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RFID tag pricing on decline?

Major providers of RFID tag components are hoping that recent declines in part pricing will help boost the stagnant RFID market and drive larger volume part orders. At least one industry analyst, however, questions if prices have come down enough to spur demand.

Recent announcements from Alien Technology (www.alientechnology.com) and Avery Dennison (www.averydennison.com) have helped spur the speculation. Alien has cut the price of its finished Class I labels to 12.9 cents, while Avery Dennison is offering Class I inlays (which must then be converted into finished labels) at 7.9 cents. Even that sub-13-cent label price is still well above the 5 cent point that some industry analysts earlier touted as the price needed to ensure a viable RFID industry.

Elsewhere, UPM Rafsec (www.rafsec.com), a leading RFID tag and inlay manufacturer, has announced UHF Class 1 and Gen 2 inlays at sub-10-cent pricing with minimum orders of 50,000 pieces.

Meanwhile, Mike Liard, AIDC and RFID group manager for analyst firm Venture Development Corp. (VDC), points out that lower prices for tag parts is a "hype circle," and that tag prices, on the whole, are still far too expensive for broad-based use. "I think 5 cent tags are a possibility but not today," he asserts.

He calls the current state of the RFID tag market "a vicious cycle where costs will go down when volume goes up." And so far, volume has not gone up.

In addition to tag prices, Liard warns potential customers to address all costs--not just tag pricing--associated with RFID. He mentions cost of ownership, maintenance and return on investment as other factors to consider.

"Price drops are a good sign," Liard concludes. "But now, there are new questions to get asked."

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Title Annotation:radio frequency identification
Comment:RFID tag pricing on decline?(radio frequency identification )
Publication:Modern Materials Handling
Article Type:Brief Article
Geographic Code:1USA
Date:Nov 1, 2005
Words:293
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