Our obstreperous observer isn't about to let RFID chips get under his skin

This is a conversation many parents must endure with their children these days: When can I have an earring? When can I have a tattoo? How old must I be before I can have a silicon chip inserted under my skin?

This last enquiry is not the mere fiction you might think it to be but occurred on a daily walk to the school bus. It appears that in the precocious brain of an 11-year-old boy, a small semi-conductor behind the ear lobe will provide sufficient "on-mind" intelligence to make not only homework irrelevant but school, too. Furthermore, a chip can prevent the need to "carry all those ID and credit cards you carry with you".

This was not such a stupid conversation, unfortunately. Implants of radio frequency identification (RFID) chips in willing citizens were approved by America's Federal Drug Administration (FDA) last month. Their use, at least for the time being, will be for purely medicinal purposes - but not quite like whisky. Doctors and hospitals will be able to scan their patient's chip to gain access to their medical records. This, of course, sends the lunatic fringe of the privacy advocates completely crazy, as they believe Big Brother will now track a "chip-carrier" wherever they go.

The FDA's move, which is pretty gutsy given society's general distrust of government on privacy issues, came two months after 100 employees of the Mexican Attorney-General's Department willingly received body implants of RFID chips. The Attorney-General himself took a chip in the arm, claiming this gave him secure access to the nation's increasingly burgeoning database of criminals. Why he could not have simply used an ID and password, like everyone else, is beyond me.

But they're a funny lot in Mexico. Silicon chips are obviously a hot fashion item.

The other members of the A-G's staff were impregnated so they could gain access to secure government areas with a swipe of their finger, a blink of an eye, or whatever. The Attorney-General's press statement said the technology would also be a deterrent to kidnapping these individuals, apparently a growing national pastime south of the border, According to the Mexicans, an RFID chip helps detect a victim of a kidnapping. Total rubbish, of course, unless the abductors are holding them in a Wal-Mart warehouse.

This is the kind of nonsense we are coming to expect to hear about RFID chips, the most over-hyped chunk of technology currently doing the rounds of the industry.

RFID chips are in the sights of leading vendors such as Hewlett-Packard, IBM, Oracle, among many others, as potential sources of revenue for software licences, maintenance annuities fees and consulting fees. While these companies push this technology almost religiously, there is an increasing body of evidence to suggest their potential clients struggle to find a business case for the technology, or show that RFID chips are really that much better than the ubiquitous barcode that was unleashed in the early 70s.

Such concerns are doing nothing to stop one of the world's most anticipated IT projects - the move by America's largest retailer, Wal-Mart, to push all its suppliers to adopt RFID tags.

The clock is ticking for the project. It begins at its Dallas distribution centre and five other cross-docking stations in Texas in less than 12 weeks. The aim is to have all the products moving in and out of these centres within a year. Wal-Mart, despite its 800-pound gorilla profile, has been working hard to help its suppliers cope with the new demands. Its CIO, Linda Dillman, says modestly, and perhaps a little misleadingly, that RFID is only an experiment but "we're not afraid to test things".