skip to main |
skip to sidebar
In June 2009, Ericsson’s VP of Systems Architecture, Håkan Djuphammar, proclaimed that all new mobile phones will be equipped with RFID by summer 2010. As of today, NCFWorld reports active RFID tag pilots at municipalities in France, Telefonica, Garanti Bank in Turkey, and others. My bet is that Håkan will not achieve his timeline, but that ultimately his vision for widespread use of phones for authentication, access, and payment will be realized.
Even if it is a delay relative to Håkan’s ambitions, RFID read and transmit will become a common feature of phones at about the same time 4G broadband capabilities become frequent part of phone-network packages. In technical terms, this will allow streaming of rich content in response to EPC Application Level Events (ALEs). Here are some future real life examples:
- An in-store shopper touches her phone to a garment and receives video of celebrities modeling similar fashions, with accessories
- A coffee drinker pays for a cup of coffee made with beans from his favorite region of Columbia and receives an infomercial on neighboring coffee producing regions.
- A patient uses a phone to make a co-payment for medical services and can immediately use the phone to view explanation of benefits from the payer
A lot of moving parts need to come together to make these solutions and other solutions real. In addition to availability of devices from the likes of Sony Ericsson, point of sale/service experiences need to be designed and deployed, networks need to be constructed, and back-end systems need to be developed. That’s a lot of coordinated investment but Sony Ericsson and the 4G network providers are leading the charge with big investments. Now businesses can make their application investments and know they are not alone. The time is right for businesses to make this three-way partnership. These applications are too exciting and valuable to pass up.
As of today, GS1 indicates there are 28 registered GDSN data pools (http://www.gs1.org/docs/gdsn/gdsn_certified_data_pools.pdf). That’s a 35+% annual growth rate since 2006 when there were 8 registered GDSN pools. In that same period, individual pools have also grown dramatically, and there are now millions of Global Trade Identification Numbers (GTINs) registered.
GDSN has hit the rapid growth phase of adoption. GDSN is proven and the benefits are clear. For suppliers and retailers of any type and of any significant size, the question is not whether to use GDSN, but when. Adoption has obtained a critical mass that now attracts more adopters. Anticipate millions of additional GTINs being registered.
Being in the rapid growth phase doesn’t mean that more registered data pools are warranted. In the near term, GDSN growth will be served more by expansion of existing registered data pools and less by creation of new pools. While some additional registered data pools will be added, most needs will be addressed by the expansion of existing registered data pools to serve additional regional and national markets and specialized industry needs.
In the very long term, it may turn out that there are too many registered data pools, which will trigger consolidation. At that point in time, the large and lean along with some niche specialists will survive in this operationally-intensive business. Then, the number of registered data pools will not grow but shrink.
For the 28 registered data pools in operation today, it’s time to acquire customers. The moves and successes today will determine who will survive as large and lean in the future, who will survive as niche specialist, and who will not survive.
“We are working with EPC, but less with RFID, due to cost per unit”, is what a friend replied when I asked about his RFID program. The decision was made with more than a million dollars invested to explore RFID for the purpose of item-level track and trace, and especially for purpose of preventing counterfeit product from entering the distribution chain. Based on careful analysis, even with a paramount need to prevent counterfeiting, his plan is “EPC yes, RFID no”. They will use EPC for unique item-level identification, but for the foreseeable future, the EPCs won’t be affixed to products via an RFID tag.
After much anticipation about employing the perfect marriage of EPC and RFID, the conclusion to forego RFID is on one hand, a disappointment. Even my friend’s company, with significant resources to plan and execute for large-scale and long-term, couldn’t make the business case work for item-level tagging. It’s disappointing at first, but on the other hand, deferring to business case over emotional attachment to technology deserves much respect.
When the business case doesn’t make sense, it’s best to call off the deployment early and avoid the more painful reality of bad economics later in the deployment. Moving ahead when the business case doesn’t make sense only results in high-visibility, costly failures. Failure to heed a bad business case will trigger a “gun shy” attitude and undermine support for future RFID deployments, even when they do make business sense. Failure to heed a bad business case will also present an unwarranted warning to others that will bias their intuition against RFID projects.
