Insiders urge pragmatic approach

How big is radio-frequency identification (RFID) technology going to be?

Some industry insiders reject claims that RFID is do or die. "We're urging our customers to take a pragmatic approach," says Dwight Klappich, a VP with META Group, a Stamford, Conn.-based IT research and advisory firm. "If you don't jump into RFID right now, you're not going out of business. Step back and really understand what, if any, benefits are available and at what cost because it's a fallacy that pricing will continue to decline at a precipitous rate."

Zebra Technologies, a provider of both RFID and bar-code solutions, takes the long-term view.

"RFID technology has been around for quite some time," observes Stuart Itkin, a Zebra Technologies VP. "But until recently, it's been a solution looking for a problem. Now we're seeing technology companies and end users coming together to focus on meaningful problems."

Itkin sees signs that the market is poised to embrace this technology—thanks primarily to channel master mandates, significant technology improvements, and availability of applications.

"The new smart labels are more capable and less expensive," Itkin says. "Read distances have gone from inches to yards."

At the same time, new developments have dropped the price of most transponders from dollars to dimes with improved product reliability. That's good news for manufacturers that encountered serious failure rates with earlier smart labels.

Karen Romanow, research director at Boston-based AMR Research, says, "The reliability of the chips is a dirty little secret that's finally getting attention. Tags are only functioning at an 80-percent success rate."

Zebra Technologies attacked both quality and cost concerns with a dual-use device called Alchemy that produces smart labels and interleaves them with traditional bar-code labels. This cuts labeling costs by a reported 30 percent and ensures quality.

"Alchemy automatically encodes each transponder and then verifies the transponder is working correctly," Itkin says. "That means every smart label is tested for both quality and performance."

Klappich sees such versatile devices as critical to the expansion of RFID. "Most companies will have to support bar codes and RFID for years. This way they won't need to have two different devices sitting next to each other.