RFID is Poised for Change
Dec 06, 2007 Dr Peter Harrop
Basic rules of marketing
Firstly, selling RFID to consumer goods companies mandated by major retailers usually breaks one of the fundamental rules of marketing "Never sell to someone who does not want to buy from you". Most of the consumer goods companies in the USA see no payback from fitting the passive UHF labels mandated by retailers, indeed, they may have lost a mutual $100 million so far trying to do so, despite the RFID suppliers losing a similar sum selling tags and readers to them at a loss. The consumer goods companies are therefore quick to point out the technical problems and they use any other valid reason to delay. The contrast with the booming sectors of RFID (almost all other sectors) is stark.
Some suppliers read the market correctly and prosper
When we look at the money spent, RFID is not a UHF business, though UHF is making inroads. In standards, it is not an EPCglobal business, though EPCglobal is making inroads. RFID is a business of tagging financial, access, identification and transport cards and tickets and tagging passports, library books and other things at HF, whether we look at the expenditure on tags or on systems. It is also a booming business in tagging pets and livestock with LF tags, but LF for beer kegs, gas cylinders, roll cages, trolleys and secure access is conceding ground to HF and, to a lesser extent, UHF. There are many companies primarily in HF that have more than $100 million in profitable, growing sales including NXP, ACS, Huahong and the RFID part of Gemplus. NXP and Motorola foresaw that the Chinese market for RFID would become one of the largest - indeed, this year it is temporarily the world's largest market for RFID. These two companies, and a few others, have already established substantial sales in China.
Although some companies that were wrong footed in prioritising UHF RFID for retailing have alleged that UHF will satisfy most RFID needs in future and HF has run out of development potential, this is far from true. To those that allege that HF is limited to one meter range and only then with a tag the size of a credit card, we must point out that DAG System and UPM Raflatac have long offered longer ranges and advances by Cambridge Resonant Technologies, in late 2007, promise a further 50% improvement. To those that say HF systems can only interrogate tens of tags at a time, we point to the global success of Magellan Technologies with Phase Jitter Modulation PJM underwritten by best-in-class-partners. Those tags can even be interrogated when they are touching.
Rapid reduction in tag cost
Then there is the issue of tag cost. Companies introducing smaller Near Field UHF tags for small items like drugs at Purdue Pharma, and for other uses, is of huge significance. By mimicking the inductive coupling of HF, Near Field UHF similarly avoids the huge problems of metal and water and even focussing of beams by curved glass that are suffered with Far Field UHF. Indeed, only one turn of antenna is needed and that makes the tag antenna cheaper than the equivalent HF item level tag. Whether the UHF chip is cheaper, the same cost or more expensive than the equivalent HF chip is obscured by the speed of EPCglobal/ ISO in preparing an equivalent EPC specification at HF and the relative pricing policies of chip makers. Neither NF UHF or HF will work beyond a few tens of centimeters but that is rarely a problem with tagging of small items.
As a result, for drug anti-counterfeiting, where the US Food and Drug Administration has gone soft on the introduction of RFID and the pressure now comes from state legislatures such as California and Florida for levels of reverse audit that are very difficult without RFID, HF and NF UHF solutions are now neck and neck. For example, GlaxoSmithKline and Pfizer have Tagsys HF RFID on their most counterfeited drugs - Trizivir and Viagra respectively.
Sadly there is no room for two tags on these tiny pots and blisterpacks of drugs. The pharmaceutical legislators need to agree standards for the frequency, signalling protocol and secure database and they are not doing so. They say they will let industry decide but there is no eveidence that that will happen. After all, some of the same RFID suppliers are responsible for three incompatible types of anti theft tag (like RFID but with only one bit of data) thirty years on, despite 12 billion being sold every year. Progress on standardisation is zero.
Contrast IATA agreeing one standard for baggage tags worldwide, opening up a different benefit to human safety and well being. Settling for 2D barcodes on drugs for the "mass singulation" used in anticounterfeiting "pedigree" is no answer because it is tough to automate and sensitive to misorientation and obscuration and cannot provide a good extra payback in automated logistical control. Counterfeit drugs have even been unknowingly sold through legitimate pharmacies and the problem is increasing, say the FDA, WHO and other respected observers. The equivalents to the FDA in other countries are similarly relaxed about using modern technology to tackle the problem and it may take a major epidemic of counterfeiting deaths in the West for the problem to be taken more seriously. Tragically, over 100,000 deaths yearly from counterfeit drugs in the Third World has no galvanising effect on suppliers of genuine product in the developed world.
