Sep 20, 2005This article was originally published by RFID Update.
September 20, 2005—Avery Dennison yesterday announced that its Gen2 inlay, the AD-220 (pdf), is available for 7.9 cents in quantities of one million or more. The company is also making its two core Gen1 inlays, the AD-210 and AD-410, available at the same price point. At first glance this news is exciting. Such a low inlay price means cheaper tags and wider RFID adoption. But there are a few points that need to be taken into consideration to understand the announcement's significance.
First, an inlay is not to be confused with an RFID tag. The inlay is the "guts" of the tag, including the integrated circuit and antenna, which is useless by itself. It must be "converted" to a tag by being placed in a plastic sleeve, adhesive, or other housing that allows it to be stuck to things, printed on, etc. The final tag cost is therefore considerably more than that of the bare inlay, often by two or three times, according to industry analyst Louis Sirico. Therefore, today's announcement by Avery Dennison should not suggest that the industry is a mere 2.9 cents away from the mythical 5-cent tag. Furthermore, it is impossible to know exactly how much the final Gen2 tag costs since a number of companies convert Avery Dennison AD-220 inlays, and their pricing varies based on a number of factors.
Second, while inlay and tag price are important measures of industry progress, the more important factor is whether end-users are buying them. "Very few are committing to that type of quantity," said Sirico in reference to the one million necessary to achieve the announced price point. So even if tags are available at a good price, it doesn't much matter until they are being bought and consumed by end-users.
Regardless, the news is good for the industry as a whole. The 7.9 cent price point is a good step, especially when considering that it is for new Gen2 inlays. It is further evidence that RFID technology and prices are moving in the right direction, even if not at a pace that most had hoped.
