RFID hardware survey 2005

RFID hardware survey 2005Is UHF technology ready forEuropean adoption?

SOLUTIONS THAT MATTER

ColophonThis study is an initiative by LogicaCMG, conducted by the RFID centre of excellence.

EditorEelco de Jong

Contributing authorsRolf Appel, Eric Burgers, Sebas de Jongh, Andrew Vann Arjon Vlasblom.

Special thanks to:All the organisations that participated in this study.Wilco Schillemans and Theo Quick for reviewing the final version

LayoutAndrew Mason

Text reviewNorman Ireland, Plain Text UK

PrintingCachet Printing B.V, Rotterdam, Netherlands

Prof. W.H. Keesomlaan 141183 DJ AmstelveenPostbus 1591180 AD AmstelveenNetherlandsTel: +31 (0)20 5033 000Fax: +31 (0)20 5713 960

01 RFID hardware survey 2005

Preface

As many of you have experienced in the past few years, the speed of RFID technologydevelopment and its business applicability has increased dramatically. Driven not only byretailers, but more significantly by logistics providers, defence departments and theaviation industry, RFID has become much more mature than it was, say, just three yearsago.

LogicaCMG has received many questions from clients about the necessary hardwareinfrastructure that needs to be put in place and the role of the RFID vendors:

• “Should we wait for Gen2 to become readily available before purchasing equipment?”

• “Is software upgrade for readers really viable when we are going for Gen2?”

• “When facing item, case and container level tagging in our company and looking atthree infrastructures, can we somehow integrate or simplify these?”

As a company whose reputation is based on facts, LogicaCMG believes that a seriousinvestigation into the status and future development of the RFID hardware in Europeserves many purposes. In line with our major research into Returnable Transport Items,2004, an international technical, business and editorial team from the Global RFID Centreof Excellence was formed. This team worked on this study for six months.

There are a number of positive conclusions in this report, notably the availability of off-the-shelf hardware solutions and the Gen2 standard, but also some issues that are stillinhibiting major adoption. Luckily, the hatchet between Symbol and Intermec on RFIDpatents has been buried, giving room to many initiatives and developments. However,this has happened only very recently.

A special word of thanks to all the companies that have contributed to this study and theHardware Survey team at LogicaCMG that has fulfilled its mission with the utmostdedication again!

Finally, I hope that this survey gives you many new insights, recommendations andreinstatements for the quest into the most efficient RFID architecture.

Paul Stam de JongeLogicaCMGGroup director RFID solutions

03

Contents

Preface

Management summary 4

1. Introduction 10

2. Findings of the survey 13

3. Implications for end-users 33

4. Conclusions 36

Appendix A: sources 39

Appendix B: glossary 40

Appendix C: introduction to RFID 44

Appendix D: overview of RFID standards 48

Appendix E: European UHF regulations 55

Appendix F: background on IP issues 60

Appendix G: company profiles 63

Appendix H: about the authors 71

Appendix I: LogicaCMG and RFID 73

RFID hardware survey 2005

Management summary

The benefits of RFID technology sound promising, especially for applications in supplychain management and asset management. This is particularly the case for RFIDtechnology in the Ultra-High Frequency (UHF) range, which makes it possible to trackobjects over a distance of about three meters. But the use of UHF RFID technology inEurope has long been hampered by regulations that prohibited many usefulapplications.

When the European regulations were changed in 2004 to allow for read ranges similarto the US market this obstacle was removed. The ratification in December 2004 of the‘EPC Class1 Generation 2 standard’ – referred to as Gen2 – created the first globalstandard for UHF RFID technology and provided a further boost to uptake. Since then,RFID hardware vendors have been quick to announce new products and Europeanearly adopters, including retailers Metro in Germany and Tesco in the UK, have startedmajor implementation projects.

As a result of these developments many companies are now considering to start pilotprojects or full-scale implementations with UHF RFID technology. The benefits of UHFRFID technology may be promising, but is the technology ready to be adopted? Withthe technology developing at such a rapid pace, it is very difficult to assess its maturityof the technology and to make sound investment decisions.

With this survey, it is LogicaCMG’s goal to help the companies facing these importantdecisions, by providing answers to the following questions:

• What is the status and maturity of UHF RFID technology in Europe in 2005?

and

• Is UHF RFID technology ready to be adopted by European end-users - both earlyadopters and mainstream users?

To explore these issues, early in 2005 we questioned twenty RFID hardware vendors.We have complemented the results of this questionnaire with in-depth interviews withleading hardware vendors, end-users and industry bodies.

Status and maturity of UHF RFID technology in Europe in 2005

We believe there are a number of variables that together determine the maturity of atechnology making it ready for mass adoption. These elements include the status ofstandards and regulations, intellectual property issues, the vendor landscape, theinvestment focus, price levels and the availability of products and technical expertise toimplement solutions. These topics are analysed here.


Based on our research, LogicaCMG concludes that 2005 is a very exciting period withsignificant progress in UHF RFID technology. In short, UHF RFID technology is ready tobe implemented in many – but not yet all – business applications.

Whereas 2004 was the year of breakthrough developments in standards andregulations, 2005 will be remembered as the year of product development. A criticalrange of products is being developed and this provides the baseline for futuredevelopments. The performance of UHF RFID technology will continue to improve inthe coming years, but the products that come to market in the next six- twelve monthsare future-proof, and increasingly address specific business problems.

With the new European regulations and the creation of the Gen2 standard, the markethas clearly found an environment that is ready for a wide range of UHF RFIDapplications. Our research shows the significant progress made, but also highlights theissues that remain to be resolved. In particular, the European regulations still includesome challenging areas for the most difficult implementation scenarios. Let’s look at thefindings in more detail:

Availability and pricing of products

European companies that wanted to implement UHF RFID technology so far had a choicebetween products that comply with the EPC Class 1 Generation 1 standard, or productscompliant with ISO 18000-6.

Clearly, this is not a perfect situation, and the Gen2 standard will help to resolve this. Weexpect that by the end of 2005 RFID tags and readers will be available in the Europeanmarket that are fully compliant with the new European regulations (the ETSI EN 302-208regulations) and the EPCglobal Gen2 standard. The road to Gen2 products is illustratedbelow:

Figure 1: UHF RFID product availability

Figure 2: The road to Gen2 products

It is very important for end-users that this next generation of readers provides a baselinefor future enhancements. Nearly all the readers will be able to be updated by softwareto support emerging standards, so end-users are guaranteed that the readers can beupgraded at low cost to support future functionality.

Based on our research, LogicaCMG expect price levels for both UHF tags and readersover the next three to five years to come down 60-70 per cent, with the price of anRFID reader at less then €1000. These reductions will mainly be driven by higher volumes.

In the next twelve months we do not anticipate major price reduction in RFID readers,as vendors will bring enhanced products to market rather than reduce the price.

Application-specific solutions

It is critical that off-the-shelf RFID solutions become available to address specificbusiness problems before the mainstream users can adopt RFID technology. We callthese ‘application-specific solutions’: they are designed to optimise the RFIDperformance in a specific situation, for example on forklift trucks in a warehouse, or onbaggage in the aviation industry. Today, there is a lack of application-specific solutions,but based on our survey, LogicaCMG expects this to change over the next one-twoyears, as the experience of the current RFID pilots and implementations translates intointegrated solutions. Hardware vendors indicate that they are currently working withcustomers and partners on many innovations in tag encapsulation and peripheralequipment. Examples of products that LogicaCMG expects to come to market overthe next twelve months include integrated portal solutions for warehouse operations,forklift readers, handheld readers, tunnel readers for the aviation industry and RFID tagsthat are optimised for use on metal objects.

Status of standards and regulations

The updated European regulations and the ratification of the EPCglobal Gen2 standardhave been a huge step forward for UHF technology in Europe. However hardwarevendors remain fairly critical of the new European regulations’ ability to meet the needsof implementations with high volumes of both tags and readers in close proximity. Theyare particularly concerned about the limited availability of bandwidth in the UHFspectrum in Europe. With only 2 Mhz available, compared to 26 Mhz in the UnitedStates, this may affect the speed at which readers can receive and process data fromtags. Despite these concerns, the hardware vendors are committed to developingproducts that are compliant with the new regulations, and are convinced that withadvanced radio engineering, many issues can be resolved. The performance of theseproducts will continue to improve over the next few years, as these companies becomemore sophisticated and experienced in applying advanced solutions.


Market focus

LogicaCMG found a remarkable shift in industry focus among RFID hardware vendors inEurope over the last year. Until about a year ago, most of the vendors were targetingopen supply chain applications in the retail industry. About six-twelve months ago,many vendors started to broaden this focus and look at opportunities in other marketsegments. The focus areas identified by different hardware vendors today include: • retail and consumer products • transportation and logistics• automotive• aerospace• healthcare• government and defence.

In terms of application focus, we have identified an important shift from open supplychain applications to more near-term opportunities in asset-tracking and closed-loopapplications. It appears that the hardware vendors have started to recognise that theEuropean RFID market is different from the market in the United States.

The vendor landscape

The current vendor landscape is complex for end-users. This is due to the variety ofRFID components required in an implementation, the different vendor strategies, thelack of clear market leaders and competition between incumbent and early-stagecompanies. But all hardware vendors agree that system integrators are the naturalchoice to take ownership of the integrated solution for the customer.

Intellectual property issues

For the last year or so, the UHF RFID market has been plagued by disputes aroundintellectual property for the Gen2 standard. Hardware vendors agree that this issuecontributes to a perception of the RFID market as being immature, and that it maycreate confusion among end-users.

Today these issues are still not completely resolved, but recent developments are ahuge step in the right direction. First, the creation of an IP pool by a group of vendorswas announced, and most recently Intermec and Symbol - two of the companies thatcontributed significant intellectual property to the Gen2 standard - reached abreakthrough agreement. Clearly, the hardware vendors have come to realise howimportant it is to resolve this issue.

As a result of these recent developments, we do not expect the intellectual propertyissue to have a major impact on the RFID adoption in Europe.

Availability of technical expertise

Hardware vendors agree that in the European market there is limited technical expertisearound UHF RFID technology. This is not surprising, given the early stage of the market.We do see that the entire industry is going through a very rapid learning curve,accelerated by both formal and informal knowledge generation, and an increasingnumber of pilots and implementations.

Technical developments

Based on a strong belief in the huge market potential for UHF RFID technology,hardware vendors are making significant investments in research & development.

There can be no doubt that in the next three to five years RFID tags and readers willbecome cheaper, provide better performance, and incorporate more intelligence. Someof the key trends, both long term and short term:• RFID readers are getting more intelligent and more networked. Readers are

becoming enterprise networked devices, and will include increasing intelligence in filtering tag data.

• Tags and readers will be optimised for the European regulations, for example by intelligent synchronization and other advanced engineering technologies.

• The development of application-specific solutions will result in more integration between RFID and sensor technology.

• New enhanced manufacturing practices and polymer chips will reduce the prices of tags and readers.

To some extent, end-users need to come back to earth following the enormous amountof publicity of last year. UHF technology is ready to be applied to some very interestingbusiness scenarios, with the potential to give a positive ROI. But UHF technology is notyet sufficiently advanced to read every object in the most demanding environments.Our advice is to start at the more realistic end of the landscape and identify achievablescenarios that make good business sense and provide positive returns. Gen2 hasgiven a clear direction to the technology. Future performance improvements will onlystrengthen this and make it possible for UHF RFID technology to handle increasinglycomplex scenarios.

If your company wishes to be an early adopter and use RFID technology to createsome kind of competitive advantage, the time is right to invest and work jointly withhardware vendors and system integrators. In this case end-users must be prepared todo some joint research work to find the fit-for-purpose solution for their business case.With RFID adoption progressing, more and more proven scenarios and application-specific products become available. But true competitive advantage can only begained by those prepared to search for the as yet unknown solution.

Is UHF RFID technologyready to be adopted byEuropean end-users?


If your company wants to be a mainstream user and implement only a proven solution,we recommend you start by experimenting today, so you’re ready for implementationwhen the solution is proven. RFID is merely an enabling technology and the realbenefits from RFID will come when you understand the impact on your businessprocesses. This knowledge takes time to develop, and cannot be copied easily fromthe early adopters. As one hardware vendor stated:

‘The early adopters have recognised where they can obtain the ROI. They’re focusedon building the solution and the early roll-out of that solution. The people who havechosen to follow I think are a bit blind to what’s going on, because people who aredeveloping those solutions have no incentive to share what they’ve learned.

This is very much an industry where you learn by doing, so you’ve got to go out andmake your own luck.’

Recommendations to end-users

This survey has clearly illustrated the rapid progress in UHF RFID technology in Europe.But even with the technology maturing quickly, companies will always need acombination of skills in order to implement RFID. Implementing RFID remains complex,especially in industries where the long-term impact is high. Based on our experience,LogicaCMG suggests the following concrete steps to address the opportunitiesprovided by RFID:

1. Understand the fundamental features of RFID and what these mean for your business. For example, what does it mean for processes such as manufacturing, logistics, distribution and in-store operations if objects can be tracked with no line ofsight and no delay in the process?

2. Develop a vision of the long-term value of RFID for your company and industry,providing a framework for the organisation to make investment decisions.

3. Involve senior management – especially if the long-term impact is high – and decideif your company wants to be an early adopter or a follower.

4. Work with a strategic partner that can help you navigate the complex RFID landscape and take responsibility for the end-to-end solution. The hardware vendors agree that the system integrators are the natural choice in this process.

5. Design and create a corporate RFID architecture. This will provide the infrastructurethat enables your company to deploy new applications quickly and achieve seamless integration with your back-office systems.

6. For the short term: identify quick wins that contribute to your key business drivers and go for rapid experimentation. Start the learning process as quickly as possible.

With 2004 the year of standards and regulatory changes, and 2005 the year of criticalproduct development, it remains to be seen whether 2006 will be the year of wide-scaleadoption of UHF technology. One thing seems clear however: UHF RFID technology isready to be implemented in many business applications. We already see companies inmany industries seizing the opportunity. The question is: will your company do thesame?

1. Introduction

Much of the interest surrounding radio frequency identification (RFID) is currentlyfocused on the ultra-high frequency (UHF) range. This allows RFID tags to be read froma distance of about three metres, and is set to revolutionise supply-chain managementin the next few years.

The vanguard of this revolution can be found in the United States where retailer Wal-Mart and the US Department of Defence are implementing UHF RFID in their globalsupply chain operations.

Until recently, UHF RFID technology in Europe hardly existed. The European regulationsrestricted the power used by UHF RFID readers to such an extent that many usefulapplications were prohibited. Instead, the market for RFID in Europe has been focusedon low–frequency (LF) and high-frequency (HF) technology. With a read range of lessthan one metre, these technologies are widely used in public transport systems andaccess control but are not suited to some other important situations.

In 2004, the main obstacle to UHF RFID technology in Europe was removed when theEuropean regulations were changed to allow for read ranges similar to the US market.

The ratification in December 2004 of ‘EPC Class1 Generation 2 standard’,1 the firstglobal standard for UHF RFID technology, will provide a further boost to the uptake.Many RFID hardware vendors have announced products and European early adopters,including retailers Metro in Germany and Tesco in the UK, have started majorimplementation projects.

European companies have watched these developments closely, and many arecurrently considering UHF RFID pilots or full-scale implementations. With thetechnology developing at such a rapid pace, companies face significant investmentdecisions.

LogicaCMG has conducted a major survey in the European market place for UHF RFIDtechnology. This survey aims to answer the following questions:

1. What is the status and maturity of UHF RFID technology in Europe in 2005, and 2. Is UHF RFID technology ready to be adopted by European end-users - both early

adopters and mainstream users?

