RFID Summit: the promise of the active tag.

ATLANTA -- Product gone missing is a massive expense: some $24 billion in European distributors' centers alone each year. Thus it is easy to grasp why supporters of active RFID are so high on its future. If the hype at the Active RFID Summit in November is to be believed, active RFID means unlimited potential and a $7 billion opportunity in the next 10 years.

According to Dan Lawrence, VP of business development at research firm IDTechEx (idtechex.com), which sponsored the event, active tags are a boon-in-waiting. Reason: The tags afford any industry a reliable means to track and locate hard assets.

Some say RFID holds promise because it doesn't threaten incumbent technologies. "RFID tags will replace nothing," says Wavetrend Technologies COO Campbell Tingey, quoting IDTechEx's Dr. Peter Harrop. Tingey calls RFID a new industry with the strengths of distance, direction, data capacity, storage, environment and asset value. "There is potential value to your business knowing where your assets are, how many you have per site, and knowing which ones are scheduled for maintenance."

Harrop adds, "This is a global phenomenon" in areas such as the airline and transportation industries, in government applications, and for livestock, to name a few. The global market for RFID cards and systems will pass $3 billion in 2008, he claims.

The leading RFID market is said to be contactless smart cards. The China National ID card and system is the biggest rollout, but an even larger budget of at least $15 billion is planned for the UK National ID card.

For the semiconductor industry, explains David Theriault of Ubisense (ubisense.net), wireless sensor real-time location systems (RTLS) can provide a "full solution." For example, he suggests manually locating lost wafers takes about 20 minutes, whereas using an active tag can reduce the time to two minutes, locating an object down to 30 cm.

The potential savings are enormous. In Europe alone, Theriault states, the cost of shrinkage of goods going through distribution centers is $24 billion, or 2% of the value of the products processed. With ultra-wide band tags (UWB) attached to mobile objects, an automated trail can reduce the amount of lost or missing goods in storage.

And in harsher environments such as automotive and industrial, sensors are encapsulated in a molding process (Modified Reaction Injection Molding, or RIM) to prevent moisture, says Tom Anderson of AVX Corp. (avxcorp.com). For this process, he continues, hand soldering is no longer necessary. "We put PCBs and batteries into a mold and seal plastic around them creating a protected device." This protected device is free to be in a chemical environment without the possibility of leakage.

According to Parelec CEO Geva Barash, RTLS holds "the unanswered need for more accurate, reliable solutions." His company (parelec.com), a conductive inks manufacturer for printed circuits, just purchased an active RFID company. He explains that smart agent tags permit high accuracy optical location (one meter); a zone location using a customizable beaconing device of three to 200 meters, and a 250-meter range. He says, "It's a low-cost, low footprint device, with no infrastructure needed."

The process is also starting for the conversion of more than three billion financial cards from Visa, MasterCard, American Express and JCB to RFID. Eurosmart reportedly sees sales of these RFID financial cards doubling to 20 million in 2007. In the U.S. alone, 150,000 readers have just been installed for these financial cards. RFID cards and tickets and RFID-enabled mobile phones increasingly provide payments, ticketing, and secure access. All three devices are seeing rapid growth, says Harrop.

China's National ID scheme reportedly will peak at 300 million cards in 2007, with a cost of about $2.45 each. Card readers valued at $1.2 billion are being ordered to go with them.

Can active RFID really live up to the projections and promise? What was conveyed at the summit and in recent news is almost solely a positive view of the technology. Will it be the "next big thing" as the industry professionals portend? It's certainly possible. Besides their broad utility, active tags are also reusable.

Are there drawbacks? Well, at least two. First, new equipment lines would be needed to manufacture the tags as the process is similar to that for making semiconductors. Also, the software needs to be consistent for the entire line. On the upside, the lines can be fairly compact (Tyco Automation, for example, sells an end-to-end line that measures perhaps 35') and yield targets are typically 98% or higher.

Second is the cost. Tingey claims that tags currently cost anywhere between $20 and $50 each, while readers range broadly in price, from $90 to $750. Much like its ballyhooed passive tag cousin, costs would likely need to come down for the technology to take off as projected. And the readers and other infrastructure must be in place.

Those are big hurdles, to be sure. Should they be overcome, active RFID's potential appears to be wide open.

Edited by Mike Buetow