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Posted on July 20, 2005 by  & 

The RFID price umbrella lets in competition

In marketing parlance, a price umbrella is when a company prices its product higher than it need, thus letting in competition. This may be because it takes unusually high profit or because it meets unnecessarily difficult specifications. The largest retailers and their largest suppliers studiously avoid price umbrellas. They target a wafer thin profit percentage and, when it seems to be about to rise, they pass on the benefit to customers rather than invite in competition - even competition with a higher cost base.
 
In 1999, the original concept of the "tag everything" Internet of Things which became the property of EPCglobal formed later was to manage with the absolute minimum specification for the tag because its cost would be very critical in the viability of such projects. Talk was of read only "license plate". They said at MIT, that 64 bits would be OK to start and 96 bits would be ideal in due course - plenty of unique numbers for everything that could possibly be tagged ever. It was not an original idea. In non stop road tolling the tags have been read only and only 24 bits or so. TransCore would say that, if any customer asked for more, they would "talk to them" meaning easily convince them that more data on the tag is unnecessary. In 1999, a basic RFID chip had 5000 transistors. For EPC Gen 2 that escalates to some 42,000 transistors, more than some early microprocessors.

The original concept is abandoned?

That original 64 bits has become 128 bits and a lot of talk of making it preferably over 500 bits. True, the developers of thin film transistor networks are aiming at 5000 transistors or less, in line with the original MIT concept. Those developing transistorless, chipless labels also aim at something very basic and read only. All of these chip alternatives are in the range of 128 bits or less. However, for now, the retailers, consumer goods companies, US Military and others controlling EPC tag purchasing seem to keep them out because they cannot meet Gen 2 in particular. EPC specifications exist for simple tags but the big purchasers do not usually want to use them.

The price umbrella is holding

Accordingly, the price umbrella that the industry has created, by specification rather than excessive profit, is holding for now. It looks as if the chipless people and anyone left who is interested in very simple silicon chips are frozen out of any volume orders - or are they?

Re-enter the barcode

Enter the much maligned barcode industry. It has quietly moved on from first generation linear barcodes to 2D barcodes used by FedEx in massive volumes and is announcing a steady stream of what we shall call third generation barcodes - 2D barcodes with extra functionality. To the horror of the RFID industry, Ford has placed a large order with Israeli company ImageID for their third generation Visidot tags on work in progress. Just where the EPC RFID suppliers thought they owned the future. But Ford says the tag cost does matter at these high volumes and far less than one twentieth of the current EPC label price will do very nicely thank you. One might add that as long as the favoured UHF EPC pallet/ case tags are interrogated by line of sight, to avoid problems with water and metal, the claimed advantage of this form of RFID over barcodes that it sees through things is rather academic.
 
 
For more, read the full article in the July issue of Smart Labels Analyst or attend Smart Labels Europe www.smartlabelseurope.com External Link.
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