How can the maturity of a technology be determined? This is not defined by a singleelement, but rather by a number of variables that, when combined, provide a goodpicture of the level of maturity. We believe these elements include, the regulatoryenvironment and status of standards, intellectual property issues, the vendor landscape,the investment focus, price levels and the availability of products and technical expertiseto implement solutions. We will analyse these topics in detail.

1 In the remainder of this document we will refer to the EPC Class 1 Generation 2 standard as ‘Gen2 standard’.


What do end-users demand from RFID hardware vendors?

When deciding to invest in new technology such as RFID, organisations have a numberof different investment criteria. These will reflect which type of organisation they arewith regard to attitude to innovation: the early adopters and mainstream users. 2

Early adopters - such as Wal-Mart, Tesco and Metro - are driven by a strong vision.They view RFID as a means to realising competitive advantage, and they are preparedto champion RFID against entrenched resistance. Being the first to implement RFIDthey are also willing to work with an immature and rapidly developing technology.

Mainstream users – who represent the majority of companies – have a different attitudetowards RFID technology. They want to minimise disruption to their existing processesand mitigate risks when deploying RFID. These companies will only implement RFIDwhen a number of conditions apply. Standards must be stable and clear. Solutionsshould be available to solve specific business problems, for example in the form of RFIDtags on IT assets such as laptops, or RFID readers on forklifts in warehouses.References and a proven track record should be widely available and include a provenreturn on investment model. Mainstream end-users do not expect to debug or refinesomebody else’s product. Instead, they want to buy ‘off-the-shelf’ RFID technologyfrom trusted partners.

This survey investigates whether the current market for UHF RFID technology meetsthese requirements from both early adopters and mainstream users.

This analysis combines three elements:• a literature study - Appendix A gives an overview of the sources• a survey questionnaire for RFID hardware vendors• interviews with end-users, hardware vendors and industry bodies.

A total of 20 manufacturers responded to the questionnaire in February and March2005. These manufacturers were selected based upon their ability to provide UHF-related RFID hardware for use in Europe, and included vendors of RFID chips, tags,readers and printers.

These manufacturers represent the majority of the European market for UHF RFIDtechnology, and together provide a good picture of the expected availability and trendsin Europe.

The follow-up interviews with end-users, hardware vendors and industry bodies wereconducted in the summer of 2005.

1.1 Research methodology

2 Our categorisation is mainly based on Geoffrey Moore’s classic book on the adoption of emerging technologies, “Crossingthe Chasm”, which analyses the different needs of early adopters and mainstream users.

This document assumes a basic understanding of RFID technologies, it terms andissues. An introduction to RFID and glossary have been included in the appendices.The authors recommend that readers familiarise themselves with these appendices ifthey are not well versed in RFID.

Within the body of the survey, the first section examines the findings of thequestionnaire and follow-up interviews. This includes current status, plans andexpectations of UHF RFID hardware in Europe. Next, we look at the implications forend-users of the current status, and provide a number of recommendations.

The results of this analysis are summarised in the conclusion.

Appendices of this survey include extensive background information. This includes:1. a glossary of RFID terms2. an introduction to RFID3. a comprehensive overview of the RFID standards4. current status of the European UHF regulations5. primer of the intellectual property issues6. a profile of the vendors and authors that participated in this survey.

1.2 Structure of thisdocument


2. Findings of the survey

This section takes a detailed look at the key findings of the survey. To analyse thestatus and maturity of the UHF RFID market in Europe, we have identified the followingelements:• vendor landscape• pricing and availability of hardware products• development of application specific solutions• status of RFID standards and regulations• intellectual property issues • industry and application focus • availability of technical expertise in the market.

We believe that these topics address the main concerns from end-users, and whencombined, provide a balanced picture of the current market for UHF RFID products inEurope.

The RFID vendor landscape is very fragmented and often confusing for the end-user.There are a lot of different players, each playing a role in the entire value chain from thepure silicon chip manufacturer to the hardware integrator or producer of forklift truckswith built-in UHF reader. As well as performing a core role, each may be a supplier ofindividual value-chain components, such as R&D capabilities, or design of a bespokesolution. The diagram below provides an overview of the RFID value chain, whichincludes RFID hardware vendors, as well as software vendors and service providers.

Figure 3: RFID Value Chain

End-users can easily get lost in this fragmented world. What tag fits my businesscase? What encapsulation do I need? What frequency and what protocol do I need?Or more generally, how do I select an RFID infrastructure which can offer a return on

2.1 The vendor landscape

investment in multiple business cases? It’s not easy to find your way in the RFIDvendor landscape, and in reality the hardware component is never the completesolution. It often only creates business value when the data generated by the RFIDinfrastructure is integrated into the business application.

Companies that took part in the survey

A total of twenty companies took part in this survey, ranging from small companies with100 per cent focus on RFID, to large multinationals whose RFID work accounts for onlya small percentage of their overall business.

The years that the companies were established ranged from 1935 to 2002, with theaverage year being 1981. The most recently established companies tended to bepurely RFID companies and were usually privately owned. 43 per cent of respondentswere entirely committed to RFID work and the average date that these companies werefounded is 1995. 36 per cent of the respondents were public organisations.

Figure 4: Product range of RFID companies

The survey was concerned mainly with four types of RFID hardware product:semiconductor chips, finished tags, interrogators (readers/writers) and RFID labelprinters. The vast majority of the respondents sold more than one type of RFIDhardware product: Twenty one per cent of respondents sold semiconductor chipsSeventy one per cent of respondents sold completed RFID tagsSixty one per cent of respondents sold interrogators Twenty one per cent of respondents sold RFID label printers.

Figure 5: RFID products by vendor


Perhaps unsurprisingly, the large majority of respondents’ RFID business (eighty-six percent) was conducted in North America and Europe. The following graph illustrates theaverage distribution of all the respondents who provided this information:

Figure6: Geographic revenue distribution

It should be noted that since this survey is primarily concerned with UHF RFIDtechnology for use within Europe, only companies who provide RFID hardware that issuitable for use within Europe were invited to take part.

Ninety-three per cent of respondents claimed to have local presence and helpdesksupport in Europe.

The following graph shows the breakdown of helpdesk support and local presence bygeographic region:

Figure 7: Local presence by region

Existing companies versus new players

When we look at the RFID hardware players, we see a big difference in their origins.Companies like Intermec, Symbol and Zebra have backgrounds in an existing set ofproduct lines, like barcode readers, handheld readers and label printers. For them,RFID is a new technology, which enhances their existing product set, and might welltake market share from that product set. Their big advantage is that they already havean existing organisational structure, suited for international roll-out and support ofinfrastructure like RFID.

At the opposite end of the scale to these ‘incumbents’ are more early-stage companies,like SAMSys, Alien Technology, and Power Paper, who have specialised in research anddevelopment of RFID products, and are eager to make the market move forward.These companies are now in serious investment mode, and are eager to accelerateprogress. They often lack the scope of large existing international organisations, but areactively setting up distribution channels through value-added resellers and systemintegrators.Based on cutting-edge research and development, they often provide the mostadvanced products in the market.

Pressure to accelerate RFID adoption in the marketplace is far greater for these youngentrepreneurial companies. They need a quick return on their investment and aretherefore much more eager to support customers in fine-tuning their solutions to theexact needs of a business and hence accelerate adoption. Often, they are willing towork on client sites and work closely with partners and end-users to prove the concept.

Application focus versus technology focus

Another distinguisher in the RFID hardware landscape is the difference in productdevelopment focus. There are a number of companies who focus on optimising thequality of their radio module, the ability to read multiple protocols and other technicalaspects. They spend a lot of time on R&D and due to this they are positioned ahead ofthe market from a technological point of view. Often they come out best in proof ofconcepts and pilots. These companies stand the best chance of reading tags whenthey need to, the products are often most easily integrated in a total solution, and ahigh level of technical support is readily available. At the other end are the companieswho focus on offering a wider range of products. They often include their readermodule in more application-specific product lines, thus concentrating more on thespecific needs of end-users. Such companies deliver products like tunnel readers,conveyor belt readers, forklift reader, etc. Of course such application-specific productsstill need integration with the regular business process, before they realise their fullbusiness potential.

A similar difference can be found at the tag supplier side. Some players focus on lowcost, high volume labels, hoping to deliver high revenue once the market develops.They provide a basic, generic tag at very affordable prices. However, when you want totag a difficult object, like a laptop which contains a lot of metal, end-users will need tofind a company that is willing to work closely with you to develop a bespoke solution.


However, it is a challenge for the end-user to distinguish one player from another, andnot be confused by adopting a generic view on the market that fails to meet the long-term requirements.

Semiconductor chip manufacturers

All of the companies that produce and sell semiconductor chips for use in RFID devicesanticipate expanding their RFID chip production capacity during 2005.

Every chip manufacturer that responded claimed that it will be mass-producing Gen2compliant chips before the end of 2005. Our opinion – based on latest information – isthat this will continue to accelerate in 2006.

Sixty-seven per cent of respondents claim to be producing UHF RFID chips that work inboth US and European frequency ranges. The remaining manufacturers are planning toproduce such a chip by Q4 2005.

As expected, the most-cited reason regarding the factors that are preventing the cost ofchips from falling further in today’s market is lack of demand. As all of the chipmanufacturers who responded claim to be expanding their production capacitysignificantly in the coming years, it can be assumed that they are predicting a largeincrease in demand. With more and more mandates expected from companies withsignificant economic clout, it seems in little doubt that RFID semiconductor chipproduction (especially in the UHF region) will proliferate in the near future.

Tag manufacturers

Whilst the majority of tag manufacturers have not experienced any microchip supplyproblems (and don’t envisage this being a problem in 2005), two major manufacturersindicated that supply had been a problem and may continue to be a problem in theshort term. This is hardly surprising considering the quantities that are being producedand all the reports that have been issued regarding shortfalls of RFID chips.

Fifty-six per cent of the tag manufacturers who responded indicated that there was nominimum order quantity for their tags. Of the remaining forty-four per cent, theminimum order quantity ranged from 10,000 to 50,000 with the average being just over20,000.

Figure 8: Minimum order size for tags

Thirty per cent of the tag manufacturers polled produced just UHF tags. The vastmajority of the respondents also produced HF tags, with a few producing tags for use inthe LF or microwave regions.

For global supply chains it would be very useful if one UHF RFID tag could operateeffectively in both frequency ranges allocated for use within the US and the lower rangeallocated for Europe. The tag manufacturers were asked whether they were planning tomarket these so-called ‘global’ UHF tags that would operate over the 860-960MHzrange. Sixty per cent were not planning to produce these. Of the remaining forty percent, twenty per cent believed they would be selling such a tag but not until 2006, tenper cent said by H2 2005 and ten per cent claimed to be already selling such a tag.

Of the forty per cent of respondents who are planning on selling such a tag, opinion isdivided as to whether or not they will cost more than a ‘standard’ tag, designed for usespecifically within Europe. The average read range of such a ‘global’ UHF tags will beslightly less compared with a standard UHF tags for only one region.

Reader Manufacturers

A large number of reader manufacturers produce both fixed and handheld RFIDreaders, although some reader manufacturers focus on plain fixed readers. Howeverthere are significantly more models of fixed readers than there are handhelds. This isillustrated in the following graph:

Figure 10: Fixed and handheld readers

Figure 9: Global UHF tags


Availability of UHF handhelds is a problem in the current market. Most companies areworking on a Gen2 product, but there’s currently a clear shortage of handheld readers,regardless of protocol.

Memberships

All participants were asked whether they were members of various standards bodies,namely EPCglobal, ETSI and ISO/IEC3.

Seventy-one per cent claimed to be members of EPCglobal, twenty-one per centmembers of ETSI and fifty per cent members of ISO/IEC as illustrated in the followinggraph:

Figure 11: Membership of standardisation bodies

Responsibility for the end-to-end solution

All hardware vendors responded unanimously to the topic of ownership. RFID hardwarevendors recognise the fact that their products are only a spoke in the wheel. It is thecomposition of the right building blocks, and integrating the RFID infrastructure intoexisting business processes that will generate business value. All hardware vendorssee it as a system integrator’s role to take ownership of building the total businesssolution. It is the systems integrator who will help the end-user to find his way in thefragmented world of RFID hardware, and ensure ROI.

Or as an important RFID hardware vendor stated it:

‘It’s absolutely the role of the system integrator to take the lead. Theywill take that natural role, once there’s enough money to be made forthem.’

Or as another vendor states it:

‘The end-user would need to be more clear about on who they are relying on providing the technology. It would be wrong to buy hardware stuff yourselves, and then buy integrator consultancy to apply this in a beneficial way, possibly resulting in the choice of the wrong equipment. Find a partner who can help you compose the right end-to-end solution for the right business challenge.’

With the ratification of the Gen2 standard in December 2004, there has been a frenzy ofactivity in order to develop and produce Gen2 tags and readers as soon as possible.

While waiting for the Gen2 products to come to market, European companies thatwanted to start pilots or implementations with UHF technology had to choose from theproducts currently available. This means either opting for technology that is based onthe EPC Class 1 Gen 1 standard, or on the ISO 18000-6 standard. See diagrambelow:

Figure 12: UHF RFID product availability

These standards have very different backgrounds. The EPC Class 1 Gen1 standard isthe initial standard that was developed by the Auto-ID Centre, and its successorEPCglobal. Vendors that supply products for this standard are the companies that haveoften been working with the Auto-ID Centre since its start in 1999, and includecompanies such as Alien Technology and Symbol (previously Matrics). Most UScompanies implementing UHF technology use this technology, including Wal-Mart. InEurope, Tesco is one of the companies implementing products based on this standard.

The ISO 18000-6 standard reflects an existing ISO standard for the air interfacebetween UHF tags and readers. Vendors that provide products based on this standardare often more established players, such as Intermec. One of the most prominent usersof the ISO 18000-6 standard is Metro in Germany.

During the course of 2005 and early 2006, products based on these two standards willlargely be superseded by products based on Gen2 standard. The road to these Gen2products is illustrated below (source: Alien Technology):

Figure 13: The road to Gen2 products

A more detailed primer on these standards may be found in the appendices

2.2 Availability and pricingof hardware products


TagsThere has been considerable talk about the lack of availability of tags in large quantities.The questionnaire enquired about this. It is interesting to note that several tag vendorshad experienced difficulties in obtaining microchips during 2004, and were expectingsome problems during 2005.

Although different chip manufacturers were able to demonstrate Gen2 chips in April 2005,it has taken some time to get to the stage of high-quantity production levels. In the lastquarter of 2005 LogicaCMG expect a significant uptake in the amount of Gen2 chipsbeing shipped to tag manufacturers. For example, chip manufacturer Impinj hasindicated that it expects to deliver 50 Million Gen 2 chips before the end of 2005.

It is expected that the costs of Gen2 tags will initially be higher than current Gen1 tags.This is due, in part, to the extra complexity of the chip and its requirement for more silicon.The cost of silicon is a major contributor to the cost of a tag. In order for costs to drop,demand needs to increase and the size of chips decrease. It is likely that Gen2 tags will initially retail for twenty to forty cents (€) for large quantities.However, it is expected that some suppliers may actually sell their Gen2 tags below cost,in an attempt to grab an early market share.

The performance of tags will continue to improve as tag manufacturers become moresophisticated in designing tags for specific applications. Tags will always be ‘pre-detuned’ so that when used on certain materials the tag will show optimumperformance.

ReadersNearly every reader supplier is aiming to deliver an off-the-shelf product that can act asa baseline for future innovations. As of 2006, Gen2 is really a starting point for futurereader development, and product lines seem to be aligned across suppliers.

