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IBM, HP Chasing Tag Technology

By Cynthia L. Webb
washingtonpost.com Staff Writer
Monday, September 27, 2004; 9:52 AM

Technology giants IBM and Hewlett-Packard are injecting hundreds of millions of dollars into radio-frequency identification technology, which aims to advance the tracking of items from ho-hum bar codes to smart tags packed with data.

Big Blue will invest $250 million and 1,000 workers "in a new business unit [that] will also focus on helping businesses exploit sensor networks by, for example, setting up computer systems that use sensor data to quickly identify supply shortages and automatically adjust delivery schedules," the New York Times reported, noting IBM is to announce its plan today.


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"IBM's goal, analysts said, is to persuade businesses to view radio tagging -- one of the hottest growth areas for mobile sensor technology -- as just one element of a new wave of information technology outside of data centers that must be integrated to be exploited," the newspaper said. "Radio tags can be read in groups instead of one by one, and they hold far more data than bar codes. In addition to indicating what product a carton holds, they can specify when and where that particular item was made and its intended destination. The new tags, known as passive RFID, for radio frequency identification, are small, paper-thin and cheaper than radio tags like E-ZPass toll collectors because they receive enough energy to communicate from signals sent by the reader. That does away with the need for batteries."

"IBM's effort is one of many recent indicators that a drive for widespread adoption of passive radio tags, spurred by Wal-Mart Stores and the Defense Department, is gaining traction," the paper said. "Oat Systems, based in Waltham, Mass., said that Tesco, the British retailer, had selected its software to manage an RFID network that will reach more than 2,000 stores. At the trade show, Oat is also expected to announce a joint marketing agreement with Hewlett-Packard, which has been a leader both in using RFID on its own products and in providing consulting services to others."
The New York Times: What's in the Box? Radio Tags Know That, and More (Registration required)
RFID Journal: IBM Bulks Up Its RFID Initiative (Subscription required)

HP is investing $150 million in RFID, the Wall Street Journal reported today. HP's investment is "an effort to appeal to large corporate customers such as retailers Wal-Mart Stores Inc. and Best Buy Co. As part of the new investment, HP ... said it has signed partnerships with software company Oat Systems Inc. and consulting firm BearingPoint Inc. around RFID, which is a technology that is used to track the movement of goods in real time."

HP has its own director of RFID programs, Ian Robertson, who told the Journal that the company is working on 12 pilot programs and "has set up 28 sites internally that are capable of shipping RFID-tagged products, he added. What's more, HP has allotted 350 consulting and integration employees to RFID projects. The RFID partnerships are the latest in a series of announcements by HP to heighten its profile in the enterprise technology space. Last month, HP reported poor quarterly financial results, largely because of problems in its enterprise technology business."
The Wall Street Journal: HP to Invest $150 Million in RFID (Subscription required)

RFID, however, is not without controversy. The New York Times said pilots of the technology by HP and others and the "use of the technology on library books, has stoked concern among some privacy advocates that governments and businesses will eventually use the technology to secretly accumulate health and behavioral data on people without their consent."

Privacy concerns tied to RFID technology will be among the tech topics at the CeBIT 2005 trade show, according to Britain's Silicon.com, a CNET Networks company. Software company SAP plans to hold meetings with privacy advocates, vendors and others at the trade show and other events to talk about concerns and the technology, Silicon.com said, picking up on an announcement by SAP. SAP said RFID-themed discussions also will start today "to clear up misconceptions and differences of opinion and to find common ground." SAP of course has a lot at stake -- the company makes software that links RFID data to business application software. "SAP executive board member Claus Heinrich said that for RFID to take off, the public at large must be convinced it has benefit," Silicon.com said.
Silicon.com: RFID Talking Shop Opens to Win Over Privacy Groups

The Wal-Mart Effect

Despite privacy concerns, the technology is forging ahead. Information Week today presents a multistory package on the big-box retailer, focusing on the company's embrace of RFID technology. The publication pulls no punches in describing how Wal-Mart has pushed RFID to the table of the tech giants. The company "single-handedly made RFID a business requirement for companies around the globe," Information Week stated in an introduction to the Wal-Mart feature.

Information Week said the retailer is preparing for a "January go-live date of its RFID initiative, aimed at solving the decades-old problem of making sure the products customers want are not only in the store but on the shelves. ... Wal-Mart expects its RFID project to help not only its sales but also those of its suppliers, and it may even aid competitors and other industries. How much it will benefit suppliers, however, is one of the biggest debates in the IT industry." The article explains how Wal-Mart plans to use the devices: "RFID tags on cases and pallets will be read not only when inventory enters a stockroom but also when those cases or pallets go to the floor and, ultimately, when empty cases go to the compactor, she explains. Much of the data collected during RFID reads will be passed on to Retail Link, Wal-Mart's Web-based software that lets the retailer's buyers and some 30,000 suppliers check inventory, sales, and more. The company is developing software for Retail Link that will leverage that data and trigger a business process--for example, initiating a purchase order."
Information Week: Wal-Mart's Way


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