RFID: Talking Beyond The Drive For Five

Experts predict limitless applications for RFID tags once the five-cent price point is reached.

For almost a decade, the "nickel tag" has loomed unattainably on the horizon. Chief information officers have waited patiently for it. Experts have forecast a role for it in "trillions" of everyday products. There is, it seems, no limit to the reach of RFID once that five-cent goal is attained.

Still, vendors are showing there's more to RFID than nickel tags.

"We've been talking about the mythical five-cent price point for years," notes Mike Liard, RFID practice director for Venture Development Corp. "Is it possible? Yes. But it may not necessarily be the type of tag you're looking for."

Indeed, makers of RFID chips and inlays (which include chip, antenna and substrate) know this, which is why most haven't rushed to put nickel tags on the market. Instead, they've been content to cut prices at a steady rate of about 5 percent to 10 percent per year since 2000, while simultaneously improving the technology. As a result, users of the tags are already employing them in applications undreamed of a decade ago, despite their inability to reach the elusive nickel price point.

The bottom line is that while RFID vendors have been lowering their prices and improving their technology, they've been carving out new niches for themselves. Increasingly, RFID tags are being used on pallets, cartons, garments, luggage, DVD cases, pill bottles and library books. And in the future, experts foresee more use in low-cost everyday items, from lipstick cases to cereal boxes. While they won't replace the barcode any time soon, they nevertheless offer non-line-of-sight capability, which means they can gather information of their whereabouts without being individually handled. As a result, they're capable of deterring theft and counterfeiting.

"RFID is not labor intensive," notes Sanjay Sarma, associate professor of mechanical engineering at Massachusetts Institute of Technology and research director for MIT's Auto-ID Center. "It gives you information you can't get with a barcode, unless you have an army of people scanning every product."

And then there's that issue of the nickel tag. At costs of 10 cents to 20 cents apiece and up, RFID tags are still far more expensive than barcodes, which is why the drive to five continues.

"The state of momentum within the industry toward the five-cent mark is very healthy," Sarma says. "The good news is that it has gone beyond research. It's moved into development, and a lot of companies are looking to go to five cents."

Experts are confident that RFID will eventually be the backbone of a plan that researchers have called "an Internet of things," in which almost everything, large and small, is connected via the Web. The plan, already described in hardware and software protocols, calls for all information on a product to be written in a code based on eXtensible Markup Language (XML). The code, which forms a sort of Web page for each item, would be connected via RFID tags to Internet servers. Thus, all products could be identified anywhere, instantly. A broad coalition of corporate giants, including Coca-Cola, International Paper, Johnson & Johnson, Kimberly-Clark, Pepsi, Procter & Gamble and others have supported such efforts through MIT's Auto-ID Center.

Low cost, of course, is a key to such plans, but researchers have worked that out, too. Ultimately, they say, everyday items will incorporate RFID, not on sticky tags, but through integration into the corrugate of cardboard boxes. Ongoing efforts in this area will be the key to lowering RFID cost, researchers say, because it eliminates the need for certain parts of the tag. Instead of being done as an afterthought, as is the case today, such technologies would be integrated during the cardboard manufacturing process, thus enabling cost reduction.

"These RFID technologies will co-exist with the barcode for a long time into the future," says Sarma of MIT. "But they will provide information that a barcode can't. 'Did the item go to the sales floor? Did the meat sit in the fridge long enough?' You can't know that with a barcode."

Sarma says such technologies will become widespread when production volume reaches a "tipping point." When that happens, it will drive costs down to a level low enough to motivate use of RFID on everyday items. And with retailers pushing hard for RFID, the concept is not unrealistic, experts say.

"The question now is the tipping point," Sarma says. "When do you get to the percentage that causes you to say, 'I'm going to put the tag inside the corrugate?' In the next year, we could see it happen."