VDC Research: RFID, Barcode, Retail Automation & Self-Service Market Blog

RFID Inside of Me?

Have you heard about this?  A Stanford medical researcher recently discovered that, contrary to common belief, HF frequencies actually transmit quite well within the human body. This realization prompted her to develop a micro-sized antenna which she then used to power an RF device capable of ‘swimming’ within a person’s bloodstream.  (See original article here.) On one hand, this discovery borders on being disconcertingly sci-fi, and conjures thoughts of Isaac Asimov’s ‘Fantastic Voyage.’ At the same time, an intravascular RF device is an exciting development that could eventually open a new world of possibilities for medical treatment and research, although such applications are a long way from becoming reality. Still, we believe this concept holds tremendous promise, as it could provide significant, undeniable value to all healthcare stakeholders—including the patient.

Using RFID in the human body and healthcare is not a new concept.  Sub-dermal tracking transponders have been around for a long time, medical device implants monitoring is gaining traction, and there have been a number of R&D projects pertaining to RF-enabled medication administration. Companies such as Versus Technology and Awarepoint offer patient monitoring systems, while Censis Technologies and Clearcount provide surgical tool tracking solutions (because nobody wants to find a forceps or sponge left inside of them post-operation).  However, this particular innovation is different, as it could eventually enable internalized, personal care giving. Not only would an intravascular device be capable of performing all of the aforementioned applications, it would also provide a physician unprecedented visibility into a patient’s body and make a number of medical procedures less invasive.

Several weeks ago we wrote about a recent NFC-in-healthcare event held at MIT. The majority of the solutions presented at that conference, as well as those we’ve heard about in our recent research, are intended for patient (as opposed to doctor/medical professional) use, and generally involve some kind of monitoring and/or tracking functionality. Our main criticism of these solutions is that they offer a weak value proposition to the person responsible for making sure they're used—the patient. Of course health insurance companies and doctors would love to monitor your blood pressure or adherence to a prescribed course of medicine in real-time; however, the key question is, how does using a solution that provides such visibility benefit the patient—the person ultimately determining whether it is used at all? If there is not a clear-cut, undeniable benefit, we think it is unlikely many patients will remember—or be willing—to use these solutions.

In the case of an intravenous RF device, the benefits for all stakeholders are readily apparent. Healthcare providers would have a new, versatile and valuable weapon in the battle against various ailments, while health insurance companies could potentially reduce payouts if this solution reduced the need for more traditional and complex procedures. Patients stand to be the greatest beneficiaries of all, as this technology could enable the precise treatment of ailments that were formerly addressable only by indirect or highly invasive methods.

Could NFC "Tap" into the Popularity of Mobile Barcode?

Could a catalyst for consumer NFC adoption be another type of technology? We believe it’s possible. The rapid emergence of near field communication (NFC) during the past 12 months, particularly in the context of NFC-enabled smartphones, has vendors and developers working furiously to create solutions that they hope will be The Next Big Thing. While these efforts have resulted in numerous application concepts ranging from mobile wallets to e-couponing to social networking, no specific application (or application type) has yet gained widespread acceptance among consumers. What can developers and vendors do to increase awareness for their NFC solutions? VDC believes that integrating NFC with other recognizable, more frequently used solutions already present on a consumer’s mobile device — such as mobile barcoding — can improve awareness and understanding of the technology, facilitate adoption and extend the reach of NFC.

Let’s consider, for example, how mobile barcode and NFC could complement each other in the context of a customer-facing supermarket deployment.  Barcodes exist on virtually all products being sold in a supermarket and are increasingly used throughout these stores for a diversity of applications such as pricing, information retrieval/exchange, comparative shopping, promotions, couponing and customer loyalty—but are very rarely used for payment.  NFC is a rapidly emerging technology that enables and enhances many of these applications–including payment–but is generally not used for actual shopping at the shelf, because tagging every item is too costly.  The two technologies, working in concert, could create an all-encompassing shopping solution that unifies the strengths and capabilities of both technologies into a single application deployed on a consumer-owned device. Alone, neither technology is ideally suited for all shopping applications; however, when converged, the two technologies together enable a robust solution capable of supporting the entire shopping process.

Some developers, to a degree, have recognized the opportunity to marry barcode and NFC in a single solution. MobiLead, for example, combines the two technologies for mobile marketing and information access, while DigiMo created a mobile payment solution that allows users to choose between NFC and barcode enabled payment. However, we are unaware of any offering that leverages both technologies for unique, specific functionalities—for example, barcode for scanning and NFC for payment. In both of the aforementioned examples, barcode and NFC provide redundant capability. Although these applications are a step in the right direction, we think the real opportunity lies in using each technology for the specific purpose (or purposes) to which it is best suited.

We recommend NFC providers leverage other technologies and solutions currently used by consumers on their mobile devices (e.g., barcode, GPS). Not only will blending NFC with other technologies enhance a solution in regards to its functionality and value, but it also will facilitate NFC education and adoption. 

