ASK THE EXPERT

The Gen 2 Road Ahead:
What Generation 2 Specifications Really Mean for the Maturity of the RFID Industry

RFID Generation 2 specifications were developed by EPCglobal and a number of companies to benefit the industry with faster, more flexible, and more accurate RFID tag reading and data transmission. The specification concerns the communication from the tag to the reader, and how readers will read the tags.

A large number of vendors are committed to Gen 2, and EPCglobal has already begun testing "Gen 2 Compliant" products from major vendors. There's little doubt we will be living in a Gen 2 world sooner or later.

Q: What is encompassed in Gen 2 Standards?

A: Generation 2 is a tag communication specification, a way for tags to talk to readers. Communications protocols like these are embodied in the silicon chip in the tag — so a new specification like this means new tags.

What should potential buyers be thinking about Gen 2 right now?

Conformance testing has started and first results will be announced in mid-September. If you haven't bought product yet and you want Generation 2 capability, the easy answer is to only buy product that has, at the very least, conformance certification. If it doesn't, don't buy it until it's got that certification. Once you've found a number of companies that have passed certification, you have to evaluate on performance to see what products will be able to do what you need them to do. Not all products are going to be the same, even if they're certified.

What does Gen 2 certification mean to end users?

Certification means that the tags or reader hardware have passed a number of tests that will ensure that the equipment conforms to the specification, and so should work with other Generation 2 products. Of course, certification won't tell the end user which product will perform best under which circumstances, or which product is the best value.

What is important to ask of potential vendors?

I would ask any potential vendor: "How many have you made of this particular product that you're trying to sell me today, and how many have you deployed?" I personally wouldn't buy an RFID reader from a company that hadn't already made thousands and deployed thousands. It's one thing to have something work in a lab; it's another thing entirely to have a factory producing thousands of them. Most end users don't need the added risk of being a guinea pig for somebody's prototype Generation 2 reader — they need something that is already proven in volume manufacturing and large scale deployments. Another important question is which other vendors do you work with. Tags need to be read well by readers from multiple vendors, and readers need to read tags from multiple vendors. Conformance testing tells part of that story — but performance across products from many different companies also demands effective partnerships between those companies.

What positives will end-users see with Gen 2 becoming standard?

The most important impact will be that more and more vendors will be competing for their business. What Gen 2 really represents is a point of market entry for a large number of companies who for whatever reason haven't been participating in EPC up until now. It's good news, because it means more competition, more innovation, and likely lower prices.

The thing to keep in mind is that with more competition comes more information, more claims, more counter-claims, and more potential for confusion. The end users are going to get bombarded with information from all these companies, and they're going to have a lot of choices to make.

What may be negative impacts of Gen 2?

At first, tag supplies may be constrained as larger companies implement their programs and vendors cater to larger orders. Despite press releases and claims to the contrary, some end users will struggle to find tags in quality and quantity for another six months or so. I think it's important to be realistic about that.

One risk is that there will be performance claims that are unrealistic, and that will lead to disappointment. Another risk is that different tags from different companies will contain important differences, despite conformance testing. We will almost certainly see Gen 2 "Plus" and Gen 2 "Minus" tags as competing vendors will try to differentiate themselves. This can be a good thing, as long as your RFID readers can cope with all the Generation 2 variants.

Will major mass-market retailers require Gen 2 compliance soon?

There is no word on anybody requiring Gen 2 right now. There are a number of companies that require EPC, and Gen 2 is a variant of EPC. But I'm sure that will come through in 2006.

Is there a "Gen 3" on the horizon?

Generation 3 is a certainty — the technology should continue to improve, and the system should allow for innovation. The trick is to deploy infrastructure that is allowed to evolve so that you get as much innovation as possible. The right way to approach standards systems is to make sure new ideas are not a problem.

How do you prepare for an evolving standard?

I think we'll always see innovation in the RFID space, but the trick for RFID buyers is to deploy infrastructure that can be upgraded to comply with new protocols as they emerge. The reality is that Gen 2 is really just an umbrella term. Yes, there are specifications and conformance tests, but every tag that comes out from every vendor will have some differences. And the most flexible infrastructure will win.

That's why I recommend that you have software-defined radio in your readers, otherwise there's a huge risk that you deploy a hardware-based, hard-wired infrastructure that gets out of date very quickly. With software defined radio, it's a straightforward process to upgrade for new generations and variations — you just upgrade the software. Hardware defined radio is a different story — you have to swap out boards in the field, or throw the whole thing away and start over. There should be no "do overs" in the world of RFID readers.

How long will it take for the majority of systems to be fully in the Gen 2 world?

