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Alorie Gilbert

Staff Writer, CNET

In an effort to lead by example, Hewlett-Packard is ramping up its use of radio frequency identification technology this year.

The company expects to place about a million RFID tracking chips on printers, handheld computers and other merchandise it ships to Wal-Mart Stores and other national chain stores, HP spokeswoman Dayna Fried said Friday.

RFID, an electronic identification technology, is attracting a lot of attention as a next-generation bar code that could save retailers and their suppliers billions of dollars in logistics and inventory costs.

HP began testing the tracking chips, or “tags,” last year with Wal-Mart, but the volume of tags it used was practically negligible, Fried said.

“We’re basically going from zero to a million chips this year,” she said.

The company is one of the Wal-Mart 100, a group of top merchandise suppliers cooperating with the retailer’s RFID efforts. Others include Gillette, Kraft Foods and Procter & Gamble.

HP has been more vocal than most about its RFID plans because it also sells equipment and services to help other businesses set up RFID systems. The company discussed its million-tag target for 2005 on the eve of the National Retail Federation trade show, where it’s set to announce the opening of a new RFID test center in Omaha, Neb.

HP, IBM, Sun Microsystems and dozens of other big computing companies hope to cash in on growing demand for the technology. Businesses are expected to spend $2.8 billion on RFID tags in 2009, up from $300 million worldwide last year, according to market research firm In-Stat.