Subject: [NEXTEL-1] RFID - Reality vs Hype- Like I said.......

From: [email-masked]
Date: Tue, 15 Jul 2003 02:55:49 -0400

RFID: Reality vs. Hype  Like I said.......
July 11, 2003

By Antone Gonsalves
 TechWeb News

Reality is catching up with the hype surrounding wireless inventory-tracking
technology, often called radio-frequency identification (RFID).
RFID will certainly cause dramatic changes in supply chains, but the
technology is years away from the level of maturity needed for wide-scale
deployment among enterprises. Just a few of the unsettled issues include the
costs of the radio-tagged chips, the poor performance of current technology,
privacy concerns among consumer groups and the costs of changing business
processes to adapt to the technology.

"There's no RFID in a box," said Jeff Woods, analyst for market researcher
Gartner Inc.

This week, the nation's largest retailer, Wal-Mart, threw ice water on
excited hype mongers when it said it would shelve tests of the technology in
its retail stores. The company was working with Gillette on placing RFID
tags on individual products for better tracking of in-store inventory.
Instead, Wal-Mart said it would focus on using the technology to track goods
in warehouses and distribution centers.

Wal-Mart officials did not return phone calls, but company spokesman Tom
Williams told the Associated Press: "RFID at the product level is many, many
years down the road for us."

The idea that the technology is several years away from wide-scale
deployment is underscored in a recent Gartner research note titled, "Auto-ID
Center Trials Highlight RFID Deployment Challenges." The Auto-ID Center, a
research group affiliated with the Massachusetts Institute of Technology, is
a key developer of RFID technology and standards.

Among the first issues addressed in the Gartner report is cost. The price of
the least-expensive RFID tag today is from 30 cents to 50 cents apiece.
Retailers say the price will have to drop to at least between 5 cents and 10
cents to be practical for tagging pallets and cases within warehouse and
distribution centers.

For use on individual products within a retail store, the tag price would
have to drop significantly further, when you consider that hundreds of
billions of tags would be need to mark every product carried by major
retailers.

The poor performance of RFID technology is also a problem. In trials, users
report that scanners used to read product data embedded in RFID tags are
often less than 80 percent accurate, which is far less than required for
commercial applications, Gartner said.

Part of the problem is the difficulty in reading tags through certain
materials, such as shampoo, canned products and foil packaging. Those
materials often disrupt radio frequencies.

At the palette- and case-level, the technological hurdles are expected to be
overcome more quickly, because there are fewer items to track and it's
easier to manage a warehouse environment than the conditions within a
department store. However, it can take from 30 seconds to a minute to read
all the tags on a palette, so enterprises will have to design business
processes to adapt to this technological limitation, Gartner said.

Because most RFID deployments are experimental, there are no best practices
in place for IT management of these complex systems. Gartner, therefore,
advises enterprises to budget "generously for IT infrastructure and
maintenance costs associated with RFID rollouts."

Finally, consumer groups have raised privacy concerns associated with
embedding radio-enabled chips on goods bought in stores. Given the state of
current RFID technology, these protests may be premature. Nevertheless,
retailers who are early adopters of item-level RFID technology should be
prepared for consumer boycotts.

Protests from consumer groups earlier this year, for example, convinced
Italian manufacturer Benetton to delay plans to embed RFID tags from Philips
Semiconductor into Benetton's Sisley clothing line.

The bottom line on RFID technology is that enterprises should move
cautiously in evaluating its place in today's supply chains. "Enterprises
should be cautious that their assessment of RFID technology is grounded in
engineering reality," Gartner said.

http://www.techweb.com/wire/story/TWB20030711S0008

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