What Makes RFID So Expensive, and How Many Years Will It Take the Technology to Be Commercialized?

First, I would dispute the claim that RFID is expensive. The term "expensive" is, of course, relative. A Honda Civic might be expensive compared to a bicycle, but cheap compared to a Rolls-Royce.

Passive RFID tags are more costly than printing a bar code on a product. A passive ultrahigh-frequency (UHF) transponder might add 12 to 15 cents to an item's cost, while printing a bar code would essentially add no additional cost. However, you typically need people to scan bar codes, and labor is expensive. So in many cases, RFID winds up being cheaper when you consider the cost of capturing data, and not just the cost of the data carrier.

There is also the issue of what the technology can do. If you were looking for something to get you to and from work every day, and your office was located just six blocks from your home, a bicycle might be the least expensive and best choice. Similarly, if you were counting just a few items once a month, bar codes might be the best choice. But if you were going cross-country, a car might be the better option. In fact, a used car might even be a less expensive choice, once you consider the extra meals and hotel nights required for a long bicycle trip.

RFID technology can do much more than bar codes, and it is being commercialized widely today. RFID Journal estimates that 2 billion passive UHF tags were consumed for tracking things in 2012. High-frequency (HF) tags are being utilized in many access-control, payment and inventory-tracking systems. Even active RFID solutions, which are more expensive than passive systems, are being widely used.

I do not envision RFID transponders ever replacing bar codes, as I think the two systems will work together for a long time to come. In some cases, bar codes will be employed because RFID will be seen as too expensive to be justified. And in some scenarios, bar codes will be a back-up in case the RFID transponder doesn't function.