04/10/05 Price Cuts Seen Speeding RFID Adoption

Recent announcements from Alien, Avery Dennison bring tag prices close to five cent level, should spur deployments, ABI predicts

Recent announcements from Alien Technology and Avery Dennison suggest that the prices of radio frequency identification (RFID) tags are finally coming down, a trend that could speed adoption of the RFID technology, according to a new report from consultancy ABI Research.

Alien has cut the price of its straps to 12.9 cents, while Avery Dennison is offering inlays at 7.9 cents. Even that sub-eight-cent price is still well above the five cent point that some industry analysts earlier touted as the price needed to ensure a viable RFID industry. But that number has more recently been viewed as too simplistic in any case.

"These new low prices may represent loss-leaders," said Erik Michielsen, ABI Research's director of RFID and ubiquitous networks. "But when you tie them to the new products and services offered by software companies to help end-users make sense of their RFID data, and to the recent spate of EPC Gen 2 announcements, we may have a three-headed 'benevolent monster' that will promote demand."

ABI Research said it continuously monitors and evaluates global RFID markets in its "RFID Research Service", which examines RFID product markets in great detail, with segmentation across product types, by region and by price. Further analysis includes qualitative insight and five-year forecasting based on movement in key RFID vertical markets and their related application markets.

Michielsen added: "What we are starting to see is lower cost hardware, tested and proven performance requirements around a new standard, and software that enables non-technology focused end-users to make better decisions and find ways to drive revenue growth and cost refinement. All together, these factors support widespread RFID deployments across a wide range of vertical markets, to a degree we have not seen before."