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Cost, Privacy Imperil RFID

Research firm In-Stat is predicting explosive growth in the RFID market over the rest of the decade -- if cost and privacy issues can be resolved, according to one of the authors of the report.

Over 1.3 billion Radio Frequency Identification (RFID) tags were produced in 2005, and by 2010, that figure will climb to 33 billion, according to In-Stat. Market growth will be driven be the supply chain management sector, where massive retailers like Wal-Mart have mandated that their top suppliers use the tiny radio tags for tracking goods.

In-Stat's Alan Nogee says that cost is one of the key barriers to adoption for retailers that aren't mega-corporations.

"Five cents a tag is the magic number for the industry," he tells Unstrung. "We aren't there yet, 20 cents a tag is pretty routine, although prices are coming down fast."

Privacy is another key concern. Nogee notes that some consumer advocacy groups are concerned about retailers using RFID tags on razors and other goods, particularly as the technology improves and more information can be carried on the tag.

"It is enough to cause a pause," Nogee says.

Standards are less of a concern, according to Nogee. He says that while RFID standards are still "evolving," not every application needs standardized tags.

"For instance, using RFID to find your car keys, standards could be a disadvantage... They could make it easier for hackers."

Still, Nogee says that the new Electronic Product Code (EPC) standard is important. This allows companies to keep a lot more information about the items they tag and track than traditional bar-code systems and allows companies to collect basic data on where an asset is -- on the production line, in the warehouse or on the sales rack.

He also observes that the U.S. Department of Defense is doing a lot of the important RFID standards work. "They're working on standards... A lot of our commercial standards are derived from work originally done by the military."

— Dan Jones, Site Editor, Unstrung

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