Radio Frequency Identification

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SpeedPass and garment tags use what is known as passive RFID technology, with power to the tag supplied by the RF energy transmitted by the reader. Longer-range applications, such as automated toll-collection systems, use active—and more expensive—battery powered tags.

RFID tags used in inventory control and supply chain management applications compete with bar codes, but RFID tags can contain far more detailed information than bar codes. RFID tags also offer retailers an easier way to manage inventory than bar codes, which require a clear line of sight between the laser scanner and bar code.

'Smart Shelf'

In a 2001 test of RFID technology, San Francisco-based The Gap Inc. equipped some of its stores with "smart shelves" containing RFID readers. The system used built-in readers to instantly monitor the inventory on the smart shelves, gathering information on each garment through layers in a stack, a task that would be impossible with a bar-code scanner.

A majority of the new cars sold in the world by U.S., European and Japanese automakers now come equipped with keys embedded with RFID tags that each contain a unique identifier. When the key is inserted in the lock, it communicates with a reader built into the car's electronics.

If a thief uses a key without an embedded RFID chip—or one with the wrong identifier—the car will start but will be immobilized in a matter of minutes by the reader.

Large, read/write reusable RFID tags used to track auto parts on assembly lines can cost hundreds of dollars, but tags used for supply chain management systems have dropped to well below $1 per tag. This is still more expensive than a bar-code price tag system, which requires only a laser printer to generate an inexpensive label that contains price and inventory data.

Allied Business Intelligence Inc. in Oyster Bay, N.Y., estimates that some 220 million RFID tags will be shipped this year. Economies of scale coupled with demand will result in shipments jumping to 1.6 billion RFID tags in 2007, according to Allied Business.

But growth, particularly in competition with cheaper bar codes, seems stymied by what Bill Allen, a manager at Texas Instruments Inc.'s RFID division calls "the Holy Grail factor." Once, the Holy Grail for RFID cards was a price point below a dollar. Now, the bar seems to have been lowered to a dime or even a nickel for the kind of throwaway cards used in retail, and reaching that goal is daunting, Allen says.

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