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Tag Vendors Shift Focus Away from Price

While cost is a leading differentiator among competitors in the RFID tag space, there are already announcements coming from some vendors determined to broaden the discussion beyond merely price. Two recent announcements covered in this article highlight the trend.
Nov 07, 2005This article was originally published by RFID Update.

November 7, 2005—After a slew of aggressive pricing announcements last month and in September, it seemed that RFID tag and inlay vendors were moving closer and closer toward a competitive landscape based on cost alone. While cost is, and will always be, a leading differentiator among competitors in the tag space, there are already announcements coming from tag and inlay vendors determined to broaden the discussion beyond merely price. Two announcements specifically highlight this trend.

The first came today from Avery Dennison, the same company that kicked off the Gen2 inlay pricing excitement on September 19th when it announced the availability of its Gen2 inlays at 7.9 cents in quantities over a million. Today's announcement from Avery is the introduction of a "partnership program" by which the company will offer participants tag evaluation assistance at its Atlanta facility. Additionally, participants will receive -- free -- up to 10,000 Gen1 or Gen2 RFID tags for testing and production use. The press release says that the program is open to companies under retail mandates, retailers engaged in proof-of-concept RFID pilots, OEMs, systems integrators, and label converters that have been hired to perform the deployments for their clients.

The other announcement came last week from label converter R and V Group of Chattanooga, Tennessee, and Japanese electronics manufacturer Omron. R and V is guaranteeing 100% performance and delivery of its ruggedized RFID labels that use Omron inlays. The cost is 19 cents per tag in quantities of 50,000 or more. It applies to the currently available Gen1 tags and will apply to Gen2 tags when Gen2 inlays become available from Omron in the coming months. The offer reflects R and V's belief that, according to the press release, "the [industry] focus must change from buying low cost inlays that perform poorly to achieving an attractive total cost of ownership for finished labels." The offer's combination of aggressive pricing, low quantity purchase requirement (only 50k versus the one million seen in other pricing announcements), and guaranteed flawless reliability will help do just that.

According to the company's president Steve Van Fleet, "Producing RFID labels when you know that 30 to 40 percent or even 10 percent of their inlays will fail is a little like eating empty calories. You are going through the motions but there isn't any value. We and our clients appreciate Omron RFID's inlay performance and overall reliability. We have taken our clients from a poor situation to one where every label works every time and therefore we are introducing these 100 percent guarantees."

Do these announcements of tag evaluation assistance, 10,000 free tags, and 100% reliability guarantees mean the industry is moving away from a preoccupation with tag pricing? Probably not. Ultimately, the most stubborn hurdle to widespread RFID adoption continues to be lacking ROI. Furthermore, from a marketing perspective, aggressive pricing announcements -- in this industry as in most others -- create buzz. These announcements may represent, however, a maturation of the marketing messages. Things like tag reliability and collaborative relationships with RFID vendors are competitive differentiators that end-users should weigh alongside pricing when making purchasing decisions, and it appears that vendors are now trying to point that out.
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