Passive RFID Label Prices and Volumes in a Vicious Circle

A number of EPC Gen 2 RFID vendors are engaged in “loss-leader” activities, offering labels at unsustainable prices in an effort to gain market share. Eventually, some will drop out of the running, or will find niche markets where their products can find a role. ABI Research believes that cost reduction tactics will not have a short-term effect on market volumes. The substantial price cuts seen in the past year were necessary to attract end users complying with mandates. Looking forward, future vendor attempts at lowering production costs will make more sense as higher volumes are reached. Users will proceed cautiously case-by-case and volumes will rise slowly and steadily rather than dramatically.