BY MIKE LANGBERG, SAN JOSE MERCURY NEWS
(Reprinted via license from publisher)
Here’s an experience I’d like to have at my local video store on a busy Friday night:
I ask the clerk if the classic 1952 musical “Singin’ in the Rain” is available. The clerk looks down at her computer and says, “Yes, just look for the blinking light in aisle seven.”
Sure enough, there’s a green light blinking on the third shelf from the floor, in the middle of the aisle, exactly where the DVD of “Singin’ in the Rain” waits for me.
I grab the disc and go to a kiosk by the exit. A message flashes on the screen: “Welcome, Mike. The rental for this movie is $3.99 for two nights and will be charged to your Visa card. Press ‘1′ if you want a receipt.”
I decline the receipt and walk out the door, without ever opening my wallet.
This type of fast and convenient transaction could become common in three to five years thanks to a rapidly emerging technology called Radio Frequency Identification, or RFID.
RFID has been around for years; it’s already used in the FasTrak transponders that automatically pay tolls on Bay Area bridges, implanted ID chips for pets and livestock, and subway cash cards in Singapore and Hong Kong.
But a new generation of low-cost RFID tags, combined with the Internet’s power to instantly move data around the world, is opening up huge new opportunities — and prompting some Silicon Valley entrepreneurs and investors to tout RFID as a candidate for The Next Big Thing.
“It’s an avalanche. This threatens to hype itself out of control,” said Geoffrey Baehr, a partner in U.S. Venture Partners of Menlo Park, on Tuesday night as he moderated a panel discussion on RFID at Stanford University’s Graduate School of Business.
The panel drew a near sellout crowd of 265, many of them venture capitalists and other investors looking for deals. And there are certainly deals to be found; Baehr estimates 30 to 40 companies in Silicon Valley are now working on some aspect of RFID.
Helping to crank up the intensity level at the gathering, sponsored by the MIT/Stanford Venture Lab, is a recent string of important endorsements for RFID.
The biggest news by far came June 11 when Wal-Mart Stores, the nation’s largest retailer, ordered its 100 top suppliers to begin using RFID tags on shipments beginning in January 2005.
Among the other RFID headlines:
- In January, Gillette ordered 500 million low-cost RFID tags from Alien Technology of
Morgan Hill; the first giant
order for RFID from a major manufacturer of consumer goods.
- In May, Visa and Philips
Electronics announced a
partnership to develop RFID credit cards.
- Earlier this month, Microsoft joined the Auto-ID Center at the Massachusetts Institute of
Technology, the major research organization developing RFID technology, and Delta Air Lines said it will test RFID luggage tags in Jacksonville, Fla.
Most of these companies are looking at simple RFID tags that can respond from a distance of five to 10 feet. Fancier tags that include batteries to boost transmission power can have much greater range.
RFID makes it possible to collect information automatically and quickly in ways that would never be possible with bar-code scanners.
An RFID reader can, for example, instantly discover what’s inside a sealed shipping container sitting on a dock. If that container holds a perishable commodity, such as cut flowers, an RFID tag tied to a sensor can communicate the interior temperature and humidity.
Wal-Mart and other retailers are hoping RFID will help them keep better track of inventory, at first in warehouses and eventually on store shelves, to make it less likely they’ll be out of stock on products their customers want.
The biggest obstacle until now has been cost. The least-expensive RFID tag costs about 50 cents today, but that should drop to 5 cents next year and under 1 cent a few years later.
“The cost will totally wash out at some point,” said Peter Winer, head of Big Chief Partners, a consulting firm in Los Altos, and a panelist at the MIT/Stanford meeting. In other words, the cost of adding RFID to packaging will be inconsequential, just as manufacturers no longer think twice about printing their boxes in color instead of black and white.
Readers, too, are getting cheaper. They now cost $500 or more, but could soon be built into such electronic devices as mobile phones for at little as $10 in added cost.
I’m betting homes will ultimately be outfitted with RFID readers to monitor what’s brought in and what’s thrown away — so your house will be able to answer the age-old question, “Do I need to stop at the store on the way home from work tonight to get milk?”
I’m also convinced the most fascinating and important applications of RFID haven’t even been conceived yet, but will unfold as RFID technology becomes more widely known.
Not that RFID is a slam dunk. There are still daunting technical issues involving reliability and how to share RFID data, as well as social issues involving privacy and security. None of these is insurmountable, but I wouldn’t be surprised if we’re entering the familiar Silicon Valley cycle of early over-enthusiasm followed by a letdown when instant riches fail to materialize.
To learn more about the context for this piece and what it suggests about the media’s coverage of RFID technology, please read the editorial on page 2 of this issue. Special thanks to author Mike Langberg and the San Jose Mercury News for allowing ContactlessNews to license this article for use.