, NY — April 24, 2006 — Radio frequency identification (RFID) markets, increasingly concentrated on the Gen 2 specification, show signs of a healthy transition to the next phase of RFID implementation, with full integration at the enterprise level, backed by deep management commitment, according to a new report from technology consultancy ABI Research.

When Wal-Mart's new CIO, Rollin Ford, addressed his troops upon taking office recently, he confirmed the company's unabated enthusiasm for RFID, saying: "When Gen 2 was released we planned to make it our standard at the beginning of this year. We have done that, and I can confirm that we will be sunsetting Gen 1 on June 30."

That kind of dedication is echoed across the range of vertical markets in which RFID plays a role: transportation, pharmaceuticals, retail, consumer goods and defense. What is inspiring it?

Two Sources of Confidence

ABI Research has released a new market update to its RFID Research Service, according to which the past quarter's newfound confidence stems from two sources: RFID hardware and components, and RFID's assimilation into business systems.

Erik Michielsen, the firm's director of RFID research, points out that for hardware, standards, and the maturity of the technology, are beginning to have a significant effect. "Components can now be sourced from a multiplicity of vendors large and small," Michielsen said. "Many vendors have already released several generations of products, and they are applying the lessons they have learned to each new release."

All this is happening in a standards-driven environment. "Everybody is building around the common ground of Gen 2," said Michielsen. "Performance, scalability and interoperability are at the core of the new product designs."

He cautioned that these factors raise barriers to new component market entrants, driving development of industry- and application-specific environments.

Platforms Maturing

At the enterprise level, the platforms that are emerging across infrastructure are also showing sign of maturity. The data collected by RFID has to translate to more effective business processes. Early trials and compliance efforts did not really address those issues.

But now, Michielsen said, "Whether it's the FDA or Wal-Mart or Target or Metro or the Department of Defense, you're seeing commitment that is resonating through the industry: this is something that will be long-term, not short-term."

Michielsen dismissed reports of an industry slowdown: it's just that buying cycles are being extended, he said. Companies are planning RFID and setting capital expenditure budgets with a longer-term mindset. "They are asking better questions and addressing more comprehensive processes that mesh with longer-term corporate goals."

Additional Articles of Interest

— Contemplating RFID? Here are three critical questions to answer before embarking on a radio frequency identification initiative. Read "Recognizing Real RFID Adoption Potential," in the February/March 2006 issue of Supply & Demand Chain Executive.

— A recent independent study revealed that Wal-Mart customers are finding the items they wanted in stock more often due to the retailer's use of RFID technologies when compared to control stores. Read more in "Wal-Mart Achieving Improved On-shelf Availability with RFID, Study Finds" on SDCExec.com.