RFID Progress in Japan
Mar 13, 2006 Raghu Das
IDTechEx recently visited Japan to learn about the latest RFID developments there. RFID adoption in Japan had been generally slow with the government driving the effort by sponsoring a dozen or so RFID projects each year and a range of small, albeit lucrative, applications of RFID in many closed loop applications - from tagging sushi plates to slot machine tokens. We found that many users in Japan are closely watching global progress with RFID to understand first what their return on investment (ROI) will be. The situation is now rapidly changing, but there are still a number of factors for the slower-than-anticipated adoption, which we explore below. In contrast to the rate of adoption by the enterprise domain, Japan has become a world leader in the use of RFID for consumers through contactless commerce.
Of the plethora of closed loop applications, one of the largest markets for RFID labels in Japan has been for their use in automating procedures in libraries with some 10 million tags used in Japan alone. Globally, IDTechEx expect that 50 million RFID tags will be shipped for library applications in 2006.
In 2005, Japan was home to one of the largest deliveries of RFID tickets in a single order - 25 million tickets were made for the Aichi World Expo which was attended by over 22 million visitors. See the enclosed case study for full details.
Japan leads in contactless payments
Unchanged from previous years, contactless smart cards remain by far the largest RFID application in Japan by revenue, with card costs ranging from $2 to $10 each, and significant spend on services and systems. NTT DoCoMo, one of Japan's largest cellphone providers, has sold more than 5 million RFID enabled phones, which can be used on the Japanese National rail system rather than magnetic-stripe tickets. In addition to this the majority of convenience stores in central Tokyo and other stores (such as restaurants) now accept this as a form of payment.
Progress at UHF
The use of UHF RFID in Japan got off to a faulty start. Over a year ago it was approved to use the frequency range 950-956MHz for RFID systems. This is higher than the bands allotted in the US and Europe because the cellular network in Japan operates at almost up to 950MHz. This proximity caused several issues - cellular providers did not want to have interference issues so the RF signal outside of the permitted range must be very low - not much more than background noise. Common ways of handling this is to turn down the power (reducing range) or add filters (increasing cost). Despite approval in April 2005 the use of UHF in Japan has been limited as companies still need, in most cases, to obtain a site license where they want to use it in order to control possible interference. The problem is that nothing had been decided on how to handle dense reader modes. One of the factors of the delay seems to be the number of government bodies that have been involved with conflicting interests regarding the cellphone and RF frequency space.
However, in late January 2006 the listen before talk (LBT) protocol was recommended by the regulators. This is where RFID interrogators must first "listen" for any devices operating at one frequency before transmitting. If that frequency is "busy", they try another one within the band. Devices conforming to LBT will not need site licenses any longer. Vendors that we interviewed were upgrading their firmware and hardware to this specification and expect products to market by late summer 2006 which will support this protocol.
In terms of performance, UHF is not seen as particularly important as elsewhere - in Japan 2.45GHz tags can achieve ranges of 4 meters or more already - but it does enable Japan to benefit from global economies of scale, multiple sourcing and shipping products globally.
RFID Mandates in Japan
Companies we interviewed did not see a food-retail driven mandate any time soon like those in the US; mainly because retailers are smaller and more fragmented in Japan. However, late last year, one of Japan's biggest electrical and electronic stores - "Yodobashi" - announced their intention for all their suppliers to tag incoming products using UHF EPC tags. This was due to start in April but has been pushed back now to at least summer while issues at UHF are resolved but many vendors we spoke to found this exciting and believe if this starts in summer Yodobashi's competitors would follow quickly, creating a driver for RFID use nationally.
Rapid technology innovation
Vendors are innovating at an impressive rate, offering a broad range of solutions with strong value propositions. One common area of development that came from many of the vendors we visited was their interest in chipless RFID tags (particularly fully printed versions) and active RFID. Speaking generally, Japanese companies also refreshingly consider the bigger picture - such as incorporating appropriate displays, sensors and other components with RFID to do more than just ID and provide pervasive computing.
Hibiki - the 5 Yen (4 cent) tag
In summer 2006 the two year research project Hibiki" will come to a successful end. Supported by the government and backed by companies such as Hitachi, Toppan Printing and Dai Nippon Printing, the project's aim is to develop a UHF 5 Yen tag (~ 4 US cents). This, we are told, will be achieved, based on the volumes of 100 million tags per month. They are achieving this by using a simple tag construction (e.g. simple dipole antenna). The chip is also kept fairly simple; although it has 512 bits of data they have shaved off some features so it supports about 70% of the EPC Gen 2 functionality. This keeps the design simpler and the silicon real estate used is smaller. Coupled with these factors, Hitachi are making the chip on their small chip die process with edge dimensions less than 0.4mm. The companies have evaluated the Hibiki tag over 10 projects so far and once the project completes this summer, Hitachi and others will begin producing these chips in earnest.
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