FUTURE TRENDS

Wal-Mart Effect
In the business world, competitive power shifts derived from RFID are underway. Wal-Mart and the Department of Defense are using RFID to reinvent themselves.

They are taking advantage of new standards and advances in antenna theory, semiconductors, and manufacturing processes to enhance their implementation of RFID. This is akin to a boot strapping process where the prior standards are replaced by better ones. The cycle perpetuates itself and this evolves the science of RFID, creating even better "best of class" implementations. This expands the benefits and increases the payoff for the technology.

Invisible Wave
Futurists like Alvin Toffler foretold the trends of moving from a manufacturing economy to an information-driven economy.

We are now evolving from the information-driven economy to the next step which I call the Invisible Wave. This creates huge opportunities for RFID!

Today the pace of RFID adoption is consistent with an increase in more invisible technologies like wireless, software and other intellectual processes. Early adopters are moving forward with enterprise wide adoption of RFID. A great example of this trend is the following press release from January 2003:

“The Gillette Company (NYSE:G) ordering 500 million low-cost radio-frequency identification (RFID) tags from Alien Technologies. This is the first major commercial order for products incorporating the revolutionary electronic product code (EPC). Developed by researchers and member companies at the Auto-ID Center at the Massachusetts Institute of Technology. The multi-million dollar order will support large-scale testing of EPC tag technology through Gillette's supply chain and in retail stores over the next several years.”

As more applications become feasible you get increased commercial activity. Alien Technologies CEO, Stavro Prodromou claims that sales in Oct - November 2004 have already exceeded their history to date (per quote in Boston Globe, 11/22/04). IBM recently announced that they were investing $250 Million to build a new division which will incorporate RFID. These and many other press releases confirm the acceleration of RFID growth.

The Invisible Wave (IV) encapsulates intellectual property, pervasive real time networks, silent commerce, autonomous information sharing and computerized decision making. RFID is a data supplier to this ecosystem. IV will drive the demand for more RFID applets. We see evidence of this trend for more source data in today's web sites which use XHML and allow for automatic exchange of information. RFID becomes a building block for the Invisible Wave and feeds it a stream of data to increase the spatial and temporal resolution at which we measure and analyze the world.

Factors for Success
Since the building blocks of this technology are silicon and intellectual property rights, two important positive phenomenon apply.

1. Moore’s Law: the doubling of transistors every couple of years.
2. Increasing Returns: the more people use your product the more advantage you have

Other important collaborating technologies for RFID and the Invisible Wave are:

Semantic Internet Version 2: Migration to broad band capacity with XML and other advanced languages allows Web sites to automatically exchange information for the benefit of their patriarchs.

GPS: reports latitude and longitude of things which enriches spatial data passed through the network or tracked by RFID tags.

Wireless: Bluetooth, WiFi, Zig-Bee, Next Generation Cell Phones providing ubiquitous access to dial tone and/or data transmission pipes. Lowers the effort to get real time information published to the ultimate network, the Internet.

The synergy of the Semantic Internet, GPS and Wireless as collaborating technologies will make RFID stronger and more valuable.

Other characteristics of the RFID business amplify these phenomenon. First there is the upfront cost of development for vendors and users. RFID requires enormous capital investment up front, but once the products are ready to roll the variable cost is small. Since that financial leverage happens in both camps, vendors and users, you also get positive economic feedback.


The fact that additional tags cost almost nothing is like jet fuel for the RFID rocket. Here’s why: the more tags you put into commercial use, the more it sells, because the more people use RFID, the more software and hardware gets developed for it. The more software and hardware that is available, the more people buy RFID. Radio Frequency Identification: a self fulfilling prophecy at best or a disruptive technology at worst.

HAL's LAW
I predict that RFID will create the biggest database in both networked and stand alone versions before the end of this decade. The support for this forecast is based on my observation of the following:

Hals LAW: The Cost of a TAG is inversely related to the square root of the number of networked READERS while the Value of a TAG increases every time a READER is networked.

When we overlay the graph of tag cost vs. the value of a tag we have increasing returns when this is plotted as a function of the number of networked readers. In other words, as we add more networked readers the benefits derived far outwiegh the incremental cost for another node on the network.


Future Killer Application
Any discussion of the future must address the killer application. So what does the future killer application look like?

Wait! Before we answer that question let us develop a list of benefits which appeal to the broadest range of users. If, in so doing, we also eliminate problems which affect everyone, our list will be perfect. Given these prerequisites our wish list includes the following:

• Independent of any operating system; no cold or warm reboots
• Virus proof: immunized against west nile or sobig
• Reduces fraud: no more Enrons or hanging Chads
• Never fails: due to old age or batteries wearing out
• Useful: with or without a computer
• Multilingual: works for every language in the world
• Environmentally friendly: reusable or recyclable
• Billions and billions served: makes McDonald’s and Trump look small-time

The only killer application to satisfy this incredible list of constraints is RFID PAPER!
Summary
Hal’s law means that real time networking of RFID information will raise the benefits of the system while simultaneously reducing costs.

Traditional notions of marginal rate of productivity for RFID technology will go the way of the dinosaur and increasing returns will evolve and create value for RFID.

Increasing returns will benefit RFID in the same way that expansion of the Microsoft standard created a huge jump in capabilities for the desktop. All this will provide increasing returns to both Vendors and Users. Such a doubling of payoff ensures remarkable success for RFID’s future.

RFID will create the world's largest information network in the next decade while simultaneously redefining the retail experience, supply chain management and a new paradigm known as the Real Time Enterprise. It is here now and promises to establish its place as a fundamental component of business tactics.