03.12.08

A very interesting piece from AMR Research’s John Fontanella on RFID reaching its tipping point.  This piece is free until March 14th, so click quickly!

John is a terrific analyst, and I really think he hits some great points in this, but I think the most insightful is that the attempt to drive an industry-wide standard of a nascent technology or initiative will usually not be successful (he cites ECR as another example).  RFID is a technology filled with promise, but it is still youthful, and needs the freedom to provide value in a variety of settings now that the Gen 2 standard has arrived.

To me, this is a specific instance of a wider phenomenon that I call “premature standardization”.  This occurs when a group of customers, or prospective customers, try to skip the early, difficult stages of a technology — littered with incompatibilities and proprietary solutions — and skip right to the highly desirable world of commodity technology based on industry standards.  The problem is that both of these cycles are part of a maturity cycle.  You have to go through the awkward teenage years to become a (hopefully) mature adult — there are no shortcuts.

Having said that however, the desire to standardize as rapidly as possible is completely understandable.  Standards based solutions are usually more mature, less expensive, and just plain easier to operate.  Why?  I would submit that all those characteristics are driven by the ugly, early years, when products are immature, expensive and hard to operate.  As various products mature and deliver value, which is the customers’ primary concern, people start to pay attention to all the other aspects, including costs.  Often, though not always, this drives the providers to standardize (Managed File Transfer is a case of an industry that has not standardized yet).  Generally standardization helps a market grow (because customers who were not willing to buy a proprietary solution will buy a standards based solution), and frequently the technology providers will start buying each other (consolidation).

But this is a process, and I don’t know any way to skip a step.  Everyone knows that a 1.0 product at a customer can be scary for all involved, but that first customer must happen (no amount of testing in the lab will substitute, and believe me, GXS does a ton of testing in the lab before the first customer…). 

As John states in his article: “Technologies are broadly adopted because they deliver value, not because their use is mandated.”