RFID Tempts, but Opportunity's Elusive

In addition to helping retailers with inventory, the technology is envisioned as a way to help detect counterfeits, track livestock and eventually prevent spoilage by storing temperature information. RFID is already the underlying technology in New York's EZ Pass and the Bay Area's FastPass toll-crossing systems.

Spending on RFID-related technology topped $1.9 billion worldwide last year and is expected to enjoy a 20% compound average annual growth rate through 2008, according to ABI Research, an Oyster Bay, N.Y.-based technology research think tank and consultancy. But for individual vendors, the RFID revenue won't be tangible for at least a couple of years.

Analysts are calling 2004 the year of the pilot as suppliers work to meet mandates from Wal-Mart and others. But the consensus today is that the tags must fall to the magic price of a nickel each to achieve widespread adoption.

Currently, the lowest published price is 19 cents a tag for 1 million tags, according to Accenture. AMR Research projects the number of tags shipped will not even cross the 200 million mark this year, but forecasts that number will skyrocket into the several billions by 2006.

RFID Picks and Pans

As is often the case with technology adoption, consultants are expected to be the initial winners in the early miles of the RFID marathon. Tony Ursillo, a hardware and software analyst with Loomis Sayles, points to Accenture as the obvious example, noting that RFID was a key technology component of Accenture's successful bid on the Department of Homeland Defense's massive $10 billion U.S.-Visit contract.

For now, RFID is not a big part of Accenture's business, but it's one of the company's fastest growing markets, Ginsburg said. "We believe over time it's going to grow and grow and grow," he said. "Thank you, Wal-Mart. It's certainly driving business our way."