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Five cent tag issue for RFID overshadows larger concerns

19 May 2004 News

Recent rumblings in RFID have centred on RFID tags becoming available at a price point of five (US) cents in large volumes. But the clamour around the 'five cent tag' is overshadowing more important issues in the RFID space, claims technology research firm ABI Research.

"Five cent tags are a component to the overall success of RFID but they are not one of the top five most important elements," says Erik Michielsen, ABI Research principal analyst covering RFID. "Without proper commitment, planning, and partnering, cheap RFID hardware is not sufficient to make a sustainable long-term difference with consumer packaged goods suppliers looking to benefit from RFID."

Compliance with mandates requires that companies invest in RFID regardless of tag costs. As a result, many companies have embraced cheap tags as a way to reduce compliance costs. Some companies have adopted a delaying strategy solely in hopes that tag prices will decrease.

According to Michielsen, non-RFID compliance with Wal-Mart's 1 January, 2005 deadline is not a win-lose scenario. RFID is not Y2K. Recent pro-compliance concerns from Deloitte, IBM, and others have merit in that they promote RFID understanding; however, pro-compliance efforts for the sake of compliance alone may prove more hurtful than helpful in forging a stronger relationship with Wal-Mart and other retail giants.

"Commitment trumps compliance," adds Michielsen. "Mandates provide RFID rollout incentives. But a structured RFID strategy built around creating internal and external awareness and commitment is absolutely critical to creating agile organisations that can embrace the seismic changes RFID will present to suppliers and industry relationships over the next decade."

For more information visit www.abiresearch.com





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