The Motley Fool Previous Page RFID Signal Strong in 2005 [Motley Fool Take] January 3, 2005

By Rick Aristotle Munarriz (TMF Edible)

What is a disruptive technology? As the name implies, it's a breakthrough that rattles the walls of the conventional. Technological advances, from the automobile to the microwave oven, ultimately reshape our living experience. Over the next five weeks, we will be going over five promising technologies looking to explode into the mainstream in 2005. With our new Rule Breakers newsletter singling out tomorrow's great growth stocks early in their disruptive stage, it just seems the appropriate way to break into the new year.

Today, we're taking a closer look at RFID -- or radio frequency identification. This inventory tracking technology enters a dynamic chapter this month, as retailers like Wal-Mart (NYSE: WMT) are requiring that their largest suppliers tag deliveries with passive RFID tags. Even the U.S. Department of Defense is using them.

You don't need to know the nuts and bolts of supply-chain management to understand why RFID is going to revolutionize inventory control. Unlike dormant UPC bar code labels, RFID tags can communicate with RFID readers. So companies can track merchandise in an instant. 

It's not just retailers. The technology is already being embedded in everything from casino chips to household pets. While the current cost of the RFID tags makes it unlikely that they will replace UPC or security tags entirely, the new technology does have some investing implications in 2005.

For starters, the breadth of data from RFID tags should serve as a boon to database software companies like Oracle