Get a Little Closer to your Sweetheart with AutoID

Are you a Valentine’s Day procrastinator? You are not alone and it’s not too late.  AutoID is here to save the day.  In the spirit of everyone’s ‘favorite’ Hallmark holiday, we decided to blog about how an AutoID-enabled ecosystem can help ensure a romantic, love-filled day with your significant other.

OK – you’re late to the game because you’re just coming home from a business trip, but no sweat … you’ve got your NFC-enabled smartphone (which you used as your boarding pass).  As you get off the plane and sprint toward the baggage claim, you pass a flower dispensing kiosk that has the perfect bouquet.  You quickly select the bouquet, swipe your phone near the machine, approve the transaction with a tap and voilá, instant flowers for you to hand deliver.

You grab the flowers and make your way to the baggage claim.  Although you take solace in the fact that your bag isn’t lost because the airport is using RFID, you still get there before the bags come out and know you’ll be there for at least a ‘few’ minutes. During these valuable few minutes, you call to make a dinner reservation at her favorite restaurant and are told that the only reservation they have is for 10pm and the table is next to the kitchen.  But you don’t panic, because this restaurant has a loyalty program that ensures a premium table for its members and you are a longtime member.  So you go online, transmit your loyalty card information (as a tech savvy user, you already have this scanned into your smartphone) and reserve a table for two in a dark, romantic corner.   

Surprisingly, your bag comes early – must be that RFID system – and you are quickly on your way home, speeding along the highway using your toll transponder to avoid the long lines – and added stress - at the toll booths.  You finally make it home, with flowers in hand, are greeted by your significant other with open arms, and are summarily rushed out of the house to make your dinner reservation.

Upon arriving at the restaurant, the hostess scans your loyalty card (displayed on your phone) to authenticate your reservation.  You sit down and enjoy a lovely meal.  When the bill comes, you pay with your NFC smartphone – at the table, with a quick and virtual ‘high five’ with the waiter’s device.  As you are walking out of the restaurant, your sweetheart sees a movie poster advertising the latest Rom-Com (romantic comedy) and says they want to go.  You quickly hold your NFC phone to the movie poster, watch the trailer and decide that this is not the movie for you both, but another movie playing at the same theater is.  You buy your tickets online and drive to the cinema.  At the cinema, you display your tickets on your phone, have them scanned (barcode) or read (NFC), make a quick stop to grab some soda and popcorn (again paying with your phone), and watch the movie. 

You’ve had a successful and romantic evening, but wait…we’re not done yet.  Keeping this blog post rated ‘G’, you get home and both of you slip into something more comfortable.  As you cuddle up by the fire with a glass of merlot, you use your NFC phone to pair with your Bluetooth speakers and play some smooth jazz to set the mood.  The rest is up to you – even AutoID has its limits.

Happy Valentine’s Day!

Could Health Care Inject More Life into NFC?

This past Monday, NFC Cluster Boston held an event at MIT entitled “NFC in Smartphones Transforms Healthcare.” Given MIT’s long track record of technology innovation, we were particularly excited to hear what some of the leading minds were thinking about NFC and its potential in health care. Furthermore, whereas the majority of NFC events are related to contactless payment and other B2C applications, we thought this conference would provide exposure to some innovative use-cases beyond the aforementioned “usual suspects.”  I enjoyed the discussions and presentations, particularly the open-floor panel, and appreciated the vision of the topics that were discussed; however, I wound up leaving the event thinking that NFC in health care is still a ways away. 

For the most part, the solutions featured at Monday’s event were for in-home patient use and involved some sort of monitoring or tracking functionality.  For example, one of the solutions tracks adherence to a prescribed course of medicine, while another monitors and records sleep patterns.  In my opinion, the biggest issue facing these use-cases is that NFC offers little value and no compelling reason for the patient to use the solution on an ongoing basis. 

While we do recognize there is potential value in providing health care professionals and health insurance provides a transparent perspective on a patient’s activity (as it relates to their medical condition/treatment), from the patient’s perspective, it is difficult to see a compelling value proposition.  Furthermore, we question how willing patients will be—and how often they will remember—to use their NFC smartphone to record health care-related activity. We think patients could find such applications potentially invasive, and without some sort of incentive or reward for their continued use, it will be difficult to otherwise force them into using them on an ongoing basis.

We know there is opportunity in health care opportunity for NFC, but specific use-cases and applications need time to evolve before adoption can begin.  Health care enterprises are among the most conservative in regards to technology investment, so any NFC solution targeting this vertical must offer an undeniable value proposition. Vendors could look to deliver value on any number of dimensions, including cost reduction, improved care accuracy and regulatory compliance, just to name several. But, bear in mind—if the patient is expected to play an active role in utilizing the solution, they too must receive compelling value in order to ensure its use.