Great importance of active RFID
15% of the expenditure on RFID, and a larger percentage of the profit, is for active RFID where 2.45GHz is increasingly the most popular frequency. For example, WhereNet, a $40 million division of Zebra Technologies, is a leader in the very hot form of active RFID called Real Time Locating Systems RTLS and Zebra has just bought Navis, a large RFID system integrator, to leverage that leadership. Heavy logistics and military applications feature large in active RFID applications, with healthcare coming up fast, partly thanks to RTLS from Cisco, Ekahau, PanGo Networks, AeroScout and others. Lockheed Martin (Savi Technology) sits astride the military active RFID business where orders of tens of millions of dollars are commonplace.
Where the action is
In short then, someone landing from outer space and wanting rapid, substantial and lucrative entry into the RFID business would first look at HF RFID to ISO 14443, which is responsible for maybe ten times the sales value of anything else. Then they would look at HF RFID to ISO 15693 with its longer range for library books, secure access and track and trace. They may also look at the boom in active RFID, mainly at 2.45GHz but with much business being done at Ultra Wide Band UWB, UHF and 433MHz.
They would be amused at the frenzy of wildly different passive FF UHF tags developed for overcoming the problems of reader to reader interference, signal absorption and reflection at that frequency. With a whimsical smile they will note that the problem was actually solved another way and the best selling UHF tags employ the most primitive pattern of all because they are used on such things as A) Air baggage where Faraday cages, focussed beams or tunnel readers solve the problem and B) Bookshops and apparel stores where the problem is largely non-existent due to low reader density and a largely dry and non-metallic environment.
A newcomer will see there is still work to be done. Airports do not want to slow down the carousels and conveyors to accommodate RFID readers that demand well spaced singulation of bags. They want to speed things up. Nonetheless air baggage tagging is a great success (headed for two billion tags a year) as is apparel tagging in Marks and Spencer in the UK (soon 350 million items yearly). NF UHF needs to be proven both practically and economically in mass markets and Metro in Germany looks like being a leader here. It has been moving more slowly and deliberately than some of its peers in other countries but this is now looking rather like the story of the hare and the tortoise.
The promised 80-99% reduction in cost of HF tags, by printing an alternative to the silicon chip, needs to be proven in mass markets. Someone from outer space would certainly be interested in the 1500 organisations developing printed electronics, including a minority even putting electronics onto paper, such as newcomer Additive Process Technologies that electroplates HF antennas onto paper using low cost materials in a reel to reel process or Hana Label in China that printed ten million HF labels with silver HF antennas last year.
However, low cost processes are useless if specifications and overheads are too expensive. Here it is interesting that there is an increasing interest in something cheaper and simpler than EPC in its currently chosen form. Some, like Marks and Spencer, opt for a stripped down specification of their own. Others are backing the Ubiquitous Product Code of Tokyo University now being trialled by governments in seven East Asian countries on the basis that you should not need to put 72,000 transistors on a gumball, a letter or even a book and the issuance of the numbers for such tagging should be very low in cost. Time will tell who is right, but IDTechEx believe the indsutry would do well to contemplate some very simple specifications - ironically those envisaged by Massachusetts Institute of Technology that started it all, and low cost administration. Otherwise its early and commendable success may be seen as but a Pyrrhic victory.
The most significant announcement?
When we look back at 2007, we may realise that the most significant announcement was that at the IDTechEx Printed Electronics USA conference in San Francisco in November www.idtechex.com/peUSA. We refer to the presentation from Kovio, a newcomer that is printing transistors. Most of the developers of printed electronics concentrate on photovoltaics on low cost flexible substrates. This is often transparent and it will be useful for energy harvesting in the vast number of RFID sensor tags planned for Ubiquitous Sensor Networks USN backed by the Korean Government, the Holst Centre in the Netherlands, Intel, the US Military and others. Photovoltaics can be printed on top of printed batteries and the printed antenna and the printed transistors can be under them. After all, no one would put a silicon chip in a barcode or anti-theft tag and RFID intended for such huge volumes must not use a sledgehammer to crack a nut either. Another use for the new electronics would be very low cost disposable RTLS which is needed for many uses including the ultimate supply chain. Another will be low cost cards and tickets with moving colour displays.