Usually, these new readers will use ‘soft radio‘ technology: firmware containingalgorithms that are executed by digital signal processors (DSPs). This is opposed tothe older readers that are based on electronics with a significant quantity of discretecomponents that define the protocol capabilities of the reader. These readers cannotbe easily upgraded because an upgrade effectively means replacing the internal circuitryin the reader.

Nearly all of the next generation of readers are:• able to be updated by software to support emerging standards • equipped with a self-diagnostic system, and• can be rebooted remotely.

Compatible, partially compliant or fully compliant to Gen2?

In today’s emerging marketplace where the race for market leadership is wide open,hardware vendors are rushing to develop products that are Gen2 compliant. But Gen2is a complex standard with many different features; so, being compliant to Gen2 is anot clear cut. Tags and readers can be compatible, compliant with some or most Gen2features, or they can be fully compliant.

The current activities by reader vendors remind us of the movie The Cannonball Run. Inthis movie a wide variety of eccentric competitors participate in a wild and illegal carrace to determine who can cross the United States first. In the race to be the first tomarket with Gen2 products, marketing departments of hardware vendors may beinclined to push the limits. They might be tempted to announce products that arecompliant with Gen2 for products that incorporate some or many of the Gen2 features.It may be unclear to end-users whether these products contain all the features of theGen2 specification.

This is a risky trend. What the market needs is transparency rather than confusion.The worst thing that can happen is that end-users get confused about the productofferings, and decide to wait until the dust settles before adopting the technology,causing market inertia.

To address this problem EPCglobal has recently launched the EPCglobal HardwareCertification Program. The main purpose of this program is to provide end-users theconfidence that products are really compliant with EPCglobal standards, includingGen2. Initially the program will encompass products such as chips, readers, readermodules and printers with embedded reader modules. Products that pass rigoroustesting by an independent laboratory will receive an EPCglobal Hardware CertificationMark (see below). Each Mark includes an 18-digit global Service Relation Number(GSRN) that is unique to that product and the exact test that is successfully completed.In the near future EPCglobal plans to enhance the program with interoperability testingto indicate that different products can also successfully work together.

Figure 14: EPCglobal Hardware Certification Mark

Based on our survey, we believe it likely that during the remainder of 2005, most of theUHF RFID readers that will come to market will be compliant to the Gen2 standard, butwill not yet incorporate all of the elements of Gen2. But these readers will be firmware-upgradeable, so additional enhancements to make the readers fully compliant withGen2 can be implemented with little effort.

One of the difficulties for the reader manufacturers in developing Gen2-compliantreaders so far has been the lack of availability of Gen2-compliant tags. Currentdevelopments in Gen2 reader technology are based on using prototypes of Gen2-compatible tags.

‘What we need is tag availability to get through in larger quantities now, sothat people can get going with some pilots and actually start to do someproper testing.’

r


But do we really need to wait for Gen2-compliant equipment? The answer is ‘no’, aslong as the RFID application is a closed-loop. The basic philosophy of the EPC is toallow users of the technology to access the information associated with the taganywhere, any time. Because this information can be stored anywhere, an openstandard is needed. When this is not the case – when all information is created andaccessed from within the enterprise – there is no need to wait for Gen2, becauseexisting Generation 1 or ISO 18000-6 tags will be sufficient.

Upgrading the existing products

With the rapid technical developments, an important issue for companies starting UHFpilots and implementations is the transition for products based on the existingstandards to the new European regulations and Gen2 standard. For example, canreaders be upgraded through a so-called firmware upgrade? Or is it necessary tochange some of the hardware components? This is a solution that is clearly morecostly. Our questionnaire indicates a split between vendors who believe they can do afirmware upgrade to comply with emerging standards, and companies that need tochange hardware components for this.

Some hardware vendors are sceptical about the possibilities of making an existingreader fully compliant to Gen2 standard based on a firmware upgrade:

We take a different perspective to many of our competitors. We believethat it is unlikely that you can take to current Gen1 reader and make itfully compliant to Gen2. There are just too many things, such as dense-reader-mode, multi reader modes, sessions, modulation, and symmetry,which means that we don’t believe that you can do that only with asoftware upgrade.

We believe that what will happen is that most Gen1 readers will beupgradeable to be compatible with Gen2, so that they do some if notmost of the areas of Gen2, but we believe that you actually have to builda new reader in order to be fully compliant with Gen2.

Our perspective is that there are too many people claiming that theyhave Gen2 readers. We do not believe that these readers will be fullyGen2 compliant, because there were probably insufficient chips, tags ortime available to do all the things that are in the Gen2 specification. Sowe would be very surprised if anyone could turn a Gen1 reader into aGen2 reader and be fully compliant

Reader prices

Based on the results of the questionnaire, the average price of a UHF reader was justover €2000. Some of the readers were sold as packages with antennas included, butthe majority required antennas to be bought separately. The price of these antennae isaround €250-300, and a reader is typically connected with up to four antennas.

One of the leading reader manufacturers indicated that a major ‘price point’ will be whenthe price of a reader drops to €1500. They also believe that, with sufficient marketadoption the price of a reader could fall to as low as €1000. How long it may take to reachthis point is hard to judge and is based heavily on the rate of adoption.

Prices of UHF RFID readers have dropped in the US over the last twelve months, but theprices in Europe have dropped very little, if at all. This is probably due in part to therelatively new ETSI 302-208 regulations and the time and effort that manufacturers havehad to invest in producing a reader that is compliant with these regulations. It is apparent that there is a wider range of readers in the US than there is in Europe. Thisis partly due to the fact that many of the large RFID suppliers are US based. LogicaCMGbelieve that with the introduction of new standards in the UHF range, adoption of RFIDwill increase in Europe. This will in turn lead to a larger amount of RFID hardware beingneeded and eventually to a greater variety of equipment being available.

Printers

Five suppliers provided costs for their UHF RFID printer/encoders. These were: AveryDennison, Datamax, Intermec, Printronix and Zebra.

When the questionnaire was commissioned, the average price for a printer, based on theinformation received, was just over €4300, ranging from €2995 to €8990 depending onthe supplier and functionality available. The price of RFID printers has remainedreasonably static, and this seems set to continue until economies of scale are realisedthrough widespread adoption.

As one would expect, all RFID printer manufacturers aim to supply what the marketdemands. For the moment this seems to be robust, metal-cased printers. It may be thatin the future, less robust, cheaper printers will be in demand and plastic-cased printersmay appear in the marketplace.

Whilst most RFID printer manufacturers claim to be able to ship relatively small quantities(<5) within a short timeframe (e.g. several weeks), it seems that they are often built toorder and are not generally held in stock. This means that suppliers are reliant onforecasting demand which is, of course, prone to inaccuracies, and can result in leadtimes of up to two months.

RFID will never be a technology that is capable of providing a universal ‘plug-and-play’solution, because it remains dependent on its physical environment; one warehousemay look similar to another, but if it has metal elements in the concrete floor, this willaffect the performance of RFID technology.

This does not detract from the market need for off-the-shelf solutions that addressspecific business problems. LogicaCMG refers to these as “application-specificsolutions”, which are solutions that integrate hardware and software to optimise theRFID performance in a specific situation, for example on forklift trucks in a warehouse,or lap-top computers in an office, or on baggage in the aviation industry. Someexcellent examples of application-specific RFID solutions can already be found in theHigh-Frequency (HF) range. In this market, which is more mature than the UHF market,

2.3 Development ofapplication-specificsolutions


different vendors provide integrated solutions for libraries to track books with RFID.These solutions combine tags, readers and software applications. The availability ofthese proven solutions makes RFID a viable option for mainstream users.

A first step in this evolution will be the development of hardware products that combineoptimal tag and reader design with the appropriate encapsulation of the tag andperipheral equipment, such as directional sensors.

Our survey indicates that the RFID hardware vendors recognise the need forapplication-specific solutions, but take different approaches towards developing them.Some vendors focus on their core competence in designing RFID readers and tags, andlet their partners develop integrated solutions. Others adopt a more proactive approachand take control of the integrated solution:

‘If you take a specific example like airline baggage, we have a solution that wehave been developing at a major airport for the last three years, which includes aspecial tunnel reader for airline baggage and special tags. I would expect thissolution to be rolled out within the next year or so.’

RFID hardware vendor

The current UHF RFID marketplace is at an early stage, and application-specificsolutions are simply not yet available. Based on our survey we expect this to changeover the next 1-2 years, as the experience of the current RFID pilots andimplementations are translated into integrated solutions. Hardware vendors are workingwith customers and partners on many innovations in tag encapsulation and peripheralequipment:

‘A lot of the specialised applications that we currently see are coming out interms of the peripherals and in terms of encapsulation of the tags.

For encapsulation of tags we are working with partners that are striving to meetthe requirements of reusable plastic totes and crates, as well as special close-to-metal tags. You can see a whole variety of close-to-metal tags currently beingdeveloped for applications where the cost of a tag is less of an issue than it is inthe retail supply chain.

So just because people have not heard of things, it doesn’t mean that solutionsaren’t being created. But obviously they are at the one or two pilot stage asopposed to the packaged solutions, ready-for-roll-out stage.’

RFID hardware vendor

Clearly the market is going through a rapid innovation and learning process that willresult in application-specific RFID solutions. Some of the high-priority products thatLogicaCMG expect to come to market over the next twelve months include:

• Integrated portal solutions for warehouse operations. These portals may include RFID readers with directional sensors, and may be optimised for dense reader

environments and to provide the level of robustness required in a warehouse• Forklift readers for warehouse operations• Hand-held readers, as many processes still require manual reading in certain

processes• Tunnel readers for the tracking of baggage in the aviation industry• Close-to-metal tags, to optimise the performance of UHF RFID on metal objects,

such as roll cages and lap-top computers• Plastic tote tags, tags that can be easily encapsulated in plastic totes and crates• Bagage tags, RFID labels that are designed and optimised for the use in aviation

luggage.

There is no doubt that the uptake in UHF RFID technology throughout Europe has beendue to the updated European regulations and ratification of the Gen2 standard, in 2004.Clearly, this has been a huge step forward for UHF technology in Europe, but it is criticalto understand whether these standards provide adequate features required for large-scale RFID applications. Important issues include the read range between reader andtag, the speed at which readers can read tags (the data rate) and the way in whichmany different RFID readers operate in a close environment such as a warehouse. Wediscussed these topics with the leading RIFD hardware vendors, and identified anumber of issues.

More detailed descriptions of the new European regulations and the Gen2 standard canbe found in the appendices.

First we look at how the European regulations and the EPCglobal Gen2 standard relateto each other. This is illustrated in the diagram below. The EPCglobal Gen2 standardaims to create a global standard for the way in which UHF tags and readerscommunicate with each other (the so-called air interface). This standard is part of thelarger EPCglobal efforts to create global RFID standards, particularly for low-cost tags insupply chain applications. The new European regulations specify what frequencyspectrum may by used by RFID readers within European countries, and specificguidelines how readers may operate within this spectrum, for example the power thatcan be used to transmit a radio signal.

2.4 Status of RFIDstandards and regulations


Figure 15: Comparison of RFID standards

The new European regulations are developed by ETSI, the EuropeanTelecommunications Standards Institute, and are known as ETSI EN 302-208. Beforethis new standard can come fully into effect, individual countries must pass lawsadopting the recommendations. This harmonisation process has largely finished, asmost European countries have adopted the new regulations, or are expected to do sobefore the end of 2005. France, Italy, Spain and Turkey have indicated difficulties withthe new regulations because the allocated spectrum is already in use for otherapplications. It is expected that over time these issues will be resolved, and that end-users in these countries will be able to use UHF RFID with a so-called site-license.

What are some of the important features of the new ETSI EN 302-208 regulations? Thegood news is that readers may now use up to 2 Watts of power in Europe, comparedto half a watt under the old regulations. This enables a read range which is roughlysimilar to that established in the United States. In terms of frequency spectrum, ETSIEN 302-208 provides a frequency range from 865 to 868 MHz, a total bandwidth of 3MHz, however only in a range of 2 MHz within this bandwidth can the readers operateat 2 watts. Compared to the US, which has a bandwidth of 26 MHz, the bandwidthavailable in Europe remains fairly limited. In order to permit optimum use of the availablespectrum, ETSI EN 302-208 divided the bandwidth into 15 channels, each of 200 KHz.

To enable readers in the same building to operate on adjacent channels, the regulationsrequire that readers use only one channel at a time and conform to something called a‘spectral mask’, essentially the amount a broadcast can bleed outside the channel. Inthe United States readers can emit radio waves within plus or minus 3 MHz of thefrequency of the channel they supposed to be using. This wider range in the US allowsthe reader to send more information more quickly.

The following table summarises the different regulations (from RFID Journal – New ETSIrules move Forward, November 2004)

Table 1: European versus US regulations

Although the new European regulations are seen as a major improvement over the oldregulations, many hardware vendors remain critical about the implications of thespectral masks and the limited bandwidth. These topics affect the speed at whichreaders can receive and process the data from tags, so essentially the number of tagsthat can be read simultaneously.

Despite these concerns the hardware vendors are committed to develop products thatcomply with the new regulations, and they are convinced that, with advanced radioengineering, many issues can be resolved:

‘There is a genuine interest to make the standard work and there are things wecan do to reduce the threshold and to make the spectral mask easier to complywith.’

RFID Hardware Vendor

How far these hardware vendors can push the performance of the new UHF productsin Europe remains to be seen. Many believe that within the next six months there willproducts on the market that are fully compliant with both the ETSI EN 302-208regulations and EPCglobal Gen2 standard. Only then will a good indication of the exactperformance will become available.

Despite the confidence in advanced engineering solutions, some hardware vendorsexpressed a desire for further changes to the regulations that would put Europe on apar with the rest of the world:


‘At the end of the day, Europe is the only place in the world which believes thateverything can work with 2 MHz bandwidth and 10 channels. Remember thatthe United States have 26 MHz bandwidth, Hong Kong has got 5 MHz andAustralia 8 MHz. As you are getting back to 2 or 3 MHz you are putting thetechnology under a lot of pressure.

So my view is that Europe needs to open up more bandwidth, but that’s something we can deal with over time.’


Other hardware vendors we interviewed were more reticent about regulatory changes,as they feel that what the market needs right now is stability and clarity.

In 2005, ETSI’s Task Group 34, which wrote the new regulations, started to work on acode of practice for RFID at UHF4. The group will use practical tests with end-users todetermine how the performance of UHF RFID technology in Europe can be optimised.

In summary, RFID hardware vendors are currently working very hard on thedevelopment of products that are fully compliant with the new European regulations andthe EPCglobal Gen2 standard. The performance of products that come to market overthe next six months is likely to meet the requirements of many business scenarios. Dueto the inherent issues with the European regulations, these products may not be aviable option for all applications that require a very high number of both readers andtags in close proximity. But as hardware vendors become more sophisticated inapplying advanced radio engineering solutions to address some of the issues,performance of European RFID products will continue to improve over the next few years.

The products that are based on the EPCglobal Class 1 Generation 1 were designedfrom scratch and are provided to the market on a royalty-free basis. But whenEPCglobal was looking to improve the performance with the Gen2 standard, differenthardware vendors contributed existing intellectual property. EPCglobal had alwaysaimed for a royalty-free standard, and initially underestimated the implications of addingexisting intellectual property to the new standard. The result has been that when theGen2 standard was ratified in 2004, important intellectual property issues had not beenresolved. For a background explanation of these issues, please refer to theappendices.

Today, this remains an open issue, and with the first Gen2 products coming to market,it becomes more and more urgent to resolve it.

The good news is that the key hardware vendors have recognised the urgency of thisproblem, and have been able to achieve some important breakthroughs. It is likely that

2.5 Intellectual propertyissues

the early adopters, such as Wal-Mart and the US Department of Defence have played arole in this process by putting significant pressure on the leading hardware vendors.

