RFID May See 'Explosive' Growth

By Ed Sutherland

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Auto makers and retail giants are in the driver's seat of Radio Frequency Identification (RFID), an industry expected to experience "explosive growth" over the next five years, according to analysts.

Used to track everything from Pepsi to people, 33 billion radio tags will be produced by 2010. Only 1.5 billion of the tracking devices were made last year.

Supply chain management, tracking items from the warehouse to store shelves, will become the largest segment of RFID, according to In-Stat, an Arizona-based research firm.

"This segment will account for the largest number of tags and labels from 2005 through 2010," said analyst Allen Nogee in a statement. Retail giant Wal-Mart is the leader in this area, requiring its top suppliers to use RFID, according to the analyst.

Pharmaceutical companies, plagued by counterfeit drugs, may be the next market to adopt the ID tags, according to Nogee.

While RFID could enjoy a 30-fold growth rate over the next half-decade, unsettled issues could trip any rapid rise. The spread of RFID depends on the cost of the tracking devices to drop. Additional worries are privacy concerns and delays caused by court challenges.

"RFID tags now cost about 20 cents per tag," Nogee told internetnews.com. The "magic number" RFID companies want to reach is five cents. While some advances in manufacturing radio tags are lowering costs, higher volume is key. "Buying a billion is cheaper than a million," said Nogee.

Privacy concerns surround RFID tags. Although Gillette had ordered a billion tags for shavers, and sneaker makers were planning to use radio tags to prevent black market sales, "you won't find any consumer products with RFID," said Nogee. "A lot of privacy backlash" awaits retailers considering RFID."

This article was first published on InternetNews.com. To read the full article, click here.