Predictions for RFID in 2013

Every year, there are prognosticators who announce, "This is the year of RFID." So far, they have not been correct. The question on my mind is, "Is this the year in which RFID will cross the chasm?"

Those who follow this column know I am referring to Geoffrey Moore's term for when a technology crosses the gap between early adopters and mainstream technology users. It's closest to happening in apparel retail, but I don't think this is the year even in that industry. Let me explain why.

In Crossing the Chasm, Moore posits that several conditions must exist before a new technology will be widely adopted, including a problem that no other technology can solve, a single solution and a critical mass of end users. Typically, this critical mass coalesces around a single solution, making it relatively risk-free for other companies to follow. All apparel retailers have a problem managing complex inventory, and those piloting or rolling out RFID solutions have embraced ISO 18000-6C as the standard for tracking clothing.

RFID Journal has reported that 19 of the top 30 U.S. retailers are currently investigating, piloting or employing radio frequency identification (see The Secret Life of RFID), with many more doing so in Europe, Asia and Latin America. But it will likely take a year or two for those already rolling out RFID to reach full deployment (by that, I mean using it to track all items within all stores), and it will take time for those piloting the technology to begin rollouts. So in my view, RFID will not cross the chasm in apparel retail for another year or two (perhaps three if there are some setbacks).
This year, other retailers—specialty apparel, shoes, jewelry, sporting goods and electronics—will make progress on pilots, with perhaps a few rolling out the technology, even if they don't announce it publicly. We will also continue to see more deployments in health care for tracking hospital equipment, blood, tissue samples and other items. In the manufacturing sector, expect to see some companies deploying systems for tracking work-in-process, tools and finished inventory. Some big-tech companies are likely to deploy IT asset-tracking solutions. And we'll see a variety of applications deployed across many other industries.

I have no doubt that we'll continue to see RFID hardware and software innovations. Many RFID vendors are waiting to announce their latest products at RFID Journal LIVE! 2013, which will be held from Apr. 30 to May 2, in Orlando, Fla. These improvements will make RFID systems easier to deploy, more reliable and more cost-effective, which is good news for end users.

Last year, we saw several major acquisitions of RFID hardware providers (see 2012: A Year of Progress). These were smart moves, as companies positioned themselves to seize a sizeable chunk of the growing market. I think we will see more consolidation as firms seek to position themselves to take advantage of continued growth. It will be interesting to learn whether these companies will capitalize on their acquisitions by investing in promoting their brands and products. (It's surprising how many firms make a strategic investment in a new market, but fail to follow through and take advantage of the business they bought.)

I'm also curious whether some of the major software players will step in and purchase RFID software providers, and whether large IT integrators, such as Accenture, Computer Sciences Corp., IBM Global Services and Unisys, will move into the market with an acquisition. My guess: There will still be insufficient demand for these businesses to make a move in 2013—but if one of them does, it will be a sure sign that the RFID market is growing. RFIDJournal