Most – but not all – of the hardware vendors that participated in this survey have agreedto the licensing program by Intermec, one of the vendors that contributed significantintellectual property to the Gen2 standard. A number of other vendors have taken aninitiative that seems to point to the direction of the final resolution of this issue, bycreating an IP pool. Today, it is not completely defined how the IP pool will work inpractice, but it is clearly a sensible way to move forward.

Most importantly, Intermec and Symbol – the companies that had been in a high profilelegal battle about the licensing of mutual intellectual property – have recently reached asettlement. As part of this agreement Symbol has also signed the Intermec licensingprogram.

As a result of the recent developments we no longer expect the IP issues to have amajor impact on RFID adoption by end-users. Until recent developments, this issuecontributed to a perception of the RFID market as being immature, but this has nowchanged. Nevertheless, LogicaCMG recommends end-users review carefully theposition of hardware vendors on the IP isseue before making purchasing decisions.

We detected a remarkable shift in industry focus among European RFID hardwarevendors over the last six-twelve months. Until about a year ago, most vendors weretargeting the open supply chain applications in the retail industry, hoping to capitalise onthe potential high volume of RFID tags and readers promised in these applications.However, about six-twelve months ago many vendors started to broaden their focus,and targeted opportunities in other market segments. Target areas identified bydifferent hardware vendors include:

• Retail and consumer products• Logistics • Automotive • Aerospace• Healthcare • Government and defence.

In terms of application focus we have identified an important shift from open supplychain applications to asset-tracking and closed-loop applications.

It appears that, over the last twelve months, hardware vendors have started torecognise that the European RFID market is very different from the market in the UnitedStates:

‘I think there are two ways to look at Europe compared to the US. First there isa more balanced cross-industry approach to RFID in Europe compared to theUS. In the US it is basically Wal-Mart and the Department of Defence, whichcorresponds to retail and government; whereas in Europe I think you see moreindustries involved. So it’s a lesser percentage in retail.

2.6 Industry andapplication focus


The second thing you see is that in the United States focus is on supply chainvisibility, whereas in Europe it is much more balanced between asset trackingand supply-chain visibility.’

RFID hardware vendor.We believe there may be different reasons for this shift in industry focus. The first is thatthe European retail industry has not developed over the last year as many hadexpected, with many of the retailers adopting a ‘wait-and-see’ approach. The secondreason is that leading companies in other industries have started to take an interest inUHF RFID technology, because of the new ETSI regulations and EPCglobal Gen2standard. These changes have made UHF RFID technology a viable option for theseindustries, whereas in the past it simply was not.

Hardware vendors agree that in the European market there is limited technical expertisesurrounding UHF RFID technology. This is not surprising, given the immaturity of themarket.

Companies that implement and integrate the different RFID components for a specificcustomer require a deep understanding of the capabilities of the technology. Systemintegrators and hardware resellers need to invest a significant amount of time to keepup with the rapid pace of developments, in order to best address customer needs.

We perceive the entire industry is going through a very rapid learning curve, acceleratedby formal and informal knowledge generation, and an increasing number of pilots andimplementations.

For end-users this means they have to be very selective in choosing a systemintegration partner for RFID pilots and implementations. End-users should look carefullyat the experience, skills, partnerships, as well as the commitment by a systemintegrator to develop its knowledge about RFID technology.

Today, UHF technology is an emerging technology. But because of the large businessvalue that the technology promises to bring to users, large investment is being made inresearch and development to take the technology forward. These investments aremade through corporate funding at major international companies, such as Philips,Texas Instruments and Siemens, and by financial investors, who are funding innovativeearly stage companies such as Alien Technology, SAMsys and Power Paper. Clearly,there is a sound belief in the future prospects of UHF technology.

We already discussed some areas where a lot of the current developments are focused:• Development of the next generation of Gen2-compliant readers that provides a

baseline for future upgrades. Readers that are coming to market in the next twelve months are more intelligent and better networked. These will be:

• able to be software upgraded to support emerging standards • equipped with a self-diagnostic system and• can be rebooted remotely

• Development of tags and readers that are optimized for the European regulations, for example by intelligent synchronization and other advanced engineering technologies

2.7 Availability of technicalexpertise in market

2.8 Trend in technicaldevelopments

• Developments around application-specific solutions, both at the tag level, through application-specific tuning, as well as in encapsulation of tags and peripherals.

One of the comments of a hardware vendor about the fact that RFID readers aregetting more intelligent and networked:

‘When you look at current reader technology, we’re looking to move fromproducing readers to providing an enterprise reader platform; anarchitecture. Readers are becoming networked devices that are going tosit on a network that you can deploy in tens of thousands and people arerecognizing that you need computing capability on them. Our next set ofreaders will have Windows CE or Linux and they will have RFID controllersoftware inside. So the readers become truly enterprise networkeddevices. With the current reader technology, it’s evolving much more tolook like something like a Cisco network device’


If we look further into the future there is little doubt that major technical innovations willmake the use of RFID technology ubiquitous. The boundaries between passive RFID,active RFID and sensors will continue to blur. Companies will have an intelligent edge oftheir network that provides real-time information on the status and location of physicalobjects.

A number of innovations will significantly reduce the prices of RFID tags and readers inthe future, including new, enhanced manufacturing practices and potentially polymerchips. Other innovations promise to provide enhanced intelligence and functionality, forexample closer integration of RFID and sensor technology:

‘If you look at future reader technology, that’s when you get into thewhole area of adaptive readers, very intelligent networked deviceslinking into sensors. We are already seeing things like temperature tags,long-range passive tags being integrated with reader technology, andthe sort of R&D that we see at readers at the moment in terms of thingslike directionality, synchronization, I think is really very exciting.’


There is no doubt that a very exciting future lies ahead for RFID hardware vendors andend-users alike.


3. Implications for end-usersBased on the previous analysis on the status and maturity of the UHF RFID market, wenow aim to answer the second question of this survey:

Is UHF RFID technology ready to be adopted by European end- users - both earlyadopters and mainstream users?

LogicaCMG believes that in the next twelve months, the maturity of UHF RFIDtechnology is no longer an obstacle for investments in large-scale RFIDimplementations. In other words, with Gen2-compliant products coming to market inthe next twelve months, UHF RFID technology in Europe is ready to be adopted formany – but not all – applications.

It is true that performance of UHF RFID technology will continue to improve in thecoming years, and that prices are likely to drop significantly. But with the new Europeanregulations and the creation of the Gen2 standard, the market has clearly found anenvironment that is ready for a wide range of business scenarios. And it is veryimportant that the RFID readers that will come to market in the next six-twelve arefirmware upgradable. This means that end-users are guaranteed that the readers canbe upgraded at low cost to support future functionality.

But end-users should also not expect that UHF RFID technology is ready to track everyobject in the most difficult environments. We believe end-users are best off when theystart at the realistic end of the landscape, and find the simpler, achievable scenariosthat make good business sense and provide returns. Gen2 has given a clear directionto the technology. Future improvements in technology – and longer term the potentialmodification of regulations – will only strengthen this direction and make it possible forUHF RFID technology to deal with increasingly complex scenarios.

The early adopter perspective

Early adopters of an emerging technology such as RFID are normally driven by a strongvision. These companies view RFID as a means to realising competitive advantage, andbeing the first to implement RFID they should also be willing to work with an immaturetechnology.

We believe that if your company wants to use to RFID create some kind of competitiveadvantage, the time is now to invest and work jointly with hardware vendors andsystem integrators.

The interviews with hardware vendors have clearly illustrated that these vendors areactively developing solutions based on the large number of pilot projects they areinvolved in. With RFID progressing at such a rapid pace, more and more provenscenarios and application-specific hardware product will become available in themarket. But true competitive advantage can only be gained by those companiesprepared to search for the yet unknown solution. So end-users that have the ambitionto be an early adopter must act quickly and be prepared to do some joint researchwork to find the fit-for- purpose solution for their business case.

The mainstream user perspective

Mainstream users, who represent the majority of companies, have a differentperspective from the early adopters. These companies require proven solutions basedon ‘off-the-shelf’ RFID technology from reliable partners. These companies normallydesire an ROI model based on a reference project in a similar situation. This is hardly away to achieve competitive advantage, but it does create business benefits withminimal risks.

If your company decides to be a mainstream user and only wants to implement aproven solution, we do not recommend you wait until these solutions become availablein the market. Instead, we strongly recommend you start by experimenting today, soyou’re ready for implementation when the solution is proven.

The reason to start experimenting with RFID today is simple: RFID is only an enablingtechnology and the real benefits from RFID will come when you understand the fullimpact on your business processes. This knowledge takes time to develop, and cannotbe copied easily from the early adopters. As one hardware vendor stated:

‘The early adopters have recognised where they can obtain the ROI. They’refocused on building the solution and the early roll out of that solution. Thepeople who have chosen to follow I think are a bit blind to what’s going on,because people who are developing those solutions have no incentive toshare to share what they’ve learned .

This is very much an industry where you learn by doing, so you’ve got to goout and make your own luck.’

Recommendations to end-users:

Whilst we accept that Gen2 is the building block which can take us further, we need tosee how we get to implementation. The fact is that companies still need a good deal ofknowledge in order to get there. Consequently, you need to develop an implementationstrategy that on one hand gives you the right hardware, software and integrationcomponents to fulfil this business case; and on the other hand gives you aninfrastructure and an integration approach that allows you to re-use the investment inother short- longer-term business cases and in changed business processes.

System integrators are the natural choice as a strategic partner in this process. Butgiven the limited technical experience in the market place, end-users should be veryselective in choosing their partner. The integrator with a long-term view on where yourmarket and business are heading — and with a strong track record in implementing andintegrating RFID based solutions — can be the natural and vendor neutral partner in allstages of this process.


Based on our experience, LogicaCMG suggests the following concrete steps toaddress the opportunities provided by RFID:

1. Understand the fundamental features of RFID and what these mean for your business. For example, what does it mean for processes such as manufacturing, logistics, distribution and in-store operations if objects can be tracked with no line ofsight and no delay in the process?

2. Develop a vision of the long-term value of RFID for your company and industry, providing a framework for the organisation to make investment decisions.

3. Involve senior management – especially if the long-term impact is high. 4. Decide if your company wants to be an early adopter or a follower. Do you want to

use RFID to create a competitive advantage, or just to deliver business benefits based on a proven solution?

5. Work with a strategic partner that can help you navigate the complex RFID landscape and take responsibility for the end-to-end solution.

6. Design and create the funding for a corporate RFID architecture. This will provide the infrastructure that enables your company to deploy new applications quickly andachieve seamless integration with your back-office systems.

7. For the short term: identify quick wins that contribute to your key business drivers and go for rapid experimentation. Start the learning process as quickly as possible.

4. Conclusions

RFID is one of the most difficult technologies for companies to assess today. With thissurvey, it has been LogicaCMG’s goal to provide assistance to companies that arefacing important investment decisions. We focused on two main questions:

What is the status and maturity of UHF RFID technology in Europe in 2005?Is UHF RFID technology ready to be adopted by European end-users - both earlyadopters and mainstream users?

Status and maturity of UHF RFID technology in Europe in 2005

LogicaCMG concludes that 2005 is a very exciting period for UHF RFID technology withsignificant progress in the status of the technology. In 2005 the market for UHF RFID inEurope is quickly becoming mature. Where 2004 was the year of breakthroughdevelopments in standards and regulations, 2005 will be remembered as the year ofproduct development. During 2005 a critical range of products is being developed;these provide the baseline for future developments. The performance of UHF RFIDtechnology will continue to improve in the coming years, but the products that come tomarket in the next six-twelve months are future-proof, and more and more addressingspecific business problems.

This means that the maturity of UHF RFID technology is no longer an obstacle forinvestments in many RFID applications.

With the new European regulations and the creation of the Gen2 standard, the markethas clearly found an environment that is ready for a wide range of UHF RFIDapplications. Our research shows the significant progress that has been made, but alsothe issues that remain to be resolved. In particular, the European regulations stillinclude some challenging areas, and the most difficult implementation scenarios requirehard work from all parties involved. Let’s look at the findings in more detail:

• Availability of products and solutions: By the end of 2005 RFID tags and readers will be available in the European market and these will be fully compliant with the main standards, the ETSI EN 302-208 regulations and EPCglobal Gen2 standard. This next generation of readers also provides a baseline for future enhancements, as these readers will have the ability to be updated by software to support emergingstandards. This means that end-users are guaranteed that the readers can be upgraded at low cost to support future functionality.

• Price Levels: Over the next three to five years, prices for UHF tags and readers arelikely to come down sixty-seventy per cent, with the price of an RFID reader at less then €1000. Higher volumes will mainly drive these reductions. In the next twelve months we do not anticipate major price reductions.

• Application-specific solutions: In the first half of 2006 we expect the introduction of the first application-specific products based on the new standards, including ‘off-the-shelf’ RFID tags for metal objects and plastic crates, and integrated reader portals, forklift readers and handheld readers.

4.1 Status and maturity ofUHF RFID technology inEurope in 2005


• Status of standards and regulations: The new European regulations are a major step forward but still pose challenges for implementation scenarios that require high volumes of RFID readers and tags in close proximity. Hardware vendors will need time to optimise their products to address those challenges.

• Market focus: Hardware vendors are broadening their industry focus from retail to near-term opportunities in other markets, including logistics, aerospace, healthcare, automotive and defence.

• The vendor landscape: The current vendor landscape is complex for end-users. This is due to the variety of RFID components required in an implementation, the different vendor strategies, the lack of clear market leaders and competition between incumbent and start-up vendors. But all hardware vendors agree that system integrators are the natural choice to take ownership of the integrated solution for the customer.

• Intellectual property Issues: Issues around the intellectual property for the Gen2 standard are still not completely resolved, but the recent creation of an IP Pool and the agreement between Intermec and Symbol are clearly a huge step in the right direction. As a result of these recent developments, we do not expect the IP issue to have a major impact on RFID adoption by end-users.

• Availability of technical expertise: Hardware vendors agree that in the European market there is limited technical expertise about UHF RFID technology. This is not surprising, given the early stage of the market. We do envisage the entire industry going along a very rapid learning curve, accelerated by both formal and informal knowledge generation, and an increasing number of pilots and implementations.

• Technology developments: Hardware vendors are making significant investments in research & development. In three to five years this will result in RFID tags and readers that are cheaper, provide better performance, and incorporate more intelligence. Readers will truly become intelligent enterprise network devices, and both tags and readers will be further optimised for the European regulations.

So where does the current status of UHF technology leave the end-user faced withimportant investment decisions? We conclude the following:

• With Gen2 products coming to market in the next twelve months, UHF RFID technology in Europe is ready to be adopted for many – but not yet all - applications. We recommend that users start with realistic applications and then build on those as the technology become more mature.

• If your company wants to be an early adopter and use RFID to create some kind of competitive advantage, the time is right to invest and work jointly with hardware vendors and system integrators. Many companies are already conducting RFID pilots, making for more proven scenarios and application-specific hardware becoming available in market. But true competitive advantage can only be gained by those prepared to search for the yet unknown solution.

4.2 Is UHF RFIDtechnology ready to beadopted by European end-users?

• If your company wants to be a mainstream user and only implement a proven solution, we recommend you start by experimenting now, so you’re ready for implementation when the solution is proven. RFID is only an enabling technology and the real benefits from RFID will come when you understand the impact on your business processes. This knowledge takes time to develop, and is difficult to copy from the early adopters.

