RFID market value vs tag cost : Reality vs Dream. Figure 3.2 Examples of RFID applications and potential applications at different tag prices

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1 28 Figure 3.1 Potential markets for RFID smart labels RFID market value vs tag cost : Reality vs Dream Figure 3.2 Examples of RFID applications and potential applications at different tag prices Fast Locate, Read, Nonintrusive Diagnostics $100 Military Medical No Theft, Better Traffic Control Auto Toll Payment, tax, insurance record Fast Recording and Tracking Less Theft or loss Faster, No Losses No Counterfeit, Theft, Grey Market 10c - $1 $1 - $5 $10 Vehicles Staff Access Containers, Pallets, Cattle Laundry, Air Baggage Designer Goods, Furniture Museum and art gallery pieces Conveyances such as pallets/crates Anti-counterfeit Automate Inventory No Theft, Errors Track and trace No Till, Lower cost, No queue, Track and trace 1c or less 5c Many Office and Factory Assets Expensive Retail Products, Sheep Lumber, Wheely Bins, Carcases Archiving folders and drill cores All Supermarket Produce and Low Cost Assets Most paper day/transfer/single trip/venue Tickets Stamps. Archiving sheets of paper

2 Potential markets for RFID smart labels Existing markets Existing markets for RF tags divide into EAS where extremely low cost tags are essential for the business case (over 6,000 tags per year, per reader) and RFID tags, where tag cost is usually important because most applications have at least hundreds of tags per reader but the cost of the electronics, system integration and so on is relatively more important than is the case with EAS. This is partly because the infrastructure is more sophisticated. For instance, many closed applications call for only for 1,000 tags per reader. The tags may rarely need replacing (the supermarket trolleys mentioned above would be an example) and so cost of electronics, computer system etc, will usually dominate. Only one hundred or so tags per reader may need to be purchased each year. Clearly in applications where there are millions of tags per reader the infrastructure cost is relatively unimportant. This is particularly true of disposable tags in open systems. In all applications, performance is more important to the business case than initial outlay. However, the performance measure that is critical varies. Examples are per cent of correct reads, ability to read-write, speed of operation, maintenance cost and so on. When RFID tags are reusable, their cost is less critical even when there are many per reader or read-writer. The same is true where the tag is not reused in another application but is in its existing application for a very long time, an example being labelling assets in a company for rapid inventory counting or affixing a non-stop road-tolling tag to a car. Today, about six hundred million RFID tags are sold yearly world-wide, and about six billion EAS tags. Most of the RFID tags are smart labels or pendants such as car clickers. This percentage is increasing. Millions of readers are in use, of which just under one million are for EAS. Total systems and allied services are responsible for the rest of the spend. RFID tags and associated systems and services taken together are around three billion dollars yearly. Over 50 per cent of this value relates to systems where the tag costs at least $ Emerging low price markets There is certainly a consensus in the industry that this high cost RFID business is only a beginning. Particularly by satisfying previously unsatisfied needs, there will be a huge market created when RFID tags are available for under 20 cents (airline baggage, parcels, freight, pallets, etc, ) yet another one at one cent (notably replacing bar codes on some fast-moving consumer goods) and yet another below one cent (postage stamps, documents, banknotes, anticounterfeiting features in products etc., and, later, replacing barcodes on low cost FMCG). The engineering is well advanced in all but the lowest-cost applications. The necessary collaboration and marketing is beginning but some small owners of intellectual property will need major finance and backing of major companies to see major success. Standardisation for open application is progressing. Figure

3 68 Potential markets for RFID smart labels Table 3.8 Global market for systems and services associated with RFID smart labels and tickets 2002 to $ billion Percentage $ billion Percentage $ billion Percentage Systems/Services % % % Tags/tickets Total Source : IDTechEx Electronic Article Surveillance (EAS) The world market for EAS systems is about $1.0 billion yearly, though there are problems of definition because some companies sell video and computer systems with their EAS systems. About 6 billion EAS tags are sold yearly, say around $240 million. There are over 800,000 readers (gates) in place. The main suppliers are Sensormatic, with electrostrictive tags and Checkpoint, with both SweptRF and electromagnetic tags. About 20 companies are a long way behind them. They include 3M, Knogo, Miyake, Lintec, Nedap and Actron. Professor Joshua Balmforth, a UK expert on EAS says 50 per cent of US shops use EAS but only 35 per cent of European ones do because they prefer alternatives such as policing and video cameras. The EAS market is now growing slowly at about per cent yearly though the part that is source tagging has been growing 30 per cent yearly. The maturity of EAS markets is leading proponents into the allied area of RFID, which has a much faster growth rate Chip RFID So far, over 95 per cent of RFID involves tags containing a microchip. Some market data includes EAS in RFID, however, other does not, so figures are confusing. Indeed, a few surveys include contactless smart cards because they are a form of RFID. This can greatly inflate the figures. It is rare for market figures to include chipless tags because about 125 million such cards are being sold at around $4.5 each average, in 2002 and 500 million will be sold in The associated systems and services double this market value. Datamonitor forecast a $5-20 billion European market for intelligent tags and their equipment in year 2005, including the UK. Frost and Sullivan see a $10 billion global market for RFID and EAS systems in 2005.

