September 27, 2004

RFID news

NY Times: IBM to Invest $250 Million

What's in the Box? Radio Tags Know That, and More

Published: September 27, 2004

.B.M. plans to announce today that it will invest $250 million over the next five years and employ 1,000 people in a new business unit to support products and services related to sensor networks. The new unit will also focus on helping businesses exploit sensor networks by, for example, setting up computer systems that use sensor data to quickly identify supply shortages and automatically adjust delivery schedules.


"We are moving from batches of information about operations to continuous visibility," said Gary Cohen, general manager of the pervasive computing group at International Business Machines.

The announcement is timed to attract the attention of more than 1,200 engineers and executives headed to Baltimore this week for a trade show that will highlight progress in - and barriers to - the use of radio tags to identify and track machinery and consumer goods.

I.B.M.'s goal, analysts said, is to persuade businesses to view radio tagging - one of the hottest growth areas for mobile sensor technology - as just one element of a new wave of information technology outside of data centers that must be integrated to be exploited.

Radio tags can be read in groups instead of one by one, and they hold far more data than bar codes. In addition to indicating what product a carton holds, they can specify when and where that particular item was made and its intended destination.

The new tags, known as passive RFID, for radio frequency identification, are small, paper-thin and cheaper than radio tags like E-ZPass toll collectors because they receive enough energy to communicate from signals sent by the reader. That does away with the need for batteries.

I.B.M.'s effort is one of many recent indicators that a drive for widespread adoption of passive radio tags, spurred by Wal-Mart Stores and the Defense Department, is gaining traction. Oat Systems, based in Waltham, Mass., said that Tesco, the British retailer, had selected its software to manage an RFID network that will reach more than 2,000 stores. At the trade show, Oat is also expected to announce a joint marketing agreement with Hewlett-Packard, which has been a leader both in using RFID on its own products and in providing consulting services to others.

Hewlett said it began assigning consultants to RFID work two years ago and now has 350 of them, as well 1,000 other employees working on various aspects of RFID. It also is about to announce a marketing alliance with BearingPoint, a large consulting firm based in McLean, Va., that was formerly part of KPMG.

"People are realizing that they will have to run their businesses this way, and they are starting to live with it," said Marc D. Osofsky, vice president of marketing for Oat Systems.

Large retailers, led by Wal-Mart, and major consumer goods companies like Procter & Gamble and Gillette see the tags initially as tools to combat theft and make their supply chains more efficient. They say the tags should mean that fewer consumers will find that a store is out of the product they want to buy. That is now the outcome of about 5 percent of shopping trips. Wal-Mart has set a deadline of Jan. 1 for its top 100 suppliers to be shipping goods radio-tagged to specifications developed by EPCglobal, an industry organization (the name is derived from "electronic product code"). Several other retailers, including Albertson's, Target and Best Buy, have supported adoption of the technology.

The technology is also drawing strong interest from drug companies and the Food and Drug Administration, which see it as useful in fighting counterfeiting, monitoring freshness and speeding up product recalls. And Boeing and Airbus are working with major airlines to put such electronic tags on all aircraft parts to reduce risks of maintenance errors and help airlines replace faulty equipment more quickly.

So far, the work involving consumer goods has consisted largely of pilot projects; a limited number of cartons and pallets of goods have been shipped to a handful of distribution centers and stores. A few large products, like electronics from Hewlett-Packard, are being individually tagged. Most of the companies involved in pilot tests have set up so-called slap-and-ship stations, where workers manually apply the tags at far slower speeds than would be required if all cartons and pallets were being tagged and monitored.

Such tests, and the use of the technology on library books, has stoked concern among some privacy advocates that governments and businesses will eventually use the technology to secretly accumulate health and behavioral data on people without their consent. That simmering issue was reflected last month in a letter from Senator Bill Nelson, a Florida Democrat, to the Federal Trade Commission, stating that RFID posed security and privacy risks.

But advocates for the technology say they foresee few hurdles to reaching agreements on notifying consumers when tags are present, or to creating tags that consumers can disable after they purchase goods. For now, the greater challenge is driving down the cost and improving the reliability of the hardware and software.

Companies like I.B.M. have to provide a road map that lays out small steps toward deployment of radio-tagging and other sensor technologies, said Navi Radjou, an analyst at Forrester, a market research firm in Cambridge, Mass. "People won't do big-bang implementations," he said.

The New York Times > Technology > What's in the Box? Radio Tags Know That, and More

Posted by Craig at September 27, 2004 05:06 PM