December 13, 2005 12:12 PM PST

Gartner sees RFID as $3 billion business by 2010

RFID technology is on the upswing as businesses start to see ways it can augment bar coding, according to a new report.

Worldwide spending on the emerging wireless tracking technology is set to reach $504 million this year, up more than one-third from 2004, market researcher Gartner said Tuesday. Adoption will accelerate by 2007, with spending pegged to hit $3 billion by the end of the decade.

RFID, or radio frequency identification, has been hailed for its promise as a superior way to keep tabs on merchandise in warehouses and retail outlets. Scanning of data-laden chips on pallets and products would help keep inventories in order and assure buyers that they're not paying money for counterfeit goods.

In Mississippi, the technology was used to help identify victims of Hurricane Katrina.

It's also been denounced as a harbinger of a Big Brother society in which personal privacy disappears, either because of voluminous record-keeping on people's shopping habits and travel patterns, or because the chips could end up under people's skin.

Most uses so far have been limited to trial runs, but mandates are coming from both the public and private sectors. The U.S. Department of Defense, for instance, recently insisted that its suppliers of packaged rations, clothing, personal-care items and weapon-system repair parts radio-tag products shipped to certain supply depots.

The Gartner report sticks to the mundane side of things, focusing on how RFID would augment--rather than replace--ubiquitous bar codes.

While bar codes are better at collecting data in highly structured locales such as warehouses, RFID tags will be useful in collecting data on mobile assets and in unstructured business processes, including retail stores and hospitals, Gartner said.

"Just because bar codes are used extensively in distribution centers does not mean RFID will be," Jeff Woods, Gartner's research vice president, said in a statement. "Businesses are beginning to discover business value in places where they cannot use bar coding, which will be the force that moves RFID forward."

Woods pointed to the role of the Food and Drug Administration, which is pushing for RFID tags to combat sales of fake pharmaceutical products. If the FDA's regulatory activity proceeds, he said, widespread tagging could begin around 2007.

 

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