Recommendations to end-users:

Based on our experience and the findings of this survey, LogicaCMG suggests thefollowing concrete steps to address the opportunities provided by RFID:

• Understand the fundamental features of RFID and what these mean for your business. Based on this understanding a vision of the long-term value of RFID should be developed, which provides a framework for the organisation to make investment decisions.

• Involve senior management – especially if the long-term impact of RFID is high – and decide if your company wants to be an early adopter or a follower. Do you wantto use RFID to create a competitive advantage, or just to deliver business benefits based on a proven solution?

• Work with a strategic partner that can help you navigate the complex RFID landscape and take responsibility for the end-to-end solution. The hardware vendors agree that the system integrators are the natural choice in this process. Given the limited technical expertise in the marketplace, end-users need to be very selective in choosing a strategic partner.

• Design and create the funding for a corporate RFID architecture. This will provide the infrastructure that enables your company to deploy new applications quickly andachieve seamless integration with your back-office systems.

• For the short term: identify quick wins that contribute to your key business drivers and go for rapid experimentation. Start the learning process as quickly as possible.

We already see companies in many industries seizing the opportunity this provides. Thequestion is: will your company do the same?


Appendix A: Sources

“New ETSI RFID Rules Move Forward” – Mark Roberti, RFID Journal, November 2004

“Shrouds of Time; The history of RFID” – An AIM Publication, October 2001

“Crossing the Chasm”, Geoffrey A. Moore, 1991

“ERC Recommendation 70-03; Relating to the use of Short Range Devices” – CEPT,January 2005

“A summary of RFID standards” – RFID Journal

“Impinj to ship 50M Gen 2 chips in 2005”, Mary Catherine O’Conner RFID Journal,September 2005

“Intermec, Symbol Reach Major Agreement”, Mary Catherine O’Conner RFID Journal,September 2005

“19 Firms Join Intermec Licensing Program”, Mary Catherine O’Conner RFID Journal,September 2005

“RFID Vendors to Launch Patent Pool” Mark Roberti, RFID Journal, August 2005

“Regulatory status for using RFID in the UHF spectrum”, EPCglobal, July 2005

“RFID Opportunities - Markets & Technologies in Western Europe” – Juniper Research,January 2005

“RFID Benchmark Study – Making waves: RFID adoption in returnable packaging” –LogicaCMG, May 2004

“EPCglobal Hardware Certification Program”, September 2005, EPCglobal

Appendix B: Glossary

Active tagAn RFID tag that contains a transmitter which sends back data to a reader, rather thanreflecting back a signal. Most active tags have an onboard power source, normally abattery.

Air interface protocolA protocol describing the rules that manage how readers and tags communicate.

AntennaA conductive part of a reader or tag that enables the sending and receiving of data.

Anti-collisionTerm describing methods to prevent radio waves from one device interfering with radiowaves from another. Anti-collision techniques allow a reader to receive multiple RFIDtags nearly simultaneously.

Automatic identificationCovers a range of methods that allow machines to identify objects. Examples ofautomatic identification technologies are barcodes, voice recognition, retina scans andsome other biometric techniques, and RFID.

BackscatterA method of communication used by passive and battery-assisted passive tagswhereby the tag reflects radio waves generated by a reader back to the reader.

Battery-assisted passive tagRFID tags that have an onboard power source to run the circuitry, but whichcommunicate with a reader using the backscatter technique (like passive tags).

Closed-loop systemsSystems usually set up within a company such that items never leave the company’scontrol. Open standards are less of an issue under closed-loop systems.

DoDThe United States Department of Defence. The DoD requires certain suppliers to useRFID technology.

Dumb readerAn RFID reader with limited computing capabilities. Compare with an intelligent reader.

Duty cycleThe maximum time for which a reader is allowed to transmit energy. For example, a tenper cent duty cycle means a reader is not allowed to transmit for more than six minutesper hour.

GS1Formerly known as EAN international and Uniform Code Council (UCC). Company that


formed a venture called AutoID Inc to commercialise the EPC standards by the Auto-IDCentre. AutoID Inc was later changed to EPCglobal.

EASElectronic Article Surveillance.

EIRPEffective Isotropic Radiated Power. A theoretical measurement of the output of a‘perfect’, or isotropic, antenna. EIRP is typically measured in watts. Often used in theUnited States. See also ERP.

Electromagnetic interferenceGenerally undesirable electromagnetic radiation emitted by electrical circuits as a by-product of normal operation. Causes unwanted signals (interference) to be induced inother circuits.

EMElectromagnetic.

EPCElectronic Product Code. Essentially a serial number containing information thatidentifies the manufacturer, product category and individual item.

ERPEffective Radiated Power. A measurement of the output of a dipole antenna. ERP istypically measure in watts. Often used in Europe. See also EIRP.

ETSIEuropean Telecommunications Standards Institute. Organisation that aims to settelecommunications standards for Europe. The latest RFID-related standard is ETSI302-208.

FirmwareComputer programming instructions stored in read-only memory. Most RFID readerscan be updated to accommodate new protocols by changing the firmware.

Form factorEssentially the shape of the tag. Form factors include adhesive labels, plastic cards andkey fobs.

Gen2Shorthand for EPC Generation 2. The standard ratified by EPCglobal for the airinterface protocol for the latest (seccond generation) EPC technologies.

GPSGlobal Positioning System. Satellite navigation system used for determining one’sprecise location and providing a highly accurate time reference almost anywhere onearth.

HFHigh Frequency. RFID tags designed for the HF range typically operate at 13.56MHz.

InterrogatorAnother name for a reader.

Intelligent readerRFID reader with some processing ability, similar to that of a standard PC.

ISO/IECInternational Organisation for Standardisation. International organisation of over 100countries’ individual national standards institutes.

Item-levelTerm used to describe the tagging of individual items. As opposed to case-level orpallet-level tagging.

LFLow frequency. RFID tags designed for the LF range typically operate at 125 kHz or134 kHz.

MemoryAmount of data that can be stored on the RFID tag’s chip. For passive tags, thistypically ranges from 64 bits to a few kilobytes. Active tags can generallyaccommodate more memory than passive tags.

MicrowaveMicrowave RFID tags typically operate at a frequency of 2.45GHz.

MiddlewareSoftware that sits between the reader and enterprise applications. Generally resides ona server. Middleware performs operations like filtering and smoothing of the raw RFIDdata.

MITMassachusetts Institute of Technology.

ModulationA range of techniques for encoding information on a carrier signal. Types of modulationinclude frequency modulation, amplitude modulation and phase modulation.

Passive tagsAn RFID that does not have its own transmitter and power source. The energy requiredto run the tag’s circuitry is obtained from the radio waves emanated by the reader.

Read rangeDistance from which a reader can communicate with a tag. Factors that affect the readrange of a passive tag include frequency, reader power and antenna design.


Read rateIndicates the number of tags that can be read in a given length of time. Read rate isalso used as the maximum rate at which data can be read from a tag.

Read-onlyData stored in read-only RFID tags cannot be changed by a reader.

Read-writeData stored in read-write tags can be changed many times by a reader. ReaderAn RFID reader is a piece of hardware that communicates with RFID tags. A readerhas one or more antennae attached to it which emit radio waves and receive signalsback from the tags. Many readers have the ability to write data as well as read data.

RFIDRadio Frequency Identification. A method of uniquely identifying items using EM (radio)waves.

SavantsDistributed middleware designed by the Auto-ID centre to filter data from EPC readersand pass it on to enterprise systems.

Semi-active tagAnother name for a battery-assisted tag.

Semi-passive tagAnother name for a battery-assisted tag.

Slap and shipThe process of applying an RFID label to a case or pallet just before it leaves asupplier’s facility. Often used by companies that are required to ship their goods withRFID tags.

TagIn simple terms, an RFID tag is made up of a microchip attached to an antenna,packaged so it can be applied to an object.

UHFUltra High Frequency. Typically UHF RFID tags operate in a region between 860 MHz to960MHz. As yet there is no single approved global frequency for UHF RFID use.

WORMWrite Once Read Many. A type of tag that a user can write to just once.

Write rangeDistance from which data on an RFID tag can be changed by a reader.

C1 History

Appendix C: introduction to RFID

RFID is not a new technology. It was first used in the 1940s to distinguish Allied aircraftfrom those of the opposing forces.

By the 1960s, commercial applications were beginning. Sensormatic and Checkpointdeveloped Electronic Article Surveillance (EAS) equipment to counter theft. EAS was animportant predecessor to RFID as it used radio communication over a short range.However, the memory of EAS tags stores only one bit of data. These ‘one-bit’ tags canonly detect the presence or absence of a tag, but the tags are inexpensive but effective.These systems used either microwave or inductive technology.

The 1970s were characterised primarily by developmental work. Animal tracking, vehicletracking and factory automation were the intended applications. Animal tagging effortsincluded the microwave systems at Los Alamos and the inductive systems in Europe,where interest in animal tagging was particularly strong. Alfa Laval, Nedap and otherswere all developing RFID systems.

The 1980s was the decade for full implementation of RFID technology, though interestsdeveloped differently in different parts of the world. In the United States, the focus wason transportation, personnel access, and, to a lesser extent, animals. In Europe, theemphasis was on short-range systems for animals and industrial and businessapplications. However, toll roads in Italy, France, Spain, Portugal, and Norway wereequipped with RFID.

The 1990s was a significant decade for RFID, with the wide-scale deployment ofelectronic toll collection in the United States. Several innovations in electronic tollingtook place, with vehicles able to pass toll collection points at highway speeds. Europealso showed a keen interest in RFID applications during the 1990s. Both microwaveand inductive technologies were used for toll collection, access control and a widevariety of other commercial tasks.

With efficient item management becoming more and more important and theopportunity to use RFID alongside barcodes, countless companies entered the RFIDmarketplace in the late 1990s. Since then, many have come and gone. However,many are still here and several have merged. It seems there is a new player in the RFIDmarket almost every day.

For those of us committed to the pursuit of advances in RFID, exciting times lie ahead.With the mainstream media regularly lauding the impact of the technology, RFID is likelyto become very popular in future. And the growing interest in telematics and mobilecommerce will bring RFID even closer to consumers.


C2 RFID technology andsystems

People often view RFID as a competitor to the barcode, or as its more high-techsuccessor. Today, in many cases, the barcode remains the better solution, particularlyin the short to medium term. However, RFID has many advantages. For example, thereader and tag do not have to be in direct line of sight, the amount of data in the tagscan be high, and data can be updated in the process. Many tags can be readsimultaneously. These features also mean that FID tags can be made much morerugged and durable, because the tags can be encapsulated in other materials. In short,RFID tags make it possible to track objects in real-time with no human intervention andno interruption in the process. The major downside at present is the price of individualtags and the system set-up costs.

However, RFID is more than a rival to the barcode. To see its full capability, a basicunderstanding of the different types of RFID system is in order. A full discussion isbeyond the scope of this report, but there are four types of RFID tags that are ofprimary interest: active, semi-active, passive and battery-assisted passive.

Active RFID tags contain a battery to boost reading range as far as 100 metres. Thesetags have a relatively large memory to store relevant data. Typically, this is encrypted toprevent unauthorised reading of, for example, a shipping manifest. Active tags maycontain sensors, GPS receiver modules, satellite links and other enhancements.

Passive tags draw their energy from the received radio signal to power their electroniccircuitry. This restricts the reading range for these tags. However, having a short rangeis not necessarily a disadvantage. If the application allows the accurate placement ofthe tag and reader in relation to one another, then short range can improve security.When people talk about RFID as a barcode competitor or replacement, they’re talkingabout passive technology.

Battery-assisted tags (which are also known as semi-active tags) are passive tags thatcontain a battery to power their internal circuitry, thus boosting reading range. Thesetags operate in essentially the same way as ‘ordinary’ passive tags, but provide betterperformance in terms of read rates and read range.

As mentioned in the introduction to this report, Europe is on the eve of implementingRFID in the UHF spectrum. In the United States, usage of the UHF spectrum is alreadymore common, as evidenced by the large number of companies offering hardware andsolutions. This is in spite of the mandates Wal-Mart and the Department of Defence(DoD) inflicted on the market, as Europe’s attention at that time was more focused onthe role of high-frequency.

Due to slow progress in this area and new standards, using UHF for RFID in Europe isbecoming more attractive. European organisations are not inflicting mandates on themarket. Instead, early adopters such as Metro and Tesco have chosen to develop theirsolutions within consortia of manufacturers and integrators.

C3 The players in the RFIDvalue chain

Figure 16: RFID value chain

The manufacturer of an RFID tag starts with the ‘inlay’, which contains the metallicantenna loop, silicon chip and associated components (like temperature sensors andbatteries). The production of the silicon chip, the plastic foil and antennae aresometimes delegated to other manufacturers.

The tag producer encapsulates the tag in some non-conductive material like rubber orplastic, or places the inlay on a plastic or paper self-adhesive carrier. Self-adhesive tagsare usually delivered on reels containing 250–1,000 pieces.

An RFID reader comprises PCBs (Printed Circuit Boards), electronic components, semi-finished products (like antennae), wiring, connectors and a casing. A readermanufacturer typically assembles the components on PCBs and builds the electronicsboards into the casing. Occasionally a reader manufacturer will implement its owndesigns or delegate this job to an engineering company, though the converse situationis more common. Usually, an engineering company designs and markets the RFIDreader and delegates production to an electronics manufacturer.

A manufacturer of RFID-enabled printers operates in the same fashion as a readermanufacturer: printers are designed and constructed by the manufacturer, perhapsusing third-party companies for some activities. In most cases, manufacturers buysemi-finished products from reader manufacturers and antennae manufacturers tointegrate into their printers.


While wall-mounted antennae are adequate to some scenarios, others have specialmounting requirements. Conveyor belts, fork-lift trucks and docking portals areexamples of contexts that present special requirements. Mechanical engineeringcompanies that have little to do with the RFID domain are responsible for designing anddelivering the constructions needed for these scenarios.Software companies deliver software to process the information from an RFIDinstallation. Several pieces of software are needed: RFID middleware, databases, back-office applications and more. A system integrator is responsible assembling the aforementioned products.

D1 Introduction tostandards

Appendix D: overview of RFID standards

In general, standards may be defined as an agreed set of rules or requirementsconcerned with performance, design, operation and measurements of competence toaccomplish a specified task. The rules may be mandatory or discretionary.

Are standards necessary? In any radio-based system, some standards must bemandatory, such as those covering radio frequencies, output power levels and‘spurious’ radiation that might interfere with other radio services. Other standards,concerning data protocols and formats, may be discretionary and a proprietary productmay be the best solution for a particular application.

In general, however, a standards-based solution is required if the user wishes tocommunicate between one supplier’s readers and another supplier’s tags. Thisbecomes even more essential if there are readers and tags from multiple vendors. So,in a closed system under the control of a single organisation, a proprietary solution maybe appropriate. But in a world of multiple suppliers, distributors and retailers,compliance with standards is essential. Another benefit of compliance with standards isthat the user of RFID systems need not be dependent upon a single supplier. This inturn should result in a greater assurance of product availability and competitive pricing.

A number of organisations are developing the standards for RFID:• International Organisation for Standardisation (ISO)• International Electrotechnical Council (IEC)• European Telecommunications Standards Institute (ETSI)• EPCglobal

This diagram shows the relationships between the various standardisationorganisations:

Figure 17: Comparison of RFID standards


ISO and EPCglobal (originally the Auto-ID Center) take fundamentally differentapproaches to producing RFID standards. In the ‘18000’ series of standards, ISOsought to define a common protocol between reader and tag for the widest possibleset of applications. EPCglobal, on the other hand, set out to develop standards forend-to-end supply chain applications, principally in the retail sector but with the flexibilityto be adapted to other market sectors.

