RFID" The "Next Big Thing"?

If level of press coverage is a reliable indicator, radio frequency identification (RFID) technology is poised to become the "next big thing."

What is RFID and why does it matter? RFID technology is deployed through tags that can be thought of like bar codes with little radio transmitters attached. More precisely, they are relatively inexpensive, paper-thin computer chips that can contain manufacturer codes, product codes and serial numbers and can broadcast this information to nearby receivers. RFID tags could revolutionize the tracking and counting of equipment and inventory, and therefore have potential applications in almost every industry. The first widespread rollouts of RFID are about to begin, and where there are products and inventory, there are (or should be) electronic buying guides and marketplaces.

Another important aspect of RFID tags is that the information on them has to be meaningful globally, and that means coordination, which means databases. The big winner to date is Verisign, which scooped up a contract to maintain the primary databases of companies and their products and ship that data rapidly around the world (RFID is designed to allow trading partners to exchange all sorts of product information on a real time basis). However, ICR believes that Verisign sees its biggest opportunity long-term in the movement of the data, not the data itself. That leaves manufacturers or their agents (industry database publishers, anyone?) to upload and maintain the product information.

Further, while the RFID specification provides for a globally standardized company numbering system, it anticipates that vertical industries will use existing product identification systems or create them. Thus, the book publishing industry will likely embed existing ISBN numbers into RFID tags, and the food industry will use UPC codes. Opportunities abound in those industries lacking such standard product identification schemes.

It seems every industry has its own exciting ideas of how to take advantage of RFID technology. The pharmaceutical industry wants to label all prescription drugs with RFID tags containing individual product serial numbers as a way to combat theft and counterfeiting. Almost every industry seems to see inventory applications, as merchandise can broadcast its arrival at the warehouse door, and its departure at the store's main entrance, all without human intervention. Wal-Mart has already announced that it will mandate use of RFID tags by its largest suppliers beginning in January 2005.