Gen 2 is being looked upon as a major milestone in the convergence of standards, and people want it, but there are some obvious footnotes to that. One is that it has to be readily available; it isn't yet today. Secondly, it has to be proved to work and all the bugs have to be ironed out. Designing silicon is not easy. I think we'll see prototype volumes through the end of this year, and the quality of tags and the number of tags in the marketplace should steadily improve through next year. By the end of 2006, there may be little Gen 1 left, based on what we're seeing currently.

Is EPCglobal serving the interests of the entire RFID industry?

I think EPCglobal has done a good job executing Gen 2. It's the first standard they've really had to do on their own. The proof of the pudding is in the eating. We have to see how these things work when they are available in the marketplace and in use in the supply chain.

I think the key thing with any standard is to bring as much competition to the marketplace as possible, because that's beneficial to the end user. The most important thing about Gen 2 is that there are a number of vendors supporting it, and that's the real achievement of this process. We now have about 10 silicon chip vendors who are either making chips for Gen 2 or planning to make chips for Gen 2. That's unprecedented in RFID.

What is the most important issue that end users should be thinking about over the next year?

Scaleability. What I mean by that is that you have to install a system that will keep growing as you need it to. That's not the same thing as getting something to work in a "lab" setting or in your distribution center. The greatest mistake I have seen in RFID, and I've seen it repeatedly, is somebody finds some setup that works well in a one-off basis in a controlled environment, and then without thinking about scaleability, tries to deploy that across their enterprise, and it can be fatal.

When you get into deployment mode, you have to think about things like security, hardware upgradeability, software upgradeability, remote management, ease of install, amount of maintenance, and level of supervision needed to keep things running. I have no doubt that there will be some end users who don't hear that message and will buy things that they have to throw away 12 months from now.

The number one criterion after "Does it read the tags I need it to read?" has to be "Does it scale?" If it's worth using RFID at all, it's likely to be worth using it in as many places as possible. So, how is it going to scale? What would 10,000 of these setups look like? If you can't answer that question, you will likely find that you reach a dead-end very quickly with your RFID deployment.

What would you suggest to companies biding their time with implementation?

On the one hand, like all technology, the longer you wait the cheaper and better it will become. On the other hand, the longer you wait, any advantage you might have gained from the technology will go to your competitors who are using it. Getting into technology is not a one-time deal. I think the benefits of waiting for better and cheaper are greatly outweighed by the disadvantages of getting left behind.

What Gen 2 represents is the next stage in RFID, the next point of maturity of the technology, and the fact that the technology is here to stay. So then the right question to ask: "If not now, when?" If you can't find a rock solid reason not to do it, I believe it's always good to err on the side of action. That doesn't mean you have to spend $100 million — just find a way get started. There's a lot to learn about this technology, and the only real way to learn is to do. Even a modest project is better than nothing.

Why was the recently formed RFID patent pool an inevitability in your opinion?

It's very straightforward. There are a lot of companies that think they have intellectual property that is essential to practice commercial RFID. And the least efficient way to approach that is for every single one of those companies to have unilateral licensing arrangements. You can actually prove mathematically that that will kill the RFID market, because no one is going to negotiate with 25 different patent holders, and nobody is going to pay 5% of their revenue 25 times. Every one loses in that scenario.

There's a very straightforward solution, and that solution is for as many companies that have essential IP to come together and supply a one-stop shop licensing solution. This is not a new situation, and there are many examples of successful patent pools in the past. It's just the natural obvious thing to do. The only time you don't need to do it is when only one company holds the essential patents. There's lots of evidence that's just not true in the case of RFID. So the question anyone opposed to patent pooling has to answer is "What's the alternative?"

What are the rules for patent pools?

The Justice Department has very specific guidelines about how to form patent pools that are pro-competitive. If they're not pro-competitive, you can't do it. One aspect is that only essential patents can be included. Also, the patent pool has to include anyone who wants to be included if they have essential intellectual property, and participation has to be voluntary.

Will the patent pool have any effect on the rate of Gen 2 conversion?

The worst-case scenario is every single patent holder does their own thing, and the market falls apart. I don't think anybody in the RFID industry is under the impression that there is only one patent holder. All companies will try to follow a strategy that they think will get them the most money. One company acting unilaterally is not ideal but it's not a disaster. The market can probably bear that. What the market can't bear is everyone doing it. From a market development perspective, the ideal outcome is that there will be one place to get your licensing. That grows the market and makes sure that patent holders get their dues. Normally everyone gets the best result that way: after all, the size of the market has a big impact on how much patents are worth.

Kevin Ashton is V.P. of Marketing at ThingMagic. Kevin was previously co-founder and Executive Director of MIT's Auto-ID Center, an Associate Director of the Procter & Gamble Company, and a Visiting Engineer at MIT. In addition to his responsibilities at ThingMagic, he lectures on RFID and related business impacts at MIT, speaks to audiences around the world on the "Sensor Age," and has recently completed a book about RFID.