Many of the global standards for RFID are being developed by Sub Committee 31(SC31) of Joint Technical Committee One (JTC1) of ISO and IEC. The terms ofreference of SC31 include the following parameters for air interface communications(‘air interface’ describes all aspects of communication in the space between reader andtag):

• Operating frequency, channel bandwidth, accuracy of operating frequency• Maximum effective output power, spurious emissions outside the designated channel• Modulation, bit rate and bit rate accuracy• Communications protocol and command set• Anti-collision (arbitration) methodsThe following table outlines the main ISO/IEC standards5 on RFID, in particular thosepertinent to the UHF frequency.

Notes: ISO/IEC 18000-6; 860–960 MHz covering the European and American bandsand the proposed Japanese allocation around 950 MHz. Range can be up to 10m. Twotypes are specified. Type A employs adaptive Aloha collision arbitration, while type B

Table 2: ISO RFID standards

D2 EPC global

D3 What is an EPC?

has an adaptive binary tree collision arbitration protocol. A new type C specification willlikely be added; this will be based on the interface specified for EPCGlobal Gen2 Class1UHF tags.

EPCglobal Inc is a joint venture between EAN International and the Uniform CodeCouncil (UCC), governed by a board including members from:• Trade organisations: UCC, EAN• Consumer packaged goods: Gillette, Johnson & Johnson, Procter & Gamble• Retailers: Wal-Mart, Metro AG• Government: US Department of Defence• Technology: Hewlett-Packard, Cisco Systems• Academia: Massachusetts Institute of Technology (MIT).

The original technology standards of EPCglobal were defined by the Auto-ID Center,headquartered at MIT. Nowadays, EPCglobal is responsible for the new standards andrelated architecture, while research work is still continuing under auspices of Auto-IDLabs, comprising MIT and five other universities.

The purpose of developing these standards is to provide technology to increaseefficiency and reduce errors in the supply chain. EPCglobal aims to achieve this byautomating item tracking through the use of low-cost RFID tags, and by providing aframework for global product information exchange. The set of technologies it hasdeveloped is known as the EPCglobal Network, a suite of distributed network services.EPCglobal has identified six classes of RFID tags, with increasing levels of functionality.

So far, Class 0 and Class 1 have been specified. Class 0 and first generation Class 1UHF tag specifications were based upon existing proprietary designs and wereintroduced to ‘kick start’ the market. The air interface protocols are not compatible withone another.

The second generation Class 1 UHF standard – commonly identified as Gen2 Class 1or just Gen2 – has finally been agreed despite what for a time seemed like irreconcilabledifferences between the protagonists. Initially, several proposals were put forward forconsideration, but these were whittled down to two:• The ‘global’ proposal, supported by Intermec, Philips Semiconductors, TexasInstruments and others• The ‘freedom’ proposal, supported by Alien Technology, Atmel and Symbol

In a comprise that combined elements of both proposal, the EPCglobal Class 1Generation 2 standard was finally ratified in December 2004 after extensive testing.

An EPC can be regarded as a next-generation barcode, uniquely identifying objects inthe supply chain. These objects could be pallets, cases or individual items. Like manyexisting numbering schemes used in business, the EPC is split into sets of charactersthat identify the manufacturer and product type. However, a further set of characters isused to identify unique items. The EPC is used as a key to look up further informationabout a specific product in the EPCglobal Network.


D4 Composition of an EPC

D5 EPC variants

D6 Genertaion 1 protocols

An EPC consists of a header, EPC Manager, object class and serial number.

1. The header identifies the length, type, structure, version and generation of EPC2. The EPC Manager includes the manufacturer of the product (e.g. Coca-Cola

Company)3. The object class gives the type of product, in most cases the SKU (Stock Keeping

Unit) for the product (e.g. Cola 330 ml can)4. The last section is the serial number – unique for each product – that precisely

identifies an individual can of cola. This makes it possible, for example, to find products quickly if the best-before date has passed.

Until recently, there have been several different types of EPC tag, all under theGeneration 1 (Gen1) umbrella. These consisted of Class 0, Class 0+ and Class 1 tags(see table below). Unfortunately, EPC Class 0 and Class 1 protocols are notcompatible, meaning that a single RFID reader could not read both Class 0 and Class 1tags unless it was a multiprotocol reader. Clearly a new, consolidated approach wasrequired.

As with most new technology, Gen1 products rapidly evolved beyond their originalspecifications. While Class 1 specifies once-only programmability, in practice many ofthese Class 1 compliant tags are actually read/writable and can be written torepeatedly. Gen2 tags (see below) are field-programmable.

Figure 18: Example EPC code

Table 3: Existing EPC protocols

D7 Some imrovements ofGen2 over Gen1

EPCglobal ratified the long-awaited Generation 2 UHF RFID air interface protocol (Gen2)in December 2004. Gen2 aims to stimulate semiconductor and other RFID equipmentvendors to invest in developing products able to address one emerging global marketfor UHF RFID. This should mean greater competition between vendors and, in turn,cheaper hardware for end-users.

Gen1 stipulated that tags have a memory capacity of either 64 or 96 bits. For Gen2,this has been altered to between 96 and 256 bits.

One of the significant enhancements of the Gen2 protocol over the Gen1 protocol is theincreased rate at which readers will be able to read and write to tags. Gen2 supports adata transfer rate of up to 640Kbps as opposed to a maximum of 80Kbps for Gen1Class 0 and 140Kbps for Gen1 Class 1. The Gen2 protocol counts a write commandas successful only if it achieves a write rate of 16 bits within 20ms.

These increased data transfer rates should mean that most existing business processesno longer need to be slowed to incorporate RFID technology. Tom Pounds, vicepresident of corporate development for Alien Technology, has suggested that, for mostapplications, end-users should expect a properly installed Gen2 system to perform50per cent faster than a similar Gen1 system in the US and as much as 100 per centfaster in Europe.

The Gen2 protocol puts in place multiple ‘tests’ to ensure that any tag that is read is infact a genuine tag and not false information created by a ‘ghost read’. Ghost readingscan cause serious problems and result in end-users losing confidence in their readings.

As in most aspects of modern business, security is a primary concern in RFIDtechnology. Previously, it was relatively easy for an unauthorised user to deactivatepermanently (‘kill’) a tag as the code needed to perform the operation was only 8 bitslong in the original Class 1 protocol and 24 bits long for the Class 0 protocol. TheGen2 protocol boasts 32-bit password codes, a significant improvement (nearly 4.3billion combinations). These passwords are used for locking and unlocking memory aswell as killing tags.

Table 4: Future EPC protocols


D8 EPCglobal Network EPCglobal provides a framework for global product information exchange. The set oftechnologies it has developed to provide this functionality is known as the EPCglobalNetwork, a suite of distributed network services. The key components of the EPCglobalNetwork vision are:

Electronic Product Code (EPC) Like the Universal Product Code (UPC) or barcode, the EPC identifies the manufacturer, product, version and serial number. But it also hasan extra set of digits to uniquely identify individual items.

ID systems Standards defining the functions, interfaces and communication protocols for the reader and tag.

EPC Middleware By filtering out erroneous, duplicated and redundant information, EPC Middleware provides ‘clean’ event data to IT applications within the enterprise. These applications can then use and interpret the information in business processes.

Object Name Service (ONS) The ONS responds to requests for information about EPCs; it takes an EPC code and returns one or more Uniform Resource Locations (URLs) where the object data resides. In this respect it is analogous to the Domain Name Service (DNS) at the heart of the internet, and it uses similar technology.

EPC Information Systems (EPC IS) Network-based service that stores, hosts and provides access to serial number specific information about products as they move through the supply chain. EPC IS may be deployed by all trading partners who wish to track EPCs relevant to their operations.

EPC Discovery Service Enables track and trace capabilities through the EPC Network.

The shape of the EPCglobal Network has changed considerably during the past year,particularly in the areas of the EPC Middleware and EPC IS. The development workhas shifted away from defining software components and towards specifying interfacesbetween applications. However, the standards are at an early stage of development.

The code structures (contents of the tag) have been defined, based as far as possibleon existing product codes, to provide some degree of compatibility with existing ITsystems and databases.At long last, the interface specification for the second-generation UHF EPC tag hasbeen agreed. Towards the end of 2004, EPCglobal announced that validation testing ofthe standard had been successfully completed. The intention now is for thespecification to form a new type C category in the ISO/IEC specification 18000-6.

The following diagram illustrates the functions of the various EPCglobal Networkcomponents that would be deployed in an enterprise.

Figure 19: EPCglobal Network overview


E1 European standards forRFID

Appendix E: European UHF regulations

In an ideal world, the assignment of different radio frequencies to users and applicationswould be the same everywhere. For historical reasons, however, this is not always thecase. Even within an economic region, individual countries may regulate somefrequency bands differently to their neighbours. This is especially the case where take-up of new radio technologies varies or where governments or military forces havedifferent requirements.

Within Europe, the principal standards organisations involved with RFID are:• European Conference of Postal and Telecommunications Administrations (CEPT).CEPT has policy-making and regulatory functions. Its objective is to negotiate commonEuropean strategies in postal services and telecommunications. Within the CEPTorganisation the Electronic Communications Committee (ECC) is responsible fordetermining and recommending long-term strategies for spectrum usage in Europe.The related regulation is described in recommendation ERC/REC70-03, wherein Annex11 defines the frequency bands for RFID.

• European Telecommunications Standards Institute (ETSI)ETSI is the principal telecommunications standards-making body in Europe. Thestandards it creates are driven either by European Union EU mandates or by marketrequirements as perceived by its members. One of its technical committees, EMC andRadio Spectrum Matters (ERM) has produced the following standards relating to UHFRFID systems: • EN 300 220, fully titled: ‘Electromagnetic Compatibility and Radio Spectrum Matters

(ERM); Short Range Devices; Radio equipment to be used in the 25MHz to 1,000MHz frequency range with power levels ranging up to 500mW.’ This standard is appropriate to RFID systems working at 433 and 868 to 870MHz.

• EN 300 440, fully titled: ‘Electromagnetic Compatibility and Radio Spectrum Matters(ERM); Short Range Devices; Radio equipment to be used in the 1GHz to 40GHz frequency range.’ This standard is appropriate to RFID systems working at 2.45GHz.

• EN 302 208, fully titled: ‘Electromagnetic Compatibility and Radio Spectrum Matters(ERM); Radio frequency identification equipment operating in the band 865MHz to 868MHz with power levels up to 2 W.’ This standard is still under the harmonisationprocess in the relevant European countries.

The national communications authorities of the European Union (EU) member countrieshave agreed on the new standard EN 302 208. Before this new standard can comeinto effect fully, it has to be published in the Official Journal of the European Union,which documents the legislative and judicial decisions of the EU member countries.The standard has to be translated into the languages of the EU, so publication couldtake up to six months. In parallel with activity at the EU level, individual countries mustpass laws adopting the recommendations on permitted power levels and frequencyallocations. These processes, collectively called ‘harmonisation’ are, largely complete.

E2 Key features of the newETSI EN 302-208 EuropeanUHF regulations

Readers based on the new regulations are already available in the market, becausevendors can begin selling readers based on the new rules if an accredited test-housecertifies that their readers comply with the standard. They also need to apply formallyto each EU country to sell readers based on the new rules in that country. Beforeharmonisation is completed it is possible to use the RFID readers in most EU countriesby means of a licence (often called a test and development licence or a site licence).

At time of writing, there were known difficulties with the licensing process for thefollowing countries for a variety of reasons:• France – military applications• Italy – military applications• Spain – road toll applications• Turkey – reason unknown.

The new regulations, dubbed ETSI EN 302-208, will allow European RFID readersoperating in the UHF band to perform nearly as well as UHF readers operating underFederal Communication Commission (FCC) rules in the United States.

Figure 20: European UHF frequency range

Source: ETSI

ETSI EN 302-208 provides an additional frequency range from 865 to 868MHz in whichRFID equipment can operate, increasing the spectrum band to 3MHz. In order tooptimise use of the available spectrum, a channel bandwidth of 200kHz has beendefined. This increases the number of channels RFID readers can broadcast on fromone to 15. The new band is divided into three sub-bands. Under new regulations EN302-208, emissions are allowed of up to 0.1 watts ERP between 865 and 865.5MHz; 2watts ERP between 865.6 and 867.6MHz; and 0.5 watts ERP between 867.6 and868MHz.

Under the old regulations EN 300-220 a frequency range from 869 to 870 MHz wasavailable for RFID purposes, but usage is restricted. Essentially, two sub-bands wereavailable, 869.4 to 869.65 at 0.5 watts ERP with 10per cent duty cycle, typically usedby RFID readers, and 869.7 to 870 at 5 milliwatts with 100per cent duty cycle, typicallyused by RFID printers.


E3 Duty cycle and listenbefore talk (LBT)

Most end-users will want to operate readers deployed in their supply chain at 2 wattsERP in the 865.6 to 867.6MHz band to get the extra read range that the powerincrease allows, although the power output (2 watts ERP) is still slightly below thatallowable in the United States (4 watts EIRP). Having 10 channels in this band will alsoimprove the performance of European RFID systems by enabling more readers tooperate simultaneously in the same facility without interfering with one another.

Based on the current and proposed regulations for Europe, the following spectrum inthe vicinity of 900MHz is available for UHF RFID usage:

Table 5: European UHF frequency spectrum

Two approaches can be taken to avoid a single user ‘hogging’ a radio channelcontinuously. The simplest, in terms of functionality built into the radio transmitter, is torestrict the user to a defined duty cycle, as specified in the existing regulations for eachfrequency band. A duty cycle of 5 per cent, for example, means that a device cannottransmit for more than 5 per cent of the time during a defined period, typically in theorder of 100 milliseconds. The technique works well with devices that transmit onlyoccasionally, such as garage door controllers, but could lead to channel congestion forsystems requiring heavy usage.

The second method is to specify a Listen Before Talk (LBT) protocol. This is theapproach taken in the new standard adopted by ETSI, in which the reader listens for arandom period (between five and ten milliseconds) to ensure that a channel is clear,before starting to transmit in that channel. The reader may transmit continuously for amaximum of four seconds and there must be a gap of at least 100ms betweenrepeated transmissions in the same channel. Alternatively, the reader could switchimmediately to any other unoccupied channel and transmit for up to a further fourseconds. Readers without LBT capabilities are limited to a 0.1 per cent duty cycle.

E4 In practice

E5 Difference between

ERP and EIRP

Under ideal conditions, at 0.5 watts ERP, a UHF reader can read a tag three metresaway (about 10 feet). With 2 watts ERP, a reader can read a tag from five metres (15feet) away or further. Many warehouse applications require a read range of 10 feet ormore.The one downside to the new regulations is that the data rate between the reader andthe tag is less than in the United States. This is because only 3MHz of spectrum isavailable in Europe for RFID, while 26MHz is available in the US. The rest of the UHFspectrum in Europe is already allocated to primary services, such as public broadcast,and to mobile phones.

To enable readers in the same facility to operate on adjacent channels, the regulationsrequire that the readers use only one channel at a time and conform to somethingcalled a ‘spectral mask’, essentially a limit on how much a broadcast can bleed outsideof the channel. Compare with the United States, where readers can emit radio waveswithin ±3MHz of the frequency of the channel they are supposed to be using. This widerange allows the reader to send more information more quickly.

The maximum permitted output power of an RFID reader can be expressed in anumber of different ways. For example, the requirement for LF and HF devices that usenear-field communications is expressed in terms of magnetic field strength at a certaindistance from the transmitter, the units being microamps per metre (actually, decibelsrelative to one microamp per metre, written as ‘dBÌA/m’). For UHF devices using far-field communications, the output power is defined in relation to a referenceconfiguration in order to accommodate the possible use of a directional antenna.

