RFID Tempts, but Opportunity's Elusive

Technophiles often tout RFID, or radio frequency identification, as the driver of the next revolution in the retail industry. But just when this revolution will sweep the industry -- and which vendors will benefit -- remains an open question.

"It's not 'if' anymore," Lyle Ginsburg, managing partner for technology innovation in Accenture's Global Products Operating Group, says of RFID, a World War II era technology that can help stores better track their inventory. But Ginsburg likens the current stage of RFID adoption to the start of a marathon: "It's going to be painful until you get your rhythm or routine down."

Understandably, many investors are struggling to find their stride as the potential RFID benefit is priced into names such as Zebra Technologies, whose stock is trading at about 31 times forward earnings and 7 times sales, and Manhattan Associates(MANH Quote), a firm with a checkered past now trading at nearly 25 times forward earnings. ...