The next generation of radio frequency identification (RFID) technology will appear in the third quarter and could upset the market, Garter said in a report released Monday.
The new RFID equipment will have “incrementally” better performance than the current RFID generation, and will unify the market by complying with global standards, said the research firm. Adoption of the new technology could have a big effect on vendor market shares, according to Gartner analyst Jeff Woods, who wrote the report.
“The substantial technical differences from G1 [generation one] technology will radically change the positions of the vendors in this market, and Gartner believes that some of these vendors may fail to make the transition to G2 [generation two] technology,” he wrote.
RFID technology has the potential to revolutionize warehousing by allowing scanners to identify products far more efficiently than today’s barcode scanners. An RFID tag is placed on an item, and the tag uses its chip and antenna to broadcast information to an RFID reader in the form of radio waves. The tags can store much more information than bar codes, and are being used on everything from cars to cell phones.
One challenge has been standardization. Gartner’s report states that the new equipment will comply with EPCglobal’s G2 standards approved in December. A second set of standards from the International Standards Organization (ISO) also exists, however, and Gartner said vendors will need to comply with both ISO and EPCglobal G2.
Intermec, Metro Group, and Royal Philips Electronics earlier this month jointly announced they had produced an RFID chip that meets both EPCglobal G2 and ISO specifications, said Gartner. Intermec also demonstrated a readable smart label with a G2 chip, and Impinj released an RFID reader and tag system called GrandPrix, which meets G2 standards.
Gartner warned that upgrades are likely to fail, particularly in “dense reader” mode, which prevents readers from interfering with each other. “Assume that any RFID equipment you buy today will not be upgradeable to dense radar mode,” stated the report.
The total cost of the new labels also could be a challenge, as could concerns about whether the new readers infringe other vendors’ patents, according to the report. Gartner recommends that companies should begin evaluating vendors “strategically, rather than seeking short-term or interim ‘fixes.’”
Scott Thorpe, an account manager for Mongoose Capital in San Francisco, said his company is switching to the new generation of programmable tags. Mongoose Capital is a commercial lender specializing in car dealers, and the company will use the tags to track cars.
“The initial investment of the upgrade is going to be quite large,” he said. “It’s a complete new set of tags, so it’s pretty costly. But it’s going to be very cost-effective overall.”