The Three Great Lies used to be: My wife doesn't understand me; I'm from corporate and I'm here to help you; and . . . I forget the third. What are the Three Great RFID Lies?

The last time I counted, more than 65 venture-backed companies were committed to RFID technology. Assume a $20 million investment in each, and that's $1.3 billion invested in RFID. Each company submitted a business plan that essentially said: RFID is going to be the next great multibillion-dollar market (Lie No. 1); every company that sells to Wal-Mart will be required to use RFID tags (Lie No. 2, though this remains to be seen); and Wal-Mart is strongly behind RFID (Lie No. 3).

RFID is a technology in search of a problem. There isn't a single industry standard yet, who knows how many vendors will be around in five years, and the RFID tags and readers are less than foolproof. The technology is young, and investments now could be obsolete or leapfrogged. Consumers see no benefit in RFID and perhaps some loss of privacy. Retailers feel RFID may discourage theft, but its cost effectiveness has not yet been proven. Where does this leave Wal-Mart?

Wal-Mart will sell $350 billion in merchandise this year. Each Wal-Mart supercenter sells 120,000 different items, and there are more than 2,200 supercenters and more than 3,000 stores in all. For some companies, such as Procter & Gamble, Wal-Mart accounts for 15% of their business. It is the category leader in clothing, toys and a half-dozen other areas, and is the largest private employer in the United States and Mexico. Among American families, 93% shop at Wal-Mart at least once a year and 100 million Americans make a trip there weekly. Wal-Mart is the monster from Arkansas, and mere mortal companies tremble when it makes a directional statement about where its technology is moving. Wal-Mart persuaded its suppliers to migrate to RFID with the promise of great cost savings that they could share.

RFID was supposed to replace bar coding, but putting a bar code on a package costs nothing. Putting on an RFID tag costs 15 cents, and then you need all the ancillary technology and software. Wal-Mart made its top 600 suppliers implement the program with the promise that nothing was going to stop it. The plan was to have all of Wal-Mart's 120 distribution centers eventually up and running. To date, just five are.