March 8, 2005 2:04 PM PST

Microsoft plans RFID software in 2006

SAN DIEGO--After investing significantly in technology for radio frequency identification devices, Microsoft is readying its first major product, a software package designed to help companies manage the product tagging technology.

Microsoft plans early next year to release the RFID Services Platform, a "middleware" product that connects the hardware that monitors RFID signals with the business software that can make sense of the information. The product is designed for businesses that want to incorporate RFID into their own systems, as well as for other software companies that want to build a product based on Microsoft's technology.

The RFID product will be built on top of Microsoft's .Net development platform and will run on a two-processor server, Microsoft RFID program manager Alex Renz told CNET News.com on Tuesday. It will also incorporate the company's SQL Server database software for information storage.

Renz did not disclose pricing for the product but noted that Microsoft wants to be a low-cost option in a market that is already seeing prices come down.

"We are going to make sure that it is not going to break the bank," he said.

The RFID field has attracted many of the biggest names in technology, as well as a host of start-ups. IBM and Oracle are among those that have been heavily involved in the area.

Often called electronic bar codes, RFID tags emit a signal that shares basic identification information about a product. Such tags can be used to track a product from manufacturing through distribution and then on to retailers.

Microsoft, for its part, has made RFID a key part of its broader "Smarter Retail Initiative." The company has also announced plans to support the tagging technology in an embedded version of Windows XP specifically aimed at retailers.

By contrast, most customers are adding RFID only grudgingly, often because a key business partner is forcing them to add tags to their products.

"Manufacturers are struggling to find the business case," Renz said during a presentation at the Convergence 2005 conference here.

In many cases, product makers are being pushed by retailers such as Wal-Mart. The retail giant is already requiring its largest suppliers to tag shipments to certain distribution centers and will require smaller suppliers to do so by early 2007.

In most cases, though, Wal-Mart suppliers are adding the tags at the end of the manufacturing process, meeting Wal-Mart's requirements but not giving the suppliers any added cost savings or efficiency gains.

Microsoft is hoping that lower-cost RFID options will prompt more companies to find ways to integrate RFID earlier in the supply chain. SAP, meanwhile, announced Wednesday that it is teaming with Intermec in an alliance aimed at helping small businesses meet partner requirements.

Renz said one of the primary benefits of the software Microsoft plans to bring out next year is that it will be able to talk to all the different varieties of RFID hardware that are coming onto the market.

In addition to offering the RFID middleware product on its own, Renz said Microsoft will build it into three of its business applications next year. The first product to get the RFID technology included will be Axapta 4.0, which is slated for the first half of next year. Two other products slated for the second half of next year--Navision 5.0 and Great Plains 9.0--will also get the RFID technology added.

Microsoft said it has also signed up two other companies to use its underlying technology in their products: GlobeRanger and ConnecTerra.

Microsoft also has a couple early customers, including Jack Link Snacks, a maker of beef jerky.

Renz said smaller companies such as Jack Link actually have an advantage when it comes to making RFID investments pay off. Larger companies have typically already invested heavily in bar codes to track products within their operations. Though RFID might shave some additional personnel costs and improve efficiency modestly for those makers, it can make a more dramatic impact at companies that lack bar code systems entirely.

"There is really an opportunity for them to leapfrog the bar code era," he said.

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