Costs still inhibiting RFID takeup

Privacy advocates can relax for another few years: the costs of chips will make widespread item-level RFID tagging unfeasible for up to seven years

Despite a renewed industry push behind RFID technologies, one vendor has warned high costs could prohibit large-scale rollouts for up to seven years.

RFID has been criticised by standards and privacy advocates, but its chances of making inroads into corporate Australia received some boosts this month. Standards body GS1 Australia announced the approval of RFID readers that operate at twice the distance of current readers, and RFID has been a key subject of debate at the Australian Retailers Association's technology exhibition in Sydney.

Con Vass, NCR vice-president, retail solutions division, South Pacific, backed GS1 Australia's work as "pretty important" to the takeup of RFID, but warned that cost remained a serious issue. He said the price of tags may not come down significantly for five to seven years and warned this was not the only area of expense.

"Don't discount the one-time costs as being a big part of the technology here," Vass said.

"[Also] the costs of wireless infrastructure for individual product tagging are much higher than pallet systems."

The average cost of a tag — which consists of a microchip and antenna which sends data to reader devices — was 30-50 cents (12p-21p), according to Vass, well above the five-cent-per-tag average recommended by analysts Frost and Sullivan. "A lot of the cost is in the silicon. The more tags you need, the more the cost," he said.

This price meant tracking individual goods would be too costly for some time yet, according to Vass.

"We can certainly track pallets and cartons today, but it's not feasible to put a tag on each item in a store."

Australian retailers such as Woolworths and Coles Myer have piloted RFID systems, but have not advanced them.

The industry hopes standards development — such as those announced by GS1 Australia this month — will help boost customer demand and reduce average tag prices accordingly.

"Having standards is a big issue," Vass said.

"Once we have more standards, that's going to help pricepoints."

He was confident this would spark more customer uptake, and later make tagging individual products feasible.

Steven Deare reported from Sydney for ZDNet Australia. For more ZDNet Australia stories, click here.