playing the waiting game

Are RFID tag prices too rich for your blood? It looks like all you'll have to do is wait. A new report from investment banker Bear Stearns predicts that prices will plunge by 50 percent or more, though not before 2008.

In thereport, Bear Stearns analysts acknowledge that in some cases, prices don't have far to fall. They note that a few vendors currently offer tags at prices as low as 6 cents. (The e-newsletter RFIDWatch Weekly reported in May that Israeli tag supplier SmartCode was making its RFID inlays available at the milestone price of 5 cents per tag.) Nonetheless, the analysts expect that prices will continue to decline as new players jump into the market and as demand takes off.

And demand will take off, they insist. "We are more confident than ever that RFID technology will be broadly adopted in supply-chain applications in the retail industry, and we also see new applications emerging in different verticals," wrote analysts Philip Alling and Andrew Matorin in the report. They put market demand for tags at somewhere between 200 million and 400 million tags this year, and foresee steady growth in 2007 and 2008. (Bear Stearns discloses that it does business, or seeks to do business, with companies covered in its report.)

Despite their rosy outlook, Alling and Matorin concede that RFID's road to adoption hasn't always been smooth. " ... [P]roduct availability, interoperability, and implementation knowledge only develop so fast," they wrote, adding that "[the process] up to now has been [slower] than some had expected."