McDonald's puts hot technology in consumer hands

From...

By Emelie Rutherford

(IDG) -- RFID (radio frequency identification) may be the hottest technology you've never heard of.

About 500 vendors are now hawking RFID-related technologies and, according to Steve Halliday, the vice president of technology at a Pittsburgh-based RFID trade association AIM (Automatic Identification Manufacturers), more are jumping on the bandwagon every day. There are now hundreds of millions of RFID devices in circulation, and companies like the giant Proctor and Gamble want billions more.

IDG.net INFOCENTER Darwin main page Ask Darwin Darwin live audio interviews Free daily newsletters Related IDG.net Stories Philips, Gemplus, Intermec propose electronic tag standard Biometrics at work? 'Bond'-foolish or business-wise? Features Preparing for the worst Meet the hackers Tech me out at the ballgame: Fenway vs. PacBell Visit an IDG site Choose a site: IDG.net CIO Computerworld Darwin Dummies.com GamePro.com The Industry Standard ITWorld.com InfoWorld.com JavaWorld LinuxWorld Macworld Online Network World Fusion PC World Publish.com UnixInsider IDG.net search

Radio frequency identification, like barcodes and magnetic strips, identifies, tracks and stores information on tagged objects. RFID hasn't made its way into the common vernacular, because much of the work it does is behind-the-scenes: for example, it helps toll booths recognize transponders on cars, key cards open doors and car engines recognize their correct ignition keys.

That is all about to change, because RFID may soon help millions of Americans do something that's near and dear to their hearts: order a Big Mac and fries.

Eleven McDonald's restaurants are running pilot programs with RFID payment wands made by Texas Instruments, which may lead to a roll-out in the fast food chain's 12,800 U.S. locations. McDonald's customers wave their wands in front of RFID readers and their personal accounts are charged. Chicago-area McDonald's are accepting ExxonMobil's SpeedPass (a RFID payment device the gas station provides for customers), and the testers in Boise, Idaho are using an RFID wand by Wayne, Penn-based cashless payment vendor FreedomPay. (Texas Instruments provides the RFID capability and the vendor provides the device.)

RFID has been around since the 1930s, but widespread distribution of devices like McDonald's became possible only in recent years, as computing power increased and the price of chips decreased. RFID differs from similar technologies that identify and capture data, such as barcodes and magnetic strips, because it does not require contact Ð readers can detect tags as far as 90 feet away. RFID tags can also be detected faster, often in less than 100 milliseconds, and can store more data, up to 1MB.

RFID is mainly used out of consumers' sight, to do things like track packages in supply chains and monitor companies' assets. It's the underlying technology used for tracking animals and automatically collecting tolls from cars passing through tollbooths with transponders.

And now consumer businesses are rushing towards RFID. Taco Bell, Pizza Hut and Kentucky Friend Chicken are considering setups similar to Macdonald's, and ticketing agencies, vending machine makers and cell phone vendors are looking at it. "RFID lets high-volume stores offer customers the convenience of credit cards without slowing down their operations while they wait for them to be processed," says Dave Slinger, vice president of Texas Instruments and general manager of its RFID Systems Business. It also helps them build those all-important affinity programs, says Michael Liard, an analyst specializing in RFID at Natick, Mass.-based consultancy Venture Development Corporation. "They collect data on consumers' spending habits," says Liard, "so they can send them coupons and targeted incentives with little effort."

RFID is not without its flaws. Multiple devices operating on the same radio frequency (RFID works on several) go awry if used in the same range, which is usually a foot. Metal and water also deter radio waves, so devices traveling on boats or sitting atop iron palates could fail. Further, the lack of standards means that the same RFID device cannot be used in the United States and Europe, where different radio frequencies are used. And RFID tags aren't cheap. AIM's Halliday says they cost from 30 to 40 cents each, which makes them too expensive to put on inexpensive items like groceries.

"This is yet another a new industry with many players that hasn't reached maturity," says Venture Development's Liard. "Barcodes are mature, but RFID is not. The costs are high and standards aren't developed."

But progress is being made. Halliday says AIM will kick off an ISO standardization process in June, which he predicts will be done by mid 2002. By 2006, according to Frost & Sullivan, a San Jose, Calif.-based consultancy, the global market will reach $7.5 billion.

And pundits say once the technology is hammered out, the possible uses are far-reaching. RFID could be used on ski lifts and at grocery stores, where people and food will be moved through with ease.

Of course, the McDonald's deal could give the industry a huge shot in the arm much sooner. It does, after all, boast billions and billions served.