A
specter is haunting Europe. It goes by a mysterious abbreviation, „RFID“,
which stands for „radio frequency identification“. Depending on whom you ask,
RFID is either the greatest hope of the retail businesses or the end of privacy
as we know it, ushering in an era of “glass consumers” under siege by
ruthless vendors. The only thing proponents and foes of RFID technology seem to
agree on is that it is still a long way off.
Actually,
both are wrong. RFID is here, and it’s here to stay. Like it or not: 2005will
be the year RFID came of age.
Like
most emerging technologies, RFID did not pop up over night. In fact, modern
merchandise tagging systems go back a long way: to 1948, to be exact, the year
in which Bernhard Silver and Joseph Woodland first started experimenting with an
automated checkout system for supermarkets that initially employed a system of
concentric rings, gradually evolving into a set of standing lines that later
became known as the barcode. Interestingly enough. RFID also first saw the light
of day in 1948 when Harry Stockman published an academic paper entitled
“Communications by means of reflected power” describing a way to remotely
store and retrieve data with the help of radio waves.
But
while the barcode took off soon after, RFID never really got off the ground -
except in commercial airplanes, where the idea morphed into today’s so-called
transponder system which provides air traffic controllers with precise
information about each little blip on the radar screen. Eventually radio chips
made their way into toll systems and animal tracking applications as well as
factory automation systems. But the technology was too complicated and too
expensive, bandwidth and range were too limited, and besides, barcodes seemed to
do the job just fine, thank you.
The big
day for barcodes came in the early 70ies when WalMart, the retail giant, told
it’s 100 largest suppliers to either adapt the system within twelve months or
be delisted. Of course the big guys in turn forced their own subcontractors,
thousands of smaller companies all over the world, to follow suit.
On June
13th, 2003, WalMart again sent out invitations to its 100 leading suppliers,
this time to gather at headquarters in Arkansas to listen to their brand-new
RFID strategy. History, it seemed, was repeating itself. Companies were given
until New Year’s Day 2005 to get “RFID ready”. If not – see above.
Word
today is that some didn’t quite make it, asking WalMart instead for a couple
of months grace to get their technology working. Nevertheless the “WalMart
bombshell” is regarded by industry insiders as a historical turning point for
RFID in supply logistics. From now on every pallet or case of breakfast cereals,
razor blades and ladies’ lingerie delivered to WalMart will be clearly
identifiable when it passes through a reader system that can recognize product
numbers, manufacturer codes, expiration dates and other bits of information, for
instance about sensitive or restricted drugs and chemicals.
The
retail giant has already announced plans to push on to tag individual products
in order to realise their vision of tomorrow’s “smart store” which will do
without cash registers; instead customers will simply push their shopping carts
past a reader gate, the system will add up the purchases and debit the
customer’s credit card account while he or she is still packing the groceries
in the trunk.
At
WalMart, RFID is an $8 billion dollar question. That is how much the company
expects to save per year – more than the total turnover of half the Fortune
500 companies put together. Cost cuts are expected to incur by reducing
out-of-stock items ($600 million), theft ($500 million) and improving warehouse
efficiency ($180 million), but the real bonanza will be in payroll savings,
where WalMart expects to reap an annual $6.7 billion windfall.
And
that’s just for starters. During the initial phase WalMart will concentrate on
tagging entire consignments, leaving the tagging of individual products for a
later project stage. So while no one knows exactly when every single razor blade
will bear an RFID chip, all experts agree that it will happen, and probably
sooner than later. Only two things appear to stand in the way of universal RFID
use: chip costs and image problems.
On the
cost side, things will probably move fast. Today, a fully programmed RFID chip
can cost as little as 10 cents, still way too much for mass application. But
scientists in Holland, funded by the European Union, are close to producing
so-called “plastronic” chips that can be printed on large sheets of
conductive polymers which will reduce the cost of a single chip to fractions of
a cent.
The
second headache may not be as easy to cure. RFID has gotten a horrible press,
with privacy and consumer activists protesting at the top of their lungs. RFID,
they worry, will lead directly to Orwell’s Big Brother state. Hidden readers
could scan passers-by and assemble perfidiously precise profiles of their habits
and tastes, subsequently showering them with torrents of targeted advertising
and junk mail which will male today’s spam nightmare seem like a pleasant
dream. And out on the lunatic fringe, proponents of doom picture government
snoops tracking every citizen’s every movement. The decision by the U.S. and
EU governments to introduce passports containing RFID chips has created qualms
even among the less openly paranoid, echoing the old Latin proverb: „Quis
custodiet ipos custodes?“ (“Who will protect us from our protectors?”)
Analyst
Martin Kuppinger of the consulting German firm KCP warn that RFID may become
hopelessly bogged down by flawed public conception of its true potential. The
danger, he says, lies not with RFID itself, but with faulty implementation or
with the fact that RFID might be the wrong technology for certain applications.
Why issue RFID passports, he asks, when a less potentially obtrusive system
could do at least as good a job without the potential danger of government or
terrorist snooping. “You don’t need a contactless chip in a passport if
you’re going to hand it to the immigration official anyway”, he maintains.
On the
other hand RFID may be a way to strengthen the bond of trust between customers
and vendors. “If the customer perceives that manufacturers and retailers are
using the information they gather to provide more and better service then they
will respond positively”, Kuppinger believes. Besides, anyone who misuses
personal information about someone else is breaking existing law and is subject
to persecution. “RFID is in fact a step towards greater, not less privacy”,
he reasons. “After all, technology doesn’t commit crimes, human being do.”
If so,
then maybe the spectre of RFID will soon be fading for good, leaving behind a
technology whose time has finally come.