RFID May See ‘Explosive’ Growth

By Ed Sutherland

Auto makers and retail giants are in the driver’s seat of Radio
Frequency Identification (RFID), an industry expected to experience
“explosive growth” over the next five years, according to analysts.

Used
to track everything from Pepsi to people, 33 billion radio tags will be
produced by 2010. Only 1.5 billion of the tracking devices were made
last year.

Supply chain management, tracking items from the warehouse to store
shelves, will become the largest segment of RFID, according to
In-Stat, an Arizona-based research firm.

“This segment will account for the largest number of tags and labels
from 2005 through 2010,” said analyst Allen Nogee in a statement. Retail
giant Wal-Mart is the leader in this area, requiring its top suppliers
to use RFID, according to the analyst.

Pharmaceutical companies, plagued by counterfeit drugs, may be the
next market to adopt the ID tags, according to Nogee.

While RFID could enjoy a 30-fold growth rate over the next
half-decade, unsettled issues could trip any rapid rise. The spread of
RFID depends on the cost of the tracking devices to drop. Additional
worries are privacy concerns and delays caused by court challenges.

“RFID tags now cost about 20 cents per tag,” Nogee told internetnews.com. The “magic
number” RFID companies want to reach is five cents. While some advances
in manufacturing radio tags are lowering costs, higher volume is key.
“Buying a billion is cheaper than a million,” said Nogee.

Privacy concerns surround RFID tags. Although Gillette had ordered a
billion tags for shavers, and sneaker makers were planning to use radio
tags to prevent black market sales, “you won’t find any consumer products
with RFID,” said Nogee. “A lot of privacy backlash” awaits retailers
considering RFID.”

Privacy issues force RFID proponents to take a different path. “RFID
is going in the back door,” according to the analyst. Could privacy
worries derail any explosive growth predicted for RFID? “Absolutely,”
said Nogee.

Rather than the store shelf, RFID is used in the back room, and
instead of people, radio ID tags now track things. “If Wal-Mart wants to
tag their cartons, I don’t think you’ll see many privacy advocates
bothered by that,” Nogee said.

Although the retail giant handles 8 percent of all cartons
worldwide, others must become involved to keep RFID growing.

Animals are being “chipped” to help owners locate their pets.
Passports will contain RFID tags for travelers. The University of Arizona is
considering using radio tags to stem the tide of stolen bicycles. Keys
may be another use for RFID.

“The majority of automobile keys contain RFID chips to make sure the
bad guys don’t steal your car,” according to the analyst. “I use an RFID
key to get into my house. My wife can just hold her purse up to the
reader and she’s in. No more fumbling for keys.”

News Around the Web