RFID tag prices are dropping. But will it drive faster adoption among manufacturers implementing RFID for their operations?

Mark Roberti, Editor of the RFID Journal, doesn't think so. He writes:

"In the past two weeks, vendors have been competing to reduce prices on UHF radio frequency identification tags based on Electronic Product Code protocols. This has created some excitement in the market and raised expectations that adoption will now accelerate quickly, but it won't happen in the short term.

The announcements, to be sure, are good news for manufacturers faced with tagging mandates. First, Alien Technology announced it was dropping the price of its popular Squiggle tag to 12.9 cents for orders of 1 million or more (see Alien Drops Tag Price to 12.9 Cents). Then, Avery Dennison and RSI ID Technologies announced they were lowering prices for inlays and labels based on the second-generation EPC standard (see Avery Dennison, RSI ID Lower Price Bar). And late last week, UPM Rafsec said it was lowering the price of Gen 2 tags to less than 10 cents for orders as small as 50,000 units (see Rafsec Announces Gen 2 Pricing).

These announcements mean that manufacturers (mainly in the United States) that have budgeted a certain amount to meet RFID tagging mandates will save 40 percent or more on the cost of tags for cases and pallets shipped to suppliers. That's welcome news, given that these mandates represent additional costs. The announcements also send an important signal to the market that tag costs are coming down and won't be an obstacle to widespread adoption.

But lower tag prices are not going to have a major impact on RFID adoption in the short term. As much as people focus on the high cost of tags and how there is little or no return on that investment, tag prices are not a major inhibitor to adoption at this stage."

What he says makes a lot of sense. In the short term nothing much will change. Companies -- especially manufacturers -- just don't move that quickly. New project initiatives and budgets can't materialize overnight. If the RFID project wasn't already in the works, then lower tag prices will not cause manufacturers to go out next week and buy.

Long term, however, the lower prices can't help but rev up the market. They increase excitement levels. They generate interest in RFID. They create a sense of urgency to act. We'll see the impact a year from now and beyond.