Having an RFID tag in your Nike shoes, or affixed to your license plate sticker, or even embedded in your driver’s license may seem bizarre.
But to Gordon Westwater, some of these non-conventional applications of radio frequency identification or RFID represent the real potential of this technology for businesses and consumers.
Westwater is president of IPICO Inc. a Burlington, Ont.-based provider of RFID technology to the global market.
RFID is an automatic identification method that relies on radio waves to retrieve data remotely stored on RFID tags. Some tags can be read from several meters away and beyond the reader’s line of sight.
IPICO trades on the Toronto Stock Exchange, but its customer base is mostly outside of Canada – everywhere from Brazil to Japan, from South Africa to China and India.
In these geographies, the company’s RFID technology and products are applied in non-conventional ways – such as sports time keeping, electronic vehicle identification and in extreme environments.
IPICO’s focus on emerging markets – such as India and China – is driven by the huge opportunities that exist in these geographies for second-gen apps, says a Canadian observer.
“India and China – unlike Canada – are more willing to venture into second- and third-gen RFID applications,” noted Rani Cleetez, industry analyst, aerospace and defense, at consulting firm Frost & Sullivan Canada in Toronto.
She says in Canada adoption of second gen apps are hindered by the perception that they are costly, risky and take too long to deploy. “Besides, many companies here are satisfied with their current (Gen 1) RFID implementations.”
By contrast, she said, India and China haven’t had any significant Gen 1 RFID implementations, but see value in going right away to the latest, most advanced applications of this technology in specific areas.
“Moreover, they can learn from mistakes made by earlier adopters [of Gen 1 apps] – and not repeat them,” Cleetez said,
In some respects, though, Canada has been a pioneer in non-conventional applications of RFID.
For instance, Canada was the first country in the world to make radio frequency ID tags mandatory for cattle, a technology that will allow food inspection officials to more effectively trace animal diseases, such as Mad Cow.
It’s in the second- or third-generation RFID applications that the real opportunities for the technology lie, says Westwater.
He says his company’s “closed loop” RFID business strategy, makes a lot of more sense than retail giant’s Wal-Mart’s “open loop” concept.
The difficulty with the Wal-Mart approach, he says, is that it has sought to force compliance. “The people who had to buy the technology [Wal-Mart’s suppliers] didn’t really benefit from it.”
By contrast, he said, IPICO’s strategy is to work with the brand owner – and only pursue applications that deliver significant ROI and make sense to those making the investment.
Shoe tag RFID
RFID for sports timekeeping, is an application that meets both criteria, he said, which is why it has become “a global brand within a 12-month period.”
At the heart of this application is the new RFID shoe tag that IPICO developed that is used to time runners and races.
“Because of the protocol we can read [metrics of] 100 runners at a race, and give you the split times.”
The tag has been used in some major marathons, Westwater says. “I’m excited about the global application of this – we’re running races in Japan, Brazil, London, the U.S.”
A version of this dual frequency chip was embedded into the shoes used by runners in a race sponsored by Nike.
Apart from its immediate use in the race, Westwater believes the tag creates huge business opportunities for the brand owner.
“For instance, the Nike tag was created for a Latin American race. But one of the things being planned is a global race, in which this tag would be [Nike’s] unique identifier.”
He said if any of the runners walked into a Nike store – their race and time information would be available – and the store would could offer them a discount.
He said for fixed track solutions – where participants are keen to access “split times” – there could be specific read points. “You could run your race, and then go home, log on to the Internet and see what your times were.”
The affordability of the tag – as opposed to competitive products – is one of its biggest selling points, the IPICO president said. IPICO, he said, sells the tag to its exclusive distributor, People Sports, for $1, which in turn sells it for around $3 to the race organizer or the brand.
“For about $5,000 a school could have a tag readers solution and start timing their kids.” A similar package would ordinarily cost $50,000 at other vendors.
The tag’s low cost is part of the reason why the response to it has been “overwhelming” in the very first year of production, Westwater said.
Frost and Sullivan’s Cleetez agrees that the tag’s low cost would be a big factor in its adoption.
The low cost of individual tags is particularly vital in large-scale projects, she said.
In projects that require hundreds of thousands of tags, customers could realize huge cost savings by opting for a tag that costs just a few dollars – as opposed to a competitor’s product that costs $50, she noted.
“Distributors can also gain through bigger margins, because they have greater leeway to mark up the tag price, while ensuring it’s still affordable to the end user.”
According to Westwater, the savings are derived, not just from the low cost of the tag, but the significantly lower cost of applying the tag to a sports timekeeping environment.
Chip on your license plate
Electronic vehicle identification and tracking is another hugely popular application of second-gen RFID technology, according to Westwater.
He cited the example of his company’s work in countries such as China and India that – along with phenomenal infrastructure growth – are experiencing runaway growth in the number of vehicles hitting their roads and highways.
“In China 80,000 kms of highway are expected to be completed by 2010, and 150,000 kms of highway by 2020. There are already more than 50 million vehicles in China, and by 2020 there will be an estimated 200 million vehicles.”
Such incredible vehicular growth should be a huge source or revenue to municipal governments, he said, but for the unfortunate fact that around 20 per cent of vehicles in developing countries are unlicensed.
By developing RFID applications for document authentication, he said IPICO is helping governments in these countries address this issue. “In addition to having the tag on your windshield, we could then put the same tag in the license that you carry.”
The IPICO application, he said, includes RFID tags, readers, middleware and software that’s custom developed for a range of vehicle and people identification applications.
The business benefits of such apps is inestimable, the IPICO exec said, especially when you factor in the low cost.
These benefits include congestion, faster trade and better use of infrastructure.
In countries such as India, he said, with millions of new cars and motorcycles hitting the road and renewed attempts to control vehicular pollution, this technology is very handy.
“It helps authenticate that that vehicle actually has been emission tested.”
In North America, he said, the technology could have huge potential benefits in applications such as toll tracking.
IPICO’s RFID tag would be a far cheaper option than a transponder for regular users of the 407 ETR – the 108 km multi-lane toll highway running across the north of the Greater Toronto Area. “That tag costs $1 versus that $25- 30 transponder.”
But industry analysts say it’s in emerging markets where adoption of RFID for EVI is likely to be really take off.
“The massive infrastructure boom in India and China, and the fact that they don’t currently have an effective EVI system, is probably the biggest driver of [EVI] in these countries,” noted Cleetez.
Apart from lowering costs, IPICO says resilience is the other attractive feature of its RFID products.
“We know we have technology that works well in very difficult applications,” said Westwater.
One of these tough applications is tracking produce as it moves through the supply chain – from the grower, to the distribution centre, to the retail outlet, to the store backroom and finally to the front shelf.
“We need to be able to time that tag [at every stage] and must do this in an environment where there’s a lot of moisture and water.”
IPICO is working on an application that would embed the tag in the tote (that carriers the produce).
“The idea then is the tote becomes the tag. In a six-year contract, there would need to be enough memory on that tag to record functionality over that period.”
Consumer applications of this technology about, Westwater said.
He cited the example of the IP-X RFID tags being used at London, U.K.-based retailer Marks & Spencer (M&S) that enable the store to do inventory in one hour as opposed to seven.
While provided to M&S by global firm Avery Dennison Corp. these tags are based on IPICO technology, he said.
“The technology has nothing to don with Avery Dennison [except that] Avery Dennison bought Paxar – the label manufacturer that we worked with to create that application.”
“By the end of 2008, there will be more than 250 million of our designed IPX chips in M and S.”