Trolling for Dollars

RFID technology and application patents have been a topic of industry debate for many years, particularly those tied to passive UHF EPC Gen 2 technology. Historically, RFID patent activity has centered on patent pooling efforts, consortium building and the occasional patent infringement suit between or among vendors. However, the industry is facing a new threat: NPEs (non-practicing entities), more commonly known as patent trolls. And, one in particular, Round Rock Research LLC (Round Rock), is capturing headlines by filing suit against major RFID users including Macy’s, GAP Inc, J.C. Penny, Hanes, Dole, Pepsi as well as passive UHF end users in a variety of industries.

Unlike what we have seen in the past, the intended targets this time around are not vendors and solutions providers. Round Rock is pursuing enterprise end users, including many with deep pockets, currently citing five patents which cover communication methods or passive UHF EPC Gen2 RFID. The specific patent numbers are: 5,500,650; 5,627,544; 5,974,078; 6,459,726 and RE 41,531 (with others under consideration).  Micron Technology Inc. sold these patents along with some 4,200 others to Round Rock founder John Desmarais.

Although the complaints filed by Round Rock differ in some ways, each claims that a specific defendant has infringed Round Rock’s patents by making, using, selling or importing products or systems that consist of or include passive UHF RFID EPC Gen2 tags and readers. The actions are the result of Round Rock allegedly having grown frustrated with the slow pace of licensing discussions and possible royalty collections in the passive UHF EPC Gen2 RFID arena. Therefore, Round Rock elected to bring these suits in order to provide a catalyst for what it dubs “stalled negotiations.” Round Rock has consistently asked the court to declare that a defendant’s infringement is “willful” and to award unspecified damages, attorneys’ fees and expenses incurred in litigation.

Where’s the RFID Troll Patrol?

To better understand the RFID industry’s response or plan of action to address this significant issue, VDC Research reached out to several leading passive UHF EPC Gen2 component, hardware and solutions providers as well as industry associations. Responses were relatively uniform: we are doing our homework; however, there is little the RFID vendor community can do to defend or protect customers and users other than recommending they seek legal counsel and use the procedures of the courts to extend the process, including forcing Round Rock to produce documentation. The hands of most industry associations are also tied as they operate as non-partisan entities.  They, too, are suggesting end users seek independent counsel.

The harsh reality is that those being sued are apparently left to fend for themselves with no direct assistance or defense support from vendors and industry associations at this time. VDC Research believes a collaborative response is required; however, uncertainties around the best approach remain.

VDC Research supports the right of organizations to derive value from the intellectual property that they own. But, when done in this fashion, questions about blackmail and the inadequacies of our patent protection system arise.  In this particular case, passive UHF EPC Gen2 RFID end users had no knowledge, no advance warning and were essentially blindsided.  The fear is that the issue will balloon if not controlled or addressed soon, and that largest accounts – which are the most attractive to both RFID technology vendors and Round Rock – will delay further investment in RFID.

VDC Research continues to monitor the situation and will provide additional commentary and analysis as more information is gathered.

Nintendo Makes NFC Technology Vendors Say "Wiiiiii!!"

Nintendo’s Wii platform revolutionized the home videogame console with its motion-sensing controller, thereby enabling a more interactive gaming experience.  With its latest version of this platform, the Wii U, Nintendo is looking to push the envelope once again…and this time, NFC (Near Field Communication) is positioned as the big differentiator.  The Wii U features a NFC-enabled touch-screen controller, and will initially leverage its NFC capability for payment, player profile creation, game card management, and/or avatar/character creation and storage.  For example, a player can use NFC to pay for access to new game levels/features and save their progress. Provided the NFC concept is intelligently designed and executed, and well-supported from the developer community perspective, we view this as a very positive development for the overall NFC market for four reasons:

• The integration of NFC into the Wii U will introduce more consumers to the technology—resulting in increased awareness and market growth. The opportunities for growth and exposure are significant—Nintendo sold approximately 20 million Wii consoles in 2010 (4 years after its introduction). For many customers, the Wii U console will be their first exposure to NFC applications.  Furthermore, based on our end user research, the demographics of videogamers are well-aligned with those of early adopters of NFC. We think a positive experience with NFC gaming will pique consumer interest in other NFC devices and applications, thereby driving growth in the broader market.

• Nintendo offers application developers an entirely new platform for innovation and experimentation. We believe one of the keys to NFC market growth is a robust and engaged developer community that creates the applications that bring NFC technology to life. The emergence of NFC in videogames brings a large and experienced group of developers into the broader NFC ecosystem.

• If the Wii U follows the successful path of its predecessor, we expect competing platforms (namely, Playstation and Xbox) to follow suit with NFC integration. The video game market is highly competitive, and success is defined by innovation and technology advancement. If Nintendo’s integration of NFC is well-received, we think its competitors will be quick to embrace the technology as well—thus driving further awareness and demand for NFC hardware.

• A positive reception for NFC in videogames will pave the way for the technology to be integrated into other consumer electronics. Time and again, an innovation that takes root in one type of device soon spreads to others—consider gesture recognition and touchscreen technology, for example.

Unless something goes very wrong with Nintendo’s NFC implementation, we see it as a big step forward in NFC adoption, sowing the seeds for future NFC market growth.