Focus on RFID's Value, Not Tag Cost

Wal-Mart has contributed to this focus on tag cost, and is another fine example of the double-edged sword that seems to hang over RFID. On one hand, the retailer accelerated RFID adoption with its early mandates. We would not have the EPC Gen 2 or ISO-18000 6C standards at all if it weren't for Wal-Mart, and without Wal-Mart's and the U.S. Department of Defense's tagging requirements, you would be paying twice as much for a tag.

On the other hand, these same mandates caused resentment among suppliers, who felt they would not derive any value from the tag. Companies that saw no value in tagging for Wal-Mart or the DOD focused on tag cost, and little else. Does anyone really think that a business doing "slap and ship" cares about anything but price? Wal-Mart has tried hard to show suppliers how to obtain real value, but some didn't want to do the work required to use RFID data to improve the way they do business.

My friend John likes to pose a question on this subject: "Let's imagine that tags and readers are free. What would you do with them, how many would you use and what would that be worth to you?" Some companies wouldn't use any, because even free tags need to be made into labels, programmed, applied and associated with a product in a database—all of which cost money.

More enlightened companies would examine their operations and say: "With these tags and readers, I can collect a lot of information with little or no labor costs. What information do I want to collect in order to improve the way I do business?" Each firm will have a different answer. Some will collect data on the movement of assets, some will track life-saving assets and others will improve on-shelf availability.

I don't know when we will see a 5-cent tag. But to me, it doesn't matter. The only thing that matters is how much value the tag delivers. Of course, I didn't say that to my customer.

Curt Carrender is a founder of Thinkify, a privately held technology firm in Morgan Hill, Calif., that focuses on embedded RFID applications. He previously held the position of VP of engineering systems and R&D at Alien Technology. In that role, he was responsible for all hardware design, development, research and testing under Alien's private and government programs.