RFID upheaval: What to expect this year
"Horror stories abound"
RFID is rapidly maturing, say analysts - and its maturity is expected to bring upheaval as vendors battle to get their RFID plans right.
According to a report by analyst Regan, Jacob and Sydney, the coming 12 months will bring IPOs, mergers and acquisitions as well as a whole range of new strategies from the main players in RFID.
The report predicts large vendors, such as Oracle and SAP, are lacking in necessary experience in wireless systems to make it big in RFID and will soon be getting their wallets out to compensate. The report said: "We expect more acquisitions like Oracle's purchase of G-Soft as they shore up these weaknesses."
As the technology becomes even more widespread, the larger, more well-known IT consultancy firms will be left trailing their smaller rivals, who are currently beating them hands-down on RFID know-how.
The report said: "Horror stories abound as customers found many large IT consulting firms did not have the talent, or the domain knowledge to help deploy RFID.
"One large firm admitted to us that its PR spending in RFID was aimed at creating the impression it was an RFID player, while the reality was it had few customers and few successes... We expect that eventually, RFID system deployment and support will be about 15 to 25 per cent served by large firms and the balance will go to small and medium-sized firms."
Among the analyst's other predictions for the RFID market is the emergence of item-level tagging during 2006, currently not often making it beyond trial level due to its prohibitive cost.
Towards the end of the year, item-level tagging will make its presence felt, according to the report, and its ascendancy will have a knock-on effect in other industries. The report noted: "Product packaging and packaging equipment is likely to change quickly to adapt to RFID. In particular, this seems important if item-level tagging is to become widespread but it could be important for case goods as well."
Despite the coming upheavals, RFID is now a mainstay of the CIO's technology armoury, the report added.
The analysts mark 2005 as the year radio frequency identification "crossed the chasm" into a mature technology - a transition kicked off in the US by landmark rollouts from the Department of Defense and supermarket giant Wal-Mart.
The report points to speculation over RFID patents and standards, and continuing rollouts by big name companies in spite of such uncertainty prove RFID is no longer a novelty.
The report said: "The fact that the market has survived Gen1/2 rumours and patent infringement threats is an indication that RFID has real value, and that both early adopters and the early majority are not significantly deterred by these threats; more evidence that RFID has crossed the chasm."