IBM and Delta push RFID tagging

IBM has officially opened its RFID Testing and Solution Centre in La Gaude, France, while in a separate move, Delta Air Lines...

IBM has officially opened its RFID Testing and Solution Centre in La Gaude, France, while in a separate move, Delta Air Lines said it will invest $15m (£8.2m) to $25m on the technology.

The IBM centre is the first of its kind in Europe, according to Faye Holland, worldwide RFID leader at IBM Global Services, and is part of the company's efforts to make users out of those who have shown interest in the wireless tracking technology.

"There has been a complete shift in the RFID arena since January and there is a massive interest in it in many more markets and industries then there was six months ago," Holland said.

The RFID testing centre in La Gaude is intended to complement existing IBM development centres in the US and in Japan.

"All of our labs around the world have some RFID capability, but the RFID testing center in France allows for detailed physics testing of RFID," Holland said.

Additionally, customers interested in RFID can see how it works as part of an end-to-end application, and can inspect the middleware needed to integrate the technology to back-end systems, she said.

IBM is targeting the wireless technology at a number of industries, including pharmaceuticals, retail, logistics, manufacturing, electronics, government and transportation, and the centre will provide prototypes for potential customers in their specific industries, Holland said.

Delta, Boeing and Airbus SAS have all announced they are testing RFID technology and are working to develop standards for the aviation industry.

Delta spokesman Reid Davis said that while the Atlanta-based airline was not making a formal announcement about its investment plans in RFID, it did want to set out its vision regarding the tracking technology.

"There is a lot of stuff that is kind of fuzzy right now in terms of our RFID plans, but within the next 24 months we do envision having some RFID tagging up and running," Davis said.

"That would definitely include bags and cargo, though all sorts of other things could piggy-back on those initial implementations."

Delta and Boeing announced earlier this month that they have been testing RFID tags to track airplane engine parts.

Davis warned that because the airline industry in general is struggling financially, the costs associated with implementing RFID do come into play.

"This technology is brand new for us - RFID isn't replacing some other system - so implementation is a daunting task," he said. But Davis added that Delta does see incentives for investing up to $25m on RFID.

"Right now we mishandle less than 1% of all bags we carry, but that costs us roughly $100m a year to rectify. If RFID tags could cut down those costs and bring better service to our customers, then we can see pay back associated with these investments," Davis said.

According to IBM, RFID technology is already highly economical for companies looking to track inventory, streamline production and reduce theft, as the cost of tags and readers has been dramatically reduced over the past 18 months.

"Cost is a really interesting debate," IBM's Holland said. "The business case for RFID is most definitely around cases and pallets, but we believe that by 2009, 50% of 'high value' items [such as items with warranties] will be tagged."

However, Jeff Woods. principal analyst at Gartner, said that even people who sell high-value items [regardless of the definition], are struggling to make the business case for RFID.

RFID have been oversold and that it is unlikely the technology will be able to live up to its near-term promises, Wood said.

Laura Rohde writes for IDG News Service

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