While almost everyone agrees that RFID tags will eventually be used almost everywhere, industry players and analysts are divided as to when that will occur. People who are predicting a strong and fast take-off claim RFID tags will be ubiquitous within three to five years, with the pace dictated by cost, standardisation and regulatory issues.
The most common factors cited for the speedy uptake of RFID technology are mandated use by large retail chains and military organisations, as well as concerns of product safety and the reaction to the perceived threat of bioterrorism and terrorism in general. In the US, two pieces of legislation are predicted to have an impact: the Hazard Analysis and Critical Control Point act and the Bioterrorism Act, both of which will enhance control and tracking of certain compounds and agents.
"For item level adoption you're looking at 2007," Will Duckworth, wireless expert for IBM told ZDNet Australia , citing internal research. "Pallet, case level [adoption will be] over the next two years." IBM is basing the prediction on chip costs - currently around 4-5 US cents for the simplest RFID tags. If the big retail stores can force their suppliers to adopt RFID technology they can share the cost of the chip, and this will increase the speed of take-up.
"Walmart mandated by January next year that the top 100 suppliers must be RFID-enabled, and by January 2006 all suppliers must be RFID enabled," said Duckworth, adding that the US Department of Defense has issued a similar mandate, and the Australian Department of Defence has indicated they are looking at RFID tags.
In fact, these mandates were cited by most proponents of RFID technology as the main driver behind an expected surge in use. Neil McKay, director of the retail and CPG industry group for Sun in Asia Pacific told ZDNet Australia the mandates had "ramped up" the roll out of RFID, and whereas a year ago people were predicting widespread use in 7-10 years, they were now predicting it in 3-6 years.
""There's a bit of science, art and magic to this."
-- John Brand, Meta Group
"With global heavy hitters like this you'll find the technology will advance at great speed," said McKay.
Scott Dawes, industry director Manufacturing, Retail and Distribution for Oracle Australia & New Zealand told ZDNet Australia that good adoption of RFID technology will be seen around 2005, spreading first across high value items and highly regulated items such as pharmaceuticals and hazardous chemicals.
"The cost of implementing it is still very high," said Dawes. "Probably not until 2008 will you see widespread adoption. It will take a tag cost of about one penny." The estimated tag cost is around five US cents by the end of 2004, which is based on 1 billion chips being sold per year. By 2008 5 billion chips per year are expected to ship, which should reduce costs to one US cent per tag.
"It was really only mid-last year that companies have woken up to the what this thing means. It's barcodes on steroids."
-- Scott Dawes, Oracle
However, Tim Moylan, managing director supply chain logistics company Manugistics, Australia and New Zealand, is less optimistic about RFID technology. He said companies need to do business analysis, not just analysis of a particular technology.
"This is why I think it's not getting the traction as fast as all the hype it is generating," said Moylan, adding that there were only a few large organisation doing trials in the US, so it was unreasonable to expect it to take off in Australia quickly. "People are adopting a wait and see approach before they jump." He said large scale implementation was "at least five years away".
Analyst group Meta Group is even more pessimistic about the introduction of RFID technology.
"There's some niche applications but it's certainly not widely adopted," John Brand, vice president technology research services at Meta Group told ZDNet Australia . "It's fairly expensive in terms of the infrastructure needed to support it. It won't be ubiquitous for some time yet."
Brand disagree with the notion that the 'Walmart Mandate' would drive support to adopt RFID technology, and emphasised it is not happening in this market yet.
"I don't think you will see it in most retail products within 5-10 years," said Brand. "It will get a growing percentage, but that percentage is likely to remain low."
