Frost: Better Awareness, Stronger Standards to Drive Chipless Tag Technology

July 30, 2007 // Published as a news service by IHS

According to Frost & Sullivan, the ability to provide key features of RFID, such as track and trace, without the line-of-sight and real-time information delivery, if required, indicates great promise for this technology.

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Consistently high prices of RFID tags are acting as a strong barrier to their large-scale implementation, despite the U.S. Department of Defense (DOD) and Wal-Mart mandate that all key suppliers be RFID-compliant by the beginning of 2006.

Analysts said although some initiatives are being taken to reduce RFID prices, a majority of suppliers believe it is still too expensive to make mass deployment a feasible proposition. This, more than anything else, is responsible for the rising interest in chipless tag technology.

Current limited awareness levels between chipless tags and RFID, however, have led to a certain amount of confusion for end-users, who need to know the application potential of both technologies and what they can bring to their businesses.

"Many users are still unsure about the potential of chipless technology and tend to think it is the same as RFID, but a cheaper version," said Frost & Sullivan research analyst Richard Sebastian.

"Since this lack of clarity will eventually impede the potential growth of both technologies, there is a need to increase market awareness of their capabilities and features so that users are able to make more informed decisions when selecting the appropriate type for specific applications."

While both these technologies share similarities in terms of functionality, they also have distinct differences that set them apart. As a result, it is unlikely that chipless tags will ever fully replace RFID. Analysts said they are instead likely to be viewed more as a complementary technology that can be used along with RFID to offer end-users the best possible solution.

Analysts said based on their similarities and differences, both chipless tag and RFID technology are likely to have their own areas of dominance, application-wise.

For instance, the lower costs of chipless tags and less memory capacity compared to RFID tags will drive their usage in areas where product value is low and reduced functionality is required. They are likely to be suitable for applications requiring a basic track and trace function.

These tags will also find opportunities in small- and medium-sized business operations, where cost is a critical concern and standards not as important as the need to offer more than universal product code (UPC) barcodes or other legacy tracking systems.

On the other hand, analysts said RFID tags will continue to prevail in areas such as supply chain management where the product value is high. The higher memory capacity offered by RFID is essential in such an environment, particularly since organizations are eventually planning to migrate from pallet to case or item level tagging.

The lack of proper standards is another challenge that could hamper the growth of chipless tag technology. Analysts said there is no single set of standards governing this technology, largely because there are more than 20 different types of chipless tags with different working operations and principles.

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"All parties involved in the development of chipless tags need to work toward a strong set of standards," said Sebastian. "Only when strong and globally accepted standards are in place will this technology start to be deployed in mainstream applications, such as supply chain management, where global interoperability is a key requirement."

Source: Frost & Sullivan.