Asset tracking with RFID can pay highly-respectable returns. Pallet tagging, case tagging, and a wide range of other RFID applications can pay highly-respectable returns. In spite of my friend’s company deciding against it, item level tagging can, whether today or in the future, also pay respectable returns. Over time, as the technology continues to mature, as the advantages of scale economics increase, as infrastructure and knowledge develop, more applications will pay more handsome returns. The key to achieving those returns is understanding when and where to invest.
It’s true that one-size-fits-all does not apply to RFID and EPC solutions. Each type of need should be addressed individually. It’s also true that one-size-fits-all does not apply to RFID and EPC business cases. The business case for each situation needs to be considered individually. There’s no valor in forging ahead with a deployment that doesn’t make business sense, and then later encountering the harsh reality of economics. It’s better to do careful business analysis and invest accordingly. It’s better to get a solid business case, one way or the other, and heed the business case decide.
Yes, [RFID and] EPC technologies will fundamentally change the world. Only time will reveal the specifics, but success in three EPC investment arenas will influence the future. In one arena, investments are made with the interest of individual enterprises as a primary consideration. In a second arena, investments are made to serve an industry by using a shared infrastructure. In a third arena, investments are made to provide uniform services to the global public.
There will be many payoffs, and some losses, in each of the three EPC investment arenas. The payoffs will accelerate to the extent investments in the three arenas are coordinated. Ken Traub is shaping and galvanizing standards (e.g., EPCIS) that will facilitate that coordination. Nobody has a crystal ball, but Ken has his finger on the pulse of EPC adoption. Ken and I spoke recently about the state of world-wide EPC adoption and this blog post is partly a reflection on my conversation with Ken.
Although complex by any measure, the first arena of enterprise-focused activity is an easier problem to define. Customer-premises-based or private-cloud solutions are a natural response to these enterprise-focused problems. IBM, SAP, and Axway, among others, are leveraging strategic competencies and making investments with emphasis in this first arena.
Relatively-speaking, it’s easier to define and respond to enterprise-oriented problems, but industry orientation provides the opportunity for additional benefits. Hosted and software-as-a-service solutions provide advantages for industry oriented solutions via neutral-party-information-sharing, shared cost of capital, and easier-to-manage risk profiles. TraceTracker’s GTNet and FSE’s GDSN pool provide examples of investment in this second arena in concert with the food and beverage community.
The third arena, uniform services for the public, envisions a day when the need to exchange information about RFID tags and EPCs is common and routine. In anticipation of this common need, an open-loop, general-purpose, publicly-accessible service is appropriate. VeriSign shares this vision and is committed to providing Object Naming Service (ONS) to connect interested parties with information about individual EPCs.
The players mentioned as examples above and many others are managing investments and dependencies in the three arenas. To enable and re-enforce their efforts, standards for EPCIS, EPC Discovery, GDSN, and ONS hold the promise for additional returns via increased interoperability among investments. Those leading the charge in the three arenas and those dedicated to standards are setting the stage that will change global productivity and fundamentally change the world.
This week, RFID Journal will host a webinar featuring Geoffrey Moore. I was first introduced to Geoffrey by Jeff Miller at Documentum. Geoffrey has written landmark books on how new technologies are adopted, including Crossing the Chasm and Inside the Tornado. I look forward to catching up with Geoffrey's latest ideas applied to RFID on the webinar.
In anticipation of the webinar, I formed up some questions that I hope Geoffrey will speak to. Technology adoption models presented in "Crossing the Chasm" and "Inside the Tornado" are mainstream ideas for tangible products, software, and services. Some products provide most or all of their value through "network effects". Network effects occur when the return to an individual or single organization is dependent on the adoption decisions of others. My questions center around the notion that different adoption models apply when network effects contribute a large share of a technology's value:
- How do you see network effects impacting RFID adoption?
- To what extent is adoption of EPCIS, ONS, GDSN, and EPC Discovery governed by network effects?
- How is the adoption model for network-effect technologies different, and how should those differences be managed in the case of RIFD, EPC, and related technologies?
I’ll report back in this space with more related to the webinar with Geoffrey and on the questions above.