The internationally-accepted measurement is ‘effective power’: the power that wouldneed to be produced by a transmitter and reference antenna to achieve the same fieldstrength as the system under test along the direction of the latter’s maximum signal.This power is generally stated in one of two units, either Effective Radiated Power(ERP), or Effective Isotropic Radiated Power (EIRP).

With EIRP, the reference system has an isotropic radiator, which is a point in spaceradiating Radio Frequency (RF) energy equally in all directions (i.e. in a sphericalpattern). This reference system has a gain of one and is a hypothetical device thatcannot be realised in practice.

With ERP, the reference system has a perfect dipole antenna, which itself has atheoretical gain factor of 1.64 (or 2.15 decibels) over an isotropic radiator.

The relationship between ERP and EIRP can therefore be written as:

(Power measured in units of EIRP) = 1.64 x (Power measured in units of ERP)


This is particularly pertinent when comparing the American and European RFIDstandards. The American standard is 4 watts EIRP, while the proposed Europeanstandard is 2 watts ERP. The American standard is not, as it may seem at first sight,double the value of the European standard; the two should only be compared whenexpressed in the same units. Using the expression stated above:

2 watts ERP = 1.64 x 2 watts EIRP = 3.28 watts EIRP

It can now be seen that the American output power limit is just twenty-five per centgreater than the European standard, so the two are comparable in performance, atleast in terms of range. However, the bandwidth per channel available in America isgreater than in Europe, giving a higher data communications bit rate between readerand tag. This in turn makes it possible to identify and collect information from moretags per second. Only operational experience will tell if this is a major disadvantage forusers in Europe.

Appendix F: background on IP issues

Many people believe that the EPC Class 1 Generation 2 protocol is crucial towidespread adoption of RFID technology, particularly in the retail supply chain. ThisUHF air-interface protocol, which was formally ratified in December 2004, shouldundoubtedly provide a large step forward in terms of helping end-users achieve goodresults. However, worries still remain over costs, licensing and intellectual property (IP)issues.

EPCglobal has always been committed to gaining speedy adoption of RFID and EPCand believe that the key to achieving this is ‘through low-cost, high-performance,globally interoperable equipment’. One of the important ways of helping to realise thisis by ensuring that standards are royalty-free. Indeed EPCglobal stipulate that allcompanies joining the organisation must sign their IP policy.

The first draft of the EPCglobal IP policy was released in October 2003. 24 companiesreviewed this and provided feedback with the aim of ironing out any worries at an earlystage. Several companies voiced concerns over the initial draft, one of these beingIntermec Technologies. They were worried that ‘there was no provision or mechanismfor us to designate or direct specific IP related to the practice of specific elements of astandard and not other’. In other words (under the draft policy) they were not able toselectively provide their IP as they would like.

The final version of the policy was published in December 2003 and contains a sectionwhich essentially says that any IP which is needed to make EPC technology functioncorrectly and that was created prior to the formation of EPC technology will becontributed by the companies that hold the patents. These companies (that hold theIP) should make this IP available to other EPCglobal subscribers either royalty free or ona reasonable and non-discriminatory (RAND) basis.

When IP is supplied for many standards (ISO and IEE included), owners of the IPtypically offer it on a RAND basis. However, this was seen to be a less-than-idealsolution as far as Gen2 was concerned. Many vendors supplied IP for Gen2 and if theywere all to take a share then the price of RFID hardware would be forced higher. Thiscould prevent widespread adoption of the protocol and contradict one of itsfundamental aims.

Later in December 2003, Alien Technologies and Matrics signed the updated IP policyand offered their (core EPC related) IP on a royalty-free basis. Interestingly, the CEO ofMatrics, Piush Sodha, wrote a letter to EPCglobal expressing some concern over thewording of the IP policy. He wrote that ‘…we believe that EPCglobal should demandthat any IP incorporated into the core standard should be available free’. In February 2004, Intermec Technologies announced that it had joined EPCglobal andsigned the requisite IP agreement. Intermec holds one of the largest amounts of UHFRFID patents – in the region of 140. By signing up, this was seen as a big boost forEPCglobal and its vision of all companies being able to use the EPC technologieswithout paying royalties.


In August 2004, Intermec announced that it believed 19 of its patents, current andpending, were relevant to previous drafts of the Gen2 specification. They wereprepared to make five of these available royalty-free and the remaining 14 would beavailable on a RAND basis. This would mean that manufacturers of RFID chips, tags,readers and printers would be required to pay royalties. Whilst this would mean thatend-users wouldn’t be charged directly, it seemed inevitable that these costs would bepassed on through increased prices set by the vendors. There was also a worry thatother vendors would follow in Intermec’s footsteps and request royalties for their IPcontributions.

EPCglobal was understandably keen to make progress and get the Gen2 protocolfinalised and ratified by the end of 2004. There were concerns that Intermec’s RANDlicensing program would delay this, and so in October 2004, EPCglobal approachedIntermec and asked for a temporary suspension of their royalty claim. Intermec agreedto a 60 day suspension which was viewed as ample for completion of testing and othernecessary work on the protocol.

On December 16 2004 the Gen2 standard was ratified by EPCglobal who said that thestandard was royalty-free. Prior to the ratification, lawyers were brought in byEPCglobal to scrutinise the standard in order to determine whether or not there wasany IP belonging to Intermec that was essential to implementing the standard. Intermecstated that it believed that some of its patents would be infringed by products beingbuilt to the new standards. EPCglobal said that there are many different ways to designGen2 hardware and some approaches may infringe Intermec’s patents. In these casesit would be down to the vendor in question to negotiate the relevant license fees withIntermec. This was summed up by Intermec’s president, Tom Miller: ‘It is important to remember the claim of a royalty-free protocol does not mean UHFRFID products will be royalty-free. We believe companies who offer UHF RFID productswill still require a license to use Intermec intellectual property…’

In February 2005 Intermec advised EPCglobal that it would no longer be offering itsRFID patents on a RAND basis. Intermec said that because EPCglobal had deemedthat Intermec’s patents were not required to implement the second-generationstandard, this relieved them of any obligation to grant licenses under that IP. In otherwords, Intermec believed that the EPCglobal IP Policy document was no longer valid.

In May 2005, Intermec announced that they were going to launch a three month ‘rapid-start licensing program’. Vendors wishing to make use of Intermec’s IP which iscovered by more than 145 patents would, under the program, be charged an initial feealong with royalties which would be at reduced rates. Intermec say that the program is‘designed to open access to Intermec’s current and future RFID technology innovationsand to clearly indicate which manufacturers and vendors are licensed to use Intermec’spatented RFID technologies’. In September 2005 Intermec announced that 19 vendorshad signed the licensing program, including companies such as SAMSys and Zebra.Some remarkable vendors did not sign up, such as Alien Technology, Impinj and PhilipsSemiconductors. Apparently these companies believe their products will not incorporateand intellectual property owned by Intermec.

Around the same time a major initiative was announced by 19 other RFID Hardwarevendors. In a solution that is similar to for example the DVD industry, these companieswill create an IP Pool. This pool will likely charge one standard royalty fee on all RFIDproducts based on the Gen2 standard, as well as on the ISO standard, and divide therevenue among the patent holders, based on the importance of their patents. Theofficial members thus far include leading vendors such as Alien Technology, AppliedWireless Identifications Group (AWID), Avery Dennison, ThingMagic, Tyco Fire & Securityand Zebra Technologies. Clearly this marks a very important step forward towards theresolution of the IP issue. When the IP Pool becomes operational it will create a level oftransparency that is urgently required by the end-users.

September 2005 also marked another breakthrough for the IP issue, as Intermec andSymbol announced an agreement to settle their high-profile IP dispute. As a result ofthis settlement Symbol has signed the Intermec licensing program, and both partieshave stated the intention the resolve the remaining issues. The most important result ofthis settlement may be the change in perception it creates among end-users. It nowseems clear that RFID vendors have realised the urgency this issue, and that cancompletely resolve it.

So where does this leave the end-user who is looking to implement RFID technologybased on the Gen2 protocol?

At the time of writing, LogicaCMG believe that the IP issue will not have a major impacton RFID adoption by end user. We believe that the best policy is to ask for confirmationfrom any potential vendor that their hardware does not infringe any patents or utilise anyIP that is not theirs. It should be the case that the vendor will bear any responsibility inthe event that another vendor claims that their patents are being infringed, but thisshould be checked. Even if your vendor has signed up to Intermec’s licensing program,it is still important to verify whether they have rights to all the IP contained in theirhardware as there are other vendors beside Intermec who hold this.

In conclusion, before committing to a specific RFID hardware vendor, it is important tofully investigate their stance on IP issues and ensure that you are comfortable with this.


Appendix G: company profiles

This appendix provides company profiles of the RFID hardware vendors that providedvaluable input to this survey. Please note that the content of this appendix has beenprovided by — and remains the full responsibility of — the individual companies.

Alien Technology® is a leading provider of UHF radio frequency identification (RFID)solutions that improve the efficiency, safety and security of supply chains for consumerpackaged goods companies, retailers and many other industries. Using a patentedmanufacturing process, Fluidic Self Assembly (FSA®), Alien manufactures UHF RFIDtags in unprecedented volumes and at very low cost.

Products – including RFID tags, readers and antennas – are integrated into the world’smost high-profile retail and government supply chain operations, including suppliers toWal*Mart and the US Department of Defence. With manufacturing facilities in MorganHill, California, and Fargo, North Dakota, Alien offers industry-leading manufacturingcapacity to meet the rapidly growing market demand for RFID tags.Alien’s RFID education training through RFID Academy, as well as its implementationservices, helps customers accelerate adoption of RFID.

Alien’s RFID readers provide a wide range of options, including industrial readers forsupply chain to compact reader engines suited for handhelds and printers. The Alienline of high performance products provide the range, speed and robustness required fordemanding supply chain and logistical operations.

Products and solutions include:• EPC Class 1 RFID Tags• EPC RFID Systems (Class 1/Class 0/Class 3)• Services (education, application engineering and installation)• Global Services (global regulatory compliance).

For more information about Alien Technology products andsolutions, please visit www.alientechnology.com.

Avery Dennison is a global leader in pressure sensitive technology with 21,000employees in 89 countries. A wide range of products for consumer and industrialmarkets is developed, manufactured and marketed, including Avery-brand officeproducts, Fasson-brand self-adhesive materials, RFID inlays and tags as well asautomated retail tag and labelling systems.

Avery Dennison, Printer Systems Europe offers solutions to link information to products.The innovative product portfolio comprises printers and print & apply systems forvertical markets across many industries. Avery Dennison offers complete identificationsolutions to optimise the supply chain – from consumables and software to technicalsupport and dedicated services.

Along with the latest revolutionary steps taken in RFID technology and the growingmarket demand, Avery Dennison uses its experience in the production of self-adhesivematerials and the close co-operation with the world’s technology leaders in chip designto provide breakthrough technologies and set new paths, both in RFID label design andin the manufacturing process of RFID tags.

The company has offices and partners in all European markets. Site: www.rfid.averydennison.com.

CAEN S.p.A. Costruzioni Apparecchiature Elettroniche Nucleari is an important industrialspin off of the Italian Nuclear Physics Research. The company was founded inViareggio (Italy) in 1979 by a group of senior engineers from the Istituto Nazionale diFisica Nucleare and today still designs and manufactures sophisticated electronicequipment for Nuclear Physics Research. CAEN is recognised world-wide as one ofthe leading company in this field. It controls all the stages of the realisation of itsproducts, from design to production, and collaborates on experiments from the veryearly stage conception to the running period. The quality of its products is monitoredby the UNI EN ISO 9000-1 standard. 25-years’ experience in the electronic integrationfield allows CAEN to face new challenges and new sectors as Aerospace,Microelectronics, and the latest emerging Radio Frequency Identification Technology. Inorder to strengthen its presence in the North American territory, on January 1 2005CAEN opened its new branch company in the United States, CAEN Technologies Inc.,with three sales offices: in New York, San Francisco and Orlando.Site: www.caen.it/rfid.

Datamax is the world’s leading international barcode solutions company. Offering a fullline of products to meet every bar-coding requirement, including thermal barcodeprinters, barcode verification systems, software solutions, direct thermal and thermaltransfer labels and ribbons. Customers around the world range from smallmanufacturing firms and single-outlet retailers to government agencies and multinationalcorporations.

Datamax features one of the most diverse lines of thermal printers in the barcodeindustry—products ranging from entry-level and midrange units to high-performancesystems and specialty printer platforms. The products can be deployed off-the-shelf orcustomised with a variety of options to meet special user requirements.

Datamax provides product support through a worldwide network of technical specialistsand field sales personnel. The company maintains sales support offices throughout theUnited States and in Harlow, UK, and Singapore. Datamax leads the industry in itscommitment to world-class product training, with programs available to VARS, resellers,distributors and end-users. Site: www.datamaxcorp.com.


From the beginnings to the present day deister electronic, a leader in the securityindustry, develops, manufactures, and distributes highly specialized security products.

While focusing on the installation of systems for mobile data acquisition andcomponents for radio frequency identification systems, deister electronic providesproducts and services to the following business sectors: • Systems integrators• OEM manufacturers• Security companies• Government organizations• Industrial facilities

Company headquarters are located near Hannover, Germany and subsidiaries are in theUS, Canada, United Kingdom, and France.

Highly-skilled application engineers provide a global support and advice service inproject management and on product applications. In addition, trained engineers canassist in system installation and troubleshooting if required.Site: www.deister.com.

Impinj, the Gen2 Leader, is a fabless semiconductor company whose chips power highperformance, enhanced-functionality RFID systems that fulfil the needs of theconsumer-packaged goods and retailing industries. The company is a leadingcontributor to the RFID standards for high volume supply-chain applications worldwide.Impinj is leveraging its systems engineering expertise and working with partners todevelop a complete solution encompassing tags, readers, modems, software, systemsintegration and high-volume manufacturing to offer low-cost RFID ‘that just works’ anddelivers true ROI to customers.

Site: www.impinj.com/page.cfm?ID=rfidProducts.

Intermec Technologies is a world leader in the development of innovative industrialautomation technologies, including RFID. Intermec RFID technology gives new levels offast, accurate scanning and data capture. It allows you to scan inside crates andcartons without opening them. Complete RFID-based item tracking and managementsystems include tags, handheld and stationary readers, printers, labels, wireless localarea networks and software.

Intermec is a global leader in the development, manufacture and integration of wiredand MobileLAN™ wireless automated data collection, Intellitag® RFID, mobilecomputing systems, barcode printers and label media.Its total solution approach offers companies assurance that, with Intermec’s network ofleading technology partners, Intermec and its team can provide complete answers tocompanies’ requirements, from concept to completion.

Intermec Technologies has over 35 years’ experience solving mission critical businessproblems with Automatic Identification Data Capture solutions. The company hassuccessfully installed over 250,000 systems in Fortune 500 companies around theworld.Intemec technology improves efficiency and reduces paperwork giving companies theability to increase manufacturing output. From printing to scanning, scanning to datamanagement, data management to communications, Intermec is one of the fewmanufacturers providing a one-stop shop for a total AIDC solution. A commitment toindustry standards, such as 802.11 and Microsoft™ operating systems, future-proofsinvestment mixed technologies.Site: www.intermec.com.

Kortenburg Inc. is a company that provides full service for the identification of parts,assets and other items in the field. Due to the memory in the tag and the capabilityidentification through the complete lifecycle of an item is provided. The memoryenables the customer and all of his customers and/or service providers to query andupdate the actual status of the item in the field and have a data concentration throughour client-server-system Master-ID. Master-ID gives a combination of management,history overview and document management in combination with connections to anERP-system like SAP, Progress and Navision.Site: www.myrfidsolutions.com.

