Why Should You Care About RFID?

By Jim Pomager
Editor in Chief

I could give you a million reasons why you should care about RFID technology in 2006. In fact, I will offer you exactly 504 million of them -- $504 million, that is. According to a recent projection by Gartner, Inc., worldwide RFID spending totaled some $504 million in 2005, up 39% from 2004.

Five hundred million isn't enough for you? How does 3 billion sound? That's the number (in U.S. dollars) that Gartner expects worldwide RFID spending to surpass by 2010. It's also the estimated quantity of RFID tags that will be shipped in China by 2009, according to In-Stat.

Still not impressed? Let's up the ante to 8.8 billion. Frost and Sullivan (bullishly) predicts that RFID-related technology spending in the hospital marketplace alone will reach $8.8 billion by 2010. With numbers like this being thrown around, RFID is clearly a market that deserves at least a little of your attention.

New application areas drive aggressive market forecasts

Over the past few months, RFID has shown signs that it is finally ready to graduate from merchandise tracking, animal identification, and toll collection into a seemingly limitless number of new applications. For example, it was reported last week that China's Ministry of Public Security will embed RFID tags in more than 1 billion resident ID cards by 2008, making it one of the biggest RFID projects in the world. (What did you think they were going to do with the 3 billion RFID tags I mentioned earlier?)

And last month, the Associated Press reported what is considered the first use of RFID technology inside humans in the United States. According to the report, Cincinnati-based surveillance equipment company CityWatcher.com has implanted three of its employees (including its CEO) with RFID chips. These chips are intended to identify workers who have access to vaults where police department data is kept.

If these Big Brother-esque RFID applications aren't for you, consider some more mainstream RFID application sectors that have emerged in recent months, including pharmaceutical (tracking drugs from manufacturing through delivery), retail (allowing customers to pay without removing products from their shopping carts), and medical (preventing the theft of diagnostic equipment).

Not to be outdone, the two most established RFID headline-stealers -- Wal-Mart and the U.S. Department of Defense (DoD) -- proved they're still worthy of note with big news in early 2006. According to reports, Wal-Mart plans to expand its already enormous RFID tagging system to 1,000 stores and 600 suppliers in 2007. And the DoD moved a step closer to employing RFID technology in collaborative military coalition operations by releasing the final list of 24 partner countries that have agreed to participate in the program.

Price, globalization, technology fuel RFID expansion

Research firms have been predicting an imminent RFID market explosion almost every year. So why should we put any more stock in their latest round of big-dollar claims?

First, RFID technology has become much more affordable. In late 2005, we saw signs that RFID tags prices are starting fall, and that reader prices might not be far behind. Couple that with an increase in IT spending, widespread acceptance of the EPC Gen 2 standard, and the development of more user-friendly interface software, and it looks as though RFID's stars could be aligning.

In addition, there has been a globalization of the RFID industry. Although the United States has historically been at the center of worldwide RFID activity, tag and reader suppliers are emerging in Europe and Asia, stimulating competition. And RFID technology itself is beginning to take root in countries outside the United States, as evidenced by the China resident ID card example above.

Lastly, RFID research and development is accelerating at a frantic pace. The miniaturization of battery technologies is speeding the implementation of active RFID tags. And we're witnessing the rise of chipless tags, which eventually could be printed directly onto product packaging.

Will 2006 be the year that RFID really takes off? I'd say there are a few (million) compelling reasons.