RFID Price Wars?
Tuesday, September 27, 2005 - AIM Global
Alien Technologies recently announced a price reduction on its Class 1 Gen1 tags to just under 19 cents in quantities of 1 million or more. Avery Dennison announced its Gen2 inlays would be available for 7.9 cents for the same quantities.
Is the mythical 5 cent tag on its way?
Alien's fully converted EPC Class 1 Gen1 ALL-9338-02 RFID labels (commonly known as the "squiggle" tag) are now priced at 12.9 cents, representing a 44 percent decrease in the price of 96-bit RFID labels in the past 12 months. Alien states that this reflects significant progress towards the goal of widely available, economic RFID labels.
Similarly, Avery Dennison announced that its Gen2 inlay (AD-220) along with two core Gen1 inlays (AD-210 and AD-410) are now available for 7.9 cents -- also in quantities of one million or more. It should be noted that the inlay is not a fully converted label and that the finished product would cost more.
It's tempting to believe that these announcements herald a major step in reducing the cost of RFID labeling. However, at this point, orders for finished labels in excess of 1 million aren't common. Even for converters, orders of 1 million inlays would represent a major increase.
A company ordering a million tags would have to commit nearly $130,000 to label costs alone and, while some of the consumer goods manufacturers might eventually need these quantities, they're not yet justified.
Two questions arise from these announcements. First, is this more a case of PR posturing than a real breakthrough? Second, if companies can offer their products at these prices for massive quantities, would they not be more successful to reduce costs by, say, half for smaller quantities and thereby help promote EPC adoption?
At this point, it's impossible to tell whether this represents a significant trend or whether it's a matter of positioning. Even so, these types of announcements are often the precursor of actual deliverables and we applaud the general direction.
Stay tuned.
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