Large volume orders for RFID tags from retail giants such as Gillette [G] should push the unit price down sufficiently to allow for widespread adoption. Intel [INTC] may now be rethinking its position in this market after stating last October that it had no intention of jumping into what it called the “penny-a-chip” radio frequency identification market.
Intel is working on a new bar-code standard that supports wireless technologies including RFID tags.
Chipmaker Intel is working with European retailers Carrefour [CA.PA], Tesco [TSCO.L] and Metro Group [MEOG.F] as part of the collectively formed EPC Product Retail Users Group of Europe. Intel’s role will be to help companies implement hardware such as scanners and handhelds that work with the Electronic Product Code-compliant RFID technologies.
EPC is a 96-bit numbering system that assigns a unique tracking number to every item that leaves a factory. The numbers are embedded into RFID chips that are placed on products, helping retailers and logistics firms to track them across supply chains.
The Metro Group, which is the world’s fifth largest retailing firm, says it already operates a ‘next-generation’ supermarket in Rheinberg, Germany that uses RFID technology to support its process chain. The company plans to roll out RFID across the rest of its operations, and has put a comprehensive pilot project in place.
Metro is following the lead of Wal-Mart [WMT], which has made it mandatory that all its suppliers adopt RFID standards by 2005. It is estimated that the cost of the technology could run up a $20 million bill for each supplier.
Last October, Intel’s COO, Paul Otellini stated at an analyst conference that the company had no plans to enter the RFID manufacturing market, despite investing heavily in wireless technologies. Mr Otellini said RFID manufacturers would have to make the chips at commodity costs to build adoption in the market.
Despite Otellini’s comments, Intel is expected to share details of upcoming processors that can be used in devices to help retailers implement inventory-tracking systems.
RFID tags currently cost 30-50 cents each, but big orders from retail giants such as Gillette and Proctor & Gamble [PG] are slowly leading to production volumes large enough to drive the unit price down to less than 5 cents, a point that is widely thought to be a threshold for widespread adoption.
This article is based on material originally published by ComputerWire