May 10, 2004 8:19 AM PDT

HP debuts RFID services

Hewlett-Packard unveiled on Monday services for companies trying to start radio frequency identification projects.

HP launched three packages that essentially create a shrink-wrapped pilot program when strung together. The packages target different stages for customers developing their RFID projects: planning, start-up and integration.

The first package, RFID Discovery, aids companies in outlining a business case for the adoption of the technology, as well as measuring the effect of adding radio tags to a company's existing supply chain operations.

The second package, dubbed the RFID Adaptive Starter Kit, aims to help companies build physical test programs, including procurement of the radio tags themselves, the reader devices used to scan the tags and the software needed to make these tools work together.

HP will also assist companies in addressing integration and data management issues created by using radio tags with its third package, RFID Readiness Assessment and Roadmap Planning.

Radio frequency identification (RFID) tags are chips that are armed with antennas and provide detailed information about the products to which they are attached. Many industry watchers assert that adoption of RFID will allow for more efficient tracking of inventory, thereby cutting costs and helping rectify supply problems.

HP, which estimates that the RFID market will grow to more than $3 billion by 2008, is the latest of several major IT companies to launch products for the emerging sector. Last week, Sun Microsystems and consultancy Capgemini introduced a combination of software and services designed for companies building RFID pilots. IBM has also established a presence in the RFID sector, offering many of the same tools as its competitors.

Executives from Palo Alto, Calif.-based HP assert that their company has a distinct advantage over its rivals, based on its experience as an RFID user, most notably as a participant in the current test program run by retail giant Wal-Mart Stores. The retail giant launched a major RFID pilot with eight of its largest suppliers, including HP, earlier this month. Wal-Mart has given its top 100 suppliers until January to begin affixing RFID tags to shipments sent to certain distribution centers and stores.

Salil Pradhan, chief technology officer of RFID at HP Labs, maintains that his company's hands-on experience with the tags gives it a major advantage over rivals such as IBM and Sun. Pradhan said HP is currently shipping more than 100 different products to Wal-Mart that are armed with RFID tags.

"We're taking our own best practices and marketing them as a service to customers, and that gives us a huge advantage," Pradhan said. "You can say as a vendor that you understand the physical or integration issues involved. But until you've built a real program like we have, it's impossible to understand everything that needs to happen to make RFID work in the real world."

Pradhan said HP already counts a number of Wal-Mart suppliers among its existing group of RFID clients, including toy maker Hasbro and fire log maker Conros, which were both announced as new customers Monday.

At least one expert agreed that HP's hands-on experience working under the Wal-Mart mandate should help to open some doors with customers. IDC analyst Chris Boone said the vendor has been relatively quiet on the RFID market up until this point, but could create significant noise with its current story and services.

"The most compelling aspect has to be that (HP) is Wal-Mart's ninth largest supplier and has multiple deployments in-house," Boone said. "As an early adopter in the U.S. and Asia-Pacific, they have an opportunity to make a big bang."

Boone said customers would likely feel comfortable working with an RFID vendor that has been down the same road they're traveling. However, the analyst stopped short of saying that HP will enjoy a distinct advantage over IBM, Sun and other rivals. He said IBM will rely on its long history of research and development and the professional services skills it assumed through its acquisition of consultants PricewaterhouseCoopers', while Sun will depend on to its strengths in building underlying software architecture.

"Just because HP can make RFID work doesn't mean they've given a customer everything they need," Boone said. "IBM has real strengths in building the business case, and large consultants such as Accenture should be able to convince people that it also has advantages, such as working with a number of retailers already on RFID."

In related news, the Computing Technology Industry Association said Monday that it has kicked off a new initiative to encourage the adoption of RFID throughout the computer, electronics and IT industries.

The industry trade group currently has a task force in place to define potential applications for RFID, including working on a standard for data residing on tags or tied into RFID systems. The association also has plans to address issues related to the impact of RFID on the supply chain and to the interaction of radio tags in certain vertical markets, such as aerospace or the government.

 

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