Tag Prices...and a Game of Chicken

Filed in archive Tags and Readers on October 18, 2004

Editor's note: We are pleased to provide another special report from guest blogger Atul Salgaonkar, Founder of RFID Solutions:Guess what this quote refers to: "Currently, there are only 2 significant suppliers and with burgeoning demand, and not enough product available. Shortage of product is causing anxiety and concern for many."

Am I talking of the flu vaccine or about (UHF) RFID tags?

The circumstances may sound similar, but fortunately for RFID, the similarities end there. While the elderly are still waiting for the flu shot and don't see an immediate respite, with RFID the tag shortage may not last.

Innovators like Impinj are cranking out silicon and large companies like Philips and Texas Instruments are poised to enter the UHF tag market. The standards body EPC-Global also appears on the verge of ratifying a new standard.

There's an effort underway to understand the root cause of the flu vaccine shortage. Similarly, the companies affected by the RFID tag shortage need to engage in honest soul searching about the reasons.

Was it completely unexpected? One of the primary causes appears to be the unwillingness on the part of the user community to invest and place orders earlier.

Tag makers are in the midst of a game of chicken between the users and mandate-makers. CFOs, already a conservative lot, have to some extent been influenced by the headlines screaming, promising very low cost tags. They kept waiting for the tag price to come down, until finally with mandate deadlines looming they could wait no longer.

RFID was promised to be a disruptive technology and this is one of the many such surprises that await. Those who learn from it will benefit and get stronger. Others will wait in long lines hoping that the compliance season is not too close.