4 The potential for very large sales of low-cost RFID 97 Figure 4.3 Some candidates for a hierarchy of networks High volume PRICE cents in 2003 GSM or battery-driven tags at UHF. Real time location RANGE kilometres END GAME ,000 UHF passive (no battery) tags. Real time location 2.45GHz AOC * passive Not real time cms meters trillions. billions. millions. * Antenna-on-chip By 2005/2010, the quoted prices may drop to one half of those given Much can be done without new technology However, in certain applications, tag price has already ceased to be a restraint. For instance the 15 million vehicles already tagged in the world should employ interoperable tags and achieve more benefits provided the political will is there. This, and greater functionality, can extend usage to one billion vehicles. Already the Chinese are trialling vehicles that each provide non-stop tolling, together with remote verification of identity (of vehicles for theft, speeding etc.), tax and insurance, for example, despite the price being $5 each in millions. The intelligent building or campus can progress much further with little or no improvement in technology. Battery-containing i.e. active RFID tags with at least several meters range and one dollar price (vs about $10 today) will help they are under development. $3 versions have already been announced Frequent need for caching information on the tag The FMCG applications are of the highest volume/toughest price constraint because the tags are fitted to very low-cost items in the main. That means readonly, very basic tags to constrain cost. However, in many other applications, caching information on the tag will be both useful and affordable. This can be done when the tag is made, in which case cost may increase only a few percent. Alternatively it can be through a read-write facility which may double the chip cost.

5 Assessment of RFID Technologies 121 Suppliers The components of an RFID system do not all have to be built and supplied by the same supplier. Some only make the tags, while others make readers to read several different types of tag. Philips Semiconductors became one of the largest chip suppliers for tags by selling off its reader and tag divisions which prevented it from competing with its customers who used Philips basic chip to make tags for their own tags and readers. Systems and standards need to be open enough to allow different suppliers to provide readers for the same tags, and similarly for different tags to be read by the same reader. As a result there are an increasing number of partnerships and cooperation between suppliers, manufacturers and system integrators Frequency choices Chip tags are usually made to work at specific frequencies which are licence free. These are KHz, MHz, UHF ( Hz), 2.45 GHz and 5.8 GHz. All have various advantages and disadvantages, and affect not only the performance and size of the tag but also the price of the tags and readers. Further, the tolerated power levels and regulations for these vary from country to country. For example, the maximum permitted legal power level (the power level at which the interrogator is set at) for 2.45 GHz in the U.S. is 100 times higher than in the Europe. This creates a huge difference in read range a 1meter range in the U.S. may only be a 1 centimeter range in Europe, all else being equal. Therefore, much work still needs to be done to balance these regulatory issues worldwide. To confuse the users even further, standards at each frequency are also in various stages of development. Comparisons Lower frequencies have low energy, which means they are slow, so data transfer is slow, range is limited and therefore antenna size needs to be larger. However, even though they have a smaller range than high frequencies they are more tolerant of obstacles, even moderately tolerant of small amounts of ferrous metal in the way. One can flood an area with radiowaves from one or two antennas, avoiding blind spots. High frequencies have more energy and therefore can be used for long range applications. A beam is involved, so it can be used for locating a smart label in three dimensions. Power drops off as the cube of distance for low frequency but only as the square of distance at high frequency. However, these high frequency beams are more easily stopped. They can give problems with reflections, irradiation of humans, aiming beams (flooding an area is less easy), inability to see round corners and problems with blocking of the beam even by some things the human eye can see through. High frequencies, having more energy, have faster data transfers.

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