Subject: [NEXTEL-1] Busting Myths about RFID Technology

From: [email-masked]
Date: Thu, 04 Dec 2003 23:32:20 -0500

Busting Myths about RFID Technology
 NEWSFACTOR SPECIAL REPORT
By Erika Morphy
NewsFactor Network
December 04, 2003
http://www.newsfactor.com/perl/story/22798.html

One of the common myths about RFID that needs to be debunked is that it is a
now-or-never proposition. There is a false sense of urgency surrounding it,
says Gartner research director Jeff Woods.

"There are a lot of people out there that see RFID as a big, scary new
technology they will have to deal with in the near future," he told
NewsFactor.

On the contrary, he explained, if logistics is not key to an organization's
competitiveness, then you can afford to take a-wait-and-see stance -- other
than complying with Wal-Mart and DOD requirements if they impact you. "If
your company is customer service-oriented, or if the main business strategy
is product innovation-centric, then there really is no urgency," Woods said.
"Over time, people will figure out RFID, and instead of investing between
(US)$10 million to $30 million in business-case development, you will be
able to buy an RFID-based warehouse management system for far less."

'There Is No Middle Ground.'

RFID is just one component of the latest generation of wireless supply-chain
technologies -- Wi-Fi networking, PDAs, cell phones, global positioning
systems and electronic sensors -- AMR Research senior analyst Matthew
Bilodeau told NewsFactor.

But Wal-Mart's high-profile project has thrown the entire technology of
automatic identification (Auto-ID) into the spotlight, Bilodeau says in a
report. "In some ways, it is a boon for the industry. Data-collection
technologies like RFID have invariably taken a back seat in interest to
their more glamorous high-tech counterparts. But awareness is a double-edged
sword -- particularly where market perception is shaped by a single complex
and hugely ambitious undertaking."

This is a disservice to the technology, he maintains. When companies adopt a
focused, less grandiose vision of RFID -- or, at the very least, refrain
from automatically associating it with Wal-Mart's plans -- they still can
receive tangible value. This piece of advice takes on even greater
importance in light of the following.

'Wal-Mart's Leadership Means A Slam Dunk for Industry Adoption.'

It is natural to assume -- given Wal-Mart's impact on the economy -- that
other businesses will follow its lead, according to Paul Zipkin, the T.
Austin Finch senior professor of business at Duke University's Fuqua School
of Business. "But people still underestimate Wal-Mart. Wal-Mart executives
are pragmatic innovators. They are quite willing to try a promising new
product, market or technology. If it doesn't work, they'll tinker with it
and try again. If it still doesn't work, they'll drop it with no regrets.
It's likely that they will take the same approach with RFID."

One plausible scenario, Zipkin says, is the following: Wal-Mart rolls out
one pilot project that flat-out doesn't work. It tinkers with it and rolls
out another that is operational -- but so costly it is unsustainable. The
third system works and is cost effective but has security glitches that
thieves immediately exploit. After several such stop-and-go rollouts, the
company hits upon a winner. Total elapsed time: six years.

'Wal-Mart Is an Evil Giant.'

Another myth about Wal-Mart -- well maybe not myth, but common assumption -- 
is that it is going to beat its suppliers over the head with this technology
in all its deployment versions. Woods, who has spent a lot of time examining
its plans, does not believe this is the case.

"Wal-Mart has been every open about its intention to collaborate with its
suppliers on this," he said, "Now, I am sure not every supplier will be
happy about adopting this technology. But Wal-Mart is not being the evil
giant here -- they are working with their suppliers on this."

'RFID Is Yet Another Invasion of Privacy.'

Well-intentioned privacy advocates already are pressing this point. "This is
one area where the technology is racing out in front of privacy
protections," Marc Rotenberg, executive director of the Electronic
Information Privacy Center, told NewsFactor.

But the fact is, Woods said, there is little substance to these fears. "The
supply-chain use of RFID has nothing to do [with] privacy -- at least at
this point. It is only when the technology filters down to the
item-identification level that such concerns have merit." But even at that
level, privacy concerns are more theoretical than practical. For example,
there have been worries that when it adopts RFID, Gillette will know when
you throw away your razor blade. Technically, that would be possible, Woods
acknowledged -- but it would be very, very impractical.

There is no cause for alarm among privacy advocates, Zipkin agrees, provided
the industry takes precautions. RFID represents "the latest of a series of
innovations -- credit cards, electronic ID cards, electronic commerce,
etc. -- that enhance the efficiency of transactions. Each of these
technologies manipulates information in new ways, for good and for ill. Each
can be -- and has been -- misused, and the industry has had to respond with
adaptations to improve security and privacy at considerable cost."

Companies should be prepared to articulate their privacy policy about RFID,
though, Woods cautions. "It will definitely be a PR issue."

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