Philips Semiconductors, headquartered in Eindhoven, The Netherlands, is one of theworld’s top semiconductor suppliers. The company’s ambition is to be the leadingprovider of semiconductor-based solutions for connected consumer andcommunications applications. Philips Semiconductors has 20 manufacturing andassembly sites and a sales organisationthat delivers in 60 countries. Manufacturingfacilities are in the USA, AsiaPacific and Europe serving customers worldwide.

Philips Semiconductors is a leading supplier of silicon system solutions for mobilecommunications, consumer electronics, digital displays, contactless payment andconnectivity, and in-car entertainment and networking. It is one of the top ten globalsemiconductor manufacturers, employing more than 35,000 people, 6,000 of whom areengineers or software engineers. A global organisation, it operates twentymanufacturing sites and maintains sales organizations in sixty countries around theworld.

Philips has shipped more than one billion RFID chips which are integral to solutionsincluding supply chain management, secure identification and authorization, automotivesafety, transportation and ticketing. Site: www.semiconductors.philips.com.


Power Paper is a leading provider of micro-power source technology, which addressesa growing trend across a wide range of industries towards ultra-thin and flexible micro-powered devices. Power Paper’s patented, thin and flexible energy cells can beadapted to fit the size, thickness and form factors required for the design of anyproduct. These environment-friendly, safe batteries require no metal casing, and can beprinted cost-effectively directly onto paper, plastics or other surfaces by standardprinting equipment. Licensing and know- how agreements allow partners and customers in the UnitedStates, Europe and Asia to utilize award-winning technology to produce millions of cellsevery year. Based on this technology, the company has developed a number ofinnovative applications for its PowerCosmetics, PowerNovelties, and PowerID productlines, as well as a line of PowerInks for authorised manufacturers.

The strategy is to enter high volume, high value markets that require thin and flexiblemicro-power sources. Leading customer relationships and authorised manufacturersworldwide, include Hasbro (US), Hallmark (US & UK), John Dickinson (UK), KSWMicrotec GmbH (Germany), Graphic Solutions Inc. (US), Jetta Industries (Hong Kong),and Toppan Forms (Japan).

The company has a wide range of expertise in developing and marketing powersystems, microelectronics, communications systems, and medical devices, as well as inmanagement, business development, marketing and manufacturing. In addition, PowerPaper has enlisted the assistance of world-class advisors and board members fromBayer, Boston Scientific, 3M, and Agfa. Since the company’s inception in 1997, it hasraised approximately €29 million in financing from US, European, Asian, and Israeliinvestors.Site: www.powerpaper.com.

Established nearly 30 years ago, Printronix is a leading provider of industrial and back-office enterprise printing solutions for customers the world over. The long-term marketleader in line matrix printers, Printronix has earned an outstanding reputation for its fullselection of thermal, laser and network solutions technologies, all supported byunsurpassed service.

The company was established to provide superior industrial and back-office enterpriseprinting solutions for the global marketplace. Throughout its history, Printronix hasdelivered the most reliable industrial printing solutions for enterprise networks.

Today, Printronix leads the industry by adding value to global enterprise printing withadvanced solutions that give customers distinct cost efficiencies and higher ROI.

Headquartered in Irvine, California, Printronix provides market coverage across theglobe, with a product breadth that meets a diverse set of customer requirements.There are five manufacturing facilities and 17 sales and support locations that serveusers in the Americas, Europe, the Middle East, Africa and Asia Pacific. As a globalcompany, Printronix has developed printers that offer languages to support itsworldwide user base.Site: http://www.printronix.com/rfid.

SAMSys Technologies Inc., founded in 1995, is the developer and owns patents formulti-protocol, multi-frequency RFID readers. Major retailers and manufacturersworldwide have been deploying SAMSys RFID readers to track the movement oftagged goods through the supply chain. The company is based in Rochmond Hill,Ontario, Canada. Visit SAMSys at www.samsys.com.

Savi Technology builds RFID networks that deliver real-time visibility, asset management,inventory optimization, and global supply chain security. Savi provides supply chainasset management, security and collaboration software that is uniquely integrated withautomatic identification and data collection (AIDC) systems to create scalable networksthat enable a new generation of real-time logistics solutions. Savi has developed anddeployed the world’s largest active RFID network for the US Department of Defencecovering more than 1,400 locations in 46 countries. This network tracks manythousand containers and other assets each day.Site: www.savi.com.

Sensite Solutions develops and markets wireless local tracing and telemetry solutions.Its LogiSphere system enables industries to keep track of the location and condition ofvaluable assets including cargo, inventory, trucks, trailers, trolleys, pallets, andcontainers, in a real-time and continuously manner. This solution provides a 300 metresdetection range, a seven to ten years battery lifetime, and a rich suite of wirelesssensors. The robust wireless communication between readers via the integratedSensNet protocol ensures minimum installation costs and time. Sensite Solutions is aprivately held company that was founded late 2001, and is located in Eindhoven. Formore information, please visit the website: www.sensite-solutions.com.

Symbol Technologies, Inc., The Enterprise Mobility Company(TM), is a worldwide leaderin enterprise mobility, delivering products and solutions that capture, move and manageinformation in real time to and from the point of business activity. Symbol enterprisemobility solutions integrate advanced data capture products, radio frequencyidentification technology, mobile computing platforms, wireless infrastructure, mobilitysoftware and world-class services programs under the Symbol Enterprise MobilityServices brand. Symbol enterprise mobility products and solutions are proven toincrease workforce productivity, reduce operating costs, drive operational efficienciesand realise competitive advantages for the world’s leading companies. Moreinformation is available at www.symbol.com/rfid.

Texas Instruments Radio Frequency Identification (TI-RFid™) Systems is the world’slargest integrated manufacturer of RFID tags, smart labels and reader systems. Withmore than 400 million tags manufactured, TI-RFid™ technology is used in a broadrange of applications worldwide including access control, automotive, documenttracking, livestock, product authentication, retail, sports timing, supply chain, ticketingand wireless payment.


Texas Instruments established Texas Instruments Registration and Identification System(TIRIS) as a worldwide business venture in early 1991, becoming the first multinationalsemiconductor company to develop and market RFID systems. Fusing corecompetencies in advanced semiconductors, microelectronic packaging, and computersystem design, TIRIS has become a standard-setting technology used in thousands ofobject tracking and data collection applications around the world.Today, TIRIS is a leading supplier of a comprehensive range of field proven RFIDproducts used in a broad variety of applications. The open platform design philosophyallows rapid, low-cost adaptation to specific requirements in identification. TexasInstruments is also participating in the development of worldwide RFID standards toensure that its systems remain both compliant and versatile. The company is an activemember of many standards bodies, including EPCglobal, ISO, ISO/IEC, ECMAInternational, ETSI, and several national standardization bodies working to drive theadoption of global standards for RFID.

Texas Instruments Incorporated provides innovative DSP and analog technologies tomeet our customers’ real world signal processing requirements. In addition toSemiconductor, the company’s businesses include Sensors & Controls, and Educational& Productivity Solutions. TI is headquartered in Dallas, Texas and has manufacturing,design or sales operations in more than 25 countries. Texas Instruments is traded onthe New York Stock Exchange under the symbol TXN. More information is located onthe World Wide Web at www.ti.com/rfid.

Tyco Fire & Security / ADT is a global provider of radio frequency identification (RFID)solutions through the Sensormatic product portfolio. Tyco Fire & Security / ADT has astrong history of working with retailers and manufacturers as a premier provider ofelectronic article surveillance solutions and source tagging programs, fire and burglaralarm detection and monitoring systems, and access control and CCTV equipment. Inthe area of electronic article surveillance, eighty per cent of the top retailers that useelectronic article surveillance equipment choose Sensormatic products.

In RFID technology, Tyco, through its acquisition of Sensormatic, has been a participantin the creation of the EPC (Electronic Product Code) RFID standard for over a decade.The Sensormatic® RFID portfolio offers end-users a comprehensive, robust physicallayer solution, consisting of labels, readers, antennas, device and data managementsoftware, peripherals and services. Building a solid physical foundation in RFID isessential for reliable data delivery to the logical layer (WMS, ERP) of an RFIDdeployment.Focusing on the physical layer is a natural extension of both the Sensormatic productline as well as Tyco core competencies relating to project management, infrastructuredesign, large scale deployments, and on-going maintenance.

The Sensormatic RFID portfolio is scalable and interoperable, providing maximumflexibility for end-users of the technology. These RFID solutions can be integrated intoexisting information infrastructures and easily configurable to adapt to changingbusiness needs. The Sensormatic RFID portfolio provides a total RFID solution for

automatic tracking of inventory and offers new levels of supply chain management. Fewcompanies have the global reach and technical breadth of knowledge that Tyco bringsto the RFID arena.Site: www.sensormatic.com/RFID.

UPM Rafsec is a world leading RFID tag manufacturer and pioneer of the ePCstandard, specialised in low-cost and high-volume production. Headquartered inTampere (Finland), in the heart of the most famous centre of excellence for wirelesstechnology worldwide, the company combines leading edge know-how in the fields ofwireless and paper technology.With its multi-disciplinary expertise in the fields of RF technology, materials andproduction processes, the company has the broadest and most comprehensive in-house know-how and capabilities for RFID tag design and manufacturing.UPM Rafsec is a part of UPM, a EUR 10 billion company listed on the New York andHelsinki stock exchanges and one of the world’s largest paper producers, employing34,000 people worldwide.Site: www.rafsec.com.

Zebra Technologies is a leading global provider of rugged and reliable specialty printingsolutions, including on-demand thermal barcode label and receipt printers and supplies,plastic card printers, RFID smart label printer/encoders, certified smart media, anddigital photo printers. Zebra Technologies delivers innovative and reliable on-demand printing solutions forbusiness improvement and security applications in 100 countries around the world.More than ninety percent of Fortune 500 companies use Zebra-brand printers. A broadrange of applications benefit from Zebra-brand barcode, ‘smart’ label, receipt, and cardprinters, resulting in enhanced security, increased productivity, improved quality, lowercosts, and better customer service. The company has sold nearly four million printers,including RFID printer/encoders and wireless mobile solutions, and also offers software,connectivity solutions, and printing supplies.Site: www.zebra.com.

Note: all URLs’ have been verified, but may change in the foreseeable future.


Appendix H: about the authors

Eelco de Jong

As RFID domain Lead, Eelco de Jong is responsible for developing LogicaCMG’s RFIDservices portfolio. Eelco is an expert in the field of RFID and often consults withcompanies on issues related to the business application of RFID technology. He hasalso initiated and managed a major study on RFID adoption in the European retailindustry and is a frequent speaker at international conferences. In addition, he is aboard member of the M.I.T. Forum for Supply Chain Innovation in Boston, USA.

Eelco holds a masters degree in Computer Science and an MBA from the M.I.T. SloanSchool of Management in Boston, USA

Rolf Appel

Rolf Appel has more than 17 years’ experience in the ICT industry. After obtaining aMasters Degree in Computer Sciences from Twente University in the Netherlands, hespent most of his career with LogicaCMG. His engineering background is mainly inmission critical systems, monitoring and control environments and telecommunications.Since 2003 Rolf has been associate director for the RFID Solutions Centre inRotterdam, and for RFID partner management within LogicaCMG.

Under his supervision the RFID Solution Centre has delivered a number of successfulRFID implementations.

Andrew Vann

Andrew Vann jointly leads the UK’s RFID and asset management solution centre forLogicaCMG’s Industry, distribution and transport division. He has worked forLogicaCMG for 5 years, mainly in the aviation and energy sectors. Andrew hasprovided consultancy and demonstrated RFID technology to numerous companies.

He has authored several sections of the survey and commissioned the associatedquestionnaire.

Arjon Vlasblom

Arjon Vlasblom is a project manager with over 17 years’ experience in industrialautomation and embedded systems. He has a broad knowledge of communicationand identification techniques and has been involved in managing RFID solution projects.In addition, Arjon is involved in the ETSI Task Group for RFID and has acted as testsupervisor during the ETSI RFID Plugtest concerning UHF compliancy.

Eric Burgers

Eric Burgers is a lead consultant in the Dutch RFID competence centre forLogicaCMG’s industry, distribution and transport division. He has worked forLogicaCMG for over 10 years and has a background in electronics, software andsystems engineering. As a project manager, he successfully implemented RFIDsolutions for numerous companies. He has authored several sections of the survey andmanaged the completion of the survey project.

Sebas de Jongh

Sebas de Jongh is a member of the RFID team in Rotterdam for LogicaCMG’s industry,distribution and transport division. He has worked for LogicaCMG for five years, ofwhich the last two years focused on RFID projects. Sebas has been involved in thestart-up and realisation of the RFID Demo Centre and is now responsible for themaintenance and technical support during visits. He provided support and didresearch for the survey.


Appendix I: LogicaCMG and RFID

With more than ten years of practical implementation experience, LogicaCMG is aleading force in RFID adoption. Our Global RFID Centre of Excellence ensures that ourexpertise is combined with the best delivery from local delivery centres across theworld. At LogicaCMG we take a pragmatic approach towards RFID. Based on our experiencewe know what works and what does not work, and we also realise that RFID may notalways be the best solution for your specific business problem.

Focus Areas

To date, we have developed RFID-based solutions in the following application areas:

• Asset management – To create real-time visibility into the status and location of your assets we provide hosted tracking and tracing and real-time location solutions

• Service and maintenance – Proven at Airbus, we offer a solution that enables a transparent flow of information in complex service and maintenance processes

• Supply chain management and compliance – We offer off-the-shelf solutions that help you meet the mandates in the retail and defence industry.

RFID Accelerator Programme

LogicaCMG has developed the RFID Accelerator Programme to support organisationsin assessing the potential of the technology and its impact on their businesses. Weoffer a phased approach, which is based on the lessons we have learned in designingand implementing RFID solutions over the last ten years.

We accelerate the delivery of RFID business benefits by providing off-the-shelf buildingblocks and helping companies to set priorities, build momentum and learn by doing.

For each step in the programme we have developed off-the-shelf building blocks, whichcan be customised and configured to your organisation’s specific requirements. Clearlydefined deliverables for each phase support decision making and minimise the risks.

LogicaCMG’s RFID Demonstration Centre

To demonstrate potential and feasibility of RFID, today, LogicaCMG has set up an RFIDdemonstration centre in Rotterdam, the Netherlands. Based on various RFID projects,the centre shows how RFID has been implemented across the supply chain:

• item level to improve product lifecycle management• case level to improve supply chain operations• container level to improve tracking and tracing in transportation.

The RFID Demonstration Centre exhibits proven solutions built using best-of-breedcomponents, including full integration with back-end systems.

For more information about this survey orRFID capabilities, please contact:Paul Stam de Jongegroup director RFID Solutions [email protected]

Eelco de JongRFID domain [email protected]

LogicaCMG RFID centre of excellenceProf. W.H. Keesomlaan 141183 DJ AmstelveenPostbus 1591180 AD Amstelveen

NetherlandsTel: +31 (0)20 5033 000Fax: +31 (0)20 5713 960

About LogicaCMGLogicaCMG is a major international force in IT services and wireless telecoms. It providesmanagement and IT consultancy, systems integration and outsourcing services to clients acrossdiverse markets including telecoms, financial services, energy and utilities, industry, distribution andtransport and the public sector. The company employs around 21,000 staff in offices across 35countries and has more than 40 years of experience in IT services. Headquartered in Europe,LogicaCMG is listed on both the London and Amsterdam stock exchanges (LSE: LOG; Euronext:LOG). More information is available from www.logicacmg.com

© LogicaCMG 2005. All rights reserved.

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RFID hardware survey 2005