Computer chips find homes on everyday items

By Michelle Kessler, USA TODAY Mon Jul 17, 6:56 AM ET

Hewlett-Packard researcher Howard Taub is showing off a sticker about the size of a hole punch. And he can barely contain his glee.

That's because hidden in the little dot is a computer chip with enough memory to store a song, a photo, or a 100-page text document. The chip needs no battery, and it can communicate wirelessly with a special receiving device.

Taub envisions a world where the chips, called Memory Spots, are stuck on all kinds of objects, and receivers are built into cellphones. But today he's stuck with a clunky prototype receiver, which is attached to a laptop via cable.

He waves it over a Memory Spot stuck on a photograph of a small boy. The laptop beeps. Then it begins playing an audio recording of the boy laughing.

Taub grins, then picks up a prescription drug bottle with a dot on top. Beep. A brochure about the drug appears on the screen, and a British-sounding voice offers instructions on taking it. "See?" Taub says. Information "isn't just on the Internet, you know."

Memory Spot isn't yet for sale. HP is releasing details of the research project Monday in hopes that chipmakers and other partners will help commercialize it. Taub expects the process will take two to five years.

But Memory Spot is already part of a growing trend: placing computer chips on everyday, non-electronic objects. In addition to HP, companies ranging from giant Freescale Semiconductor to tiny Zensys are plunging into the market.

Gillette, Procter & Gamble and Prada have all tested chips in packaging consumer goods to better track inventory. Sylvania sells a chip accessory that attaches to a lighting fixture, allowing it to be turned on and off remotely. The city of Burleson, Texas, is putting chips into water meters to cut down on reading costs.

Massachusetts Institute of Technology researchers call it making "things that think." Chips can be used to store information about an object or to command it to do something. Many automatically communicate with other computers, such as sensors that report temperature or moisture data.

"It's definitely an interesting emerging area," says wireless analyst Sam Lucero with ABI Research. "We think it has huge potential."

Statistics for the entire market are hard to come by. Lucero estimates the number of chips being placed on objects for home automation tasks - such as turning out lights - is expected to triple this year.

Scientists have experimented with smart objects for decades, but they were expensive, and it was difficult to get the chips to communicate without stringing cables. Now, improvements in manufacturing processes have brought the price for some chips down to as little as 15 cents each, says tech analyst Tim Bajarin at researcher Creative Strategies. And emerging wireless technologies are making communication easier. Among them:

•Radio frequency identification. A RFID chip is similar to a Memory Spot, with two key exceptions. It usually holds less data, but can transmit it much farther. That makes RFID ideal for tracking packages in a store or warehouse.

Wal-Mart and the Defense Department have begun mandating that key suppliers use RFID tags. That's helping an already-growing market explode. Researcher In-Stat says RFID chip sales should reach $2.8 billion in 2009, up from $300 million in 2004, the year they began to take off.

• ZigBee. Motorola spinoff Freescale Semiconductor helped lead the development of ZigBee, a technology still in its infancy. Early next year, expect to start seeing ZigBee chips in products such as light fixtures and other home automation tools, says Brett Black, an operations manager at Freescale.

•Z-Wave. Small Silicon Valley company Zensys is behind ZigBee rival Z-Wave. More than 100 products with Z-wave chips have come to market, says Zensys CEO Tony Shakib. They include systems for home automation from HomePro and Intermatic.

•Wi-Fi. Wireless Internet technology is best known for allowing laptop users to surf the Web. But chips can also use Wi-Fi to communicate. That's how the automated meter-reading system in Burleson - designed by a division of Chevron - will work when it's completed this year. Consulting firm Accenture built a similar system in a Sonoma County vineyard, Pickberry, to monitor moisture levels in soil.

There are hurdles to overcome before smart, wirelessly chatting smart objects are commonplace. Costs will have to come down even more for many applications, and technical glitches need to be worked out, Bajarin says.

But companies will work hard to solve those problems. "Bridging the gap between the physical and digital worlds is a powerful idea," he says.