Will the collar become obsolete?

In many way the dog collar is a matter of custom.  If you consider its uses they are generally: 1) to secure the dog during walks and 2) to identify the dog's owner and to identify the dog's vaccination and registration status and 3) fashion.

There really is no absolute need for 'walking' purposes for the collar to be attached to the dog, rather than to the leash.  In fact many people now use alternative leash attachment devices like a halter or body harness that are attached only when required.  There may well be other times when it is useful for your dog to have a "handle" but are they pressing enough to need to attach something to the dog permanently? Historically a lot of dogs here contained by tether, but I would hope that is pretty uncommon for companion animals and once again the collar could be used only as required when the dog is tethered for an event (camping, picnic etc).

The sticking point is, of course, the tags and contact info.  Currently analogue methods like little metal discs are the state of the art.  But there is no real reason why microchip, and microchip readers could not become almost ubiquitous. The chip could connect to a database updated by your veterinarian with vaccination records.  Readers could be built into devices like cell phones.  As a back up the record number could also be almost painlessly tattooed on the dog's ear.  A person with that number could get all the information they need to contact the owner or deal with a dog bite situation.

It may seem weird to suggest a somewhat invasive procedure over a collar, but it is a matter of a few second, versus a dogs entire life--which is really more of a bother to them? It seems possible to me that one day a collar on a dog will seem as archaic as a nose ring on a pig or hobbles on a horse.  More and more, instead of modifying the animal to fit the environment we are modifying the environment to suit the animal.  And the pet animal dress code might just relax as a result.