Why Aren't More VARs Selling RFID?

Your grandmother probably takes RFID technology for granted. In fact, anyone who has taken a cab or airport shuttle has experienced RFID in action at a tollbooth. Instead of stopping to pay a toll, the driver speeds through a separate lane that has a device that reads the radio signal from the vehicle's RFID tag. The gate goes up, and grandma gets to her bingo game faster. Or, maybe your son is one of the four million people using RFID to purchase gas or hamburgers without having to wait for an attendant to count out change. Face it, this technology is becoming a part of our everyday life. Nevertheless, many VARs and integrators are still reluctant to include it in their list of products.

But It Costs So Much, Doesn't It?
The number of RFID applications has been stifled for years because of the common perception that this is an expensive technology. Actually, the pundits were right; RFID was costly when it was first introduced. However, prices have dropped and are continuing to fall. "Serious users of RFID have been done a huge disservice by the hyperbole and misinformation surrounding this technology," stated Jack LeVan, president and CEO of SCS Corp. (San Diego). "Information about unrealistic tag prices has scared off many potential users. That's unfortunate, because at today's actual cost points, many applications are economically viable." According to Texas Instruments' (Dallas) eMarketing Manager, Bill Allen, low frequency transponder prices are down from $10 to $20 per tag to $2 to $3 per tag. Additionally, costs for RFID 13.56 MHz smart label tags are now below $1.

These cost reductions are primarily due to advancements in microelectronics and higher component manufacturing volumes. Venture Development Corp. predicts shipments of RFID systems will reach $1.6 billion by next year.

You Learned About Bar Codes, You Can Learn About RFID
Many VARs are intimidated by the "complexities" associated with learning about RFID. Differing frequencies, read ranges, and tag/transponder configurations are all part of this technology's mystique. Furthermore, ongoing standards issues have also provided a barrier to widespread adoption. Still, hasn't every AIDC (automatic identification and data collection) VAR experienced similar issues with bar coding technology? "It's much simpler to update an RFID tag than print a new bar code label," LeVan said. "There are no bar code formats to redesign or printers to reconfigure with RFID. Also, there is no checking a scanner to determine if it reads a particular symbology."

Vendors of RFID are always a good source to start with regarding education on this technology. They can not only give application examples, they can identify what it takes to succeed in this field. "First, VARs/integrators need to know how to sell RFID's benefits and advantages while overcoming the customer's resistance to change," stated Mike Uremovich, VP of sales for Axcess Inc. (Carrollton, TX). "Second, they need to change their orientation from selling widgets and standalone systems to selling integrated solutions. Finally, integrators need to have working knowledge of IP (Internet protocol) networks (both wired and wireless)."

In addition to the technological aspects of RFID, VARs should know what kind and how much data the customer needs to store. They also should determine if the application requires read-only or read-write capabilities. "There are multiple ways for VARs and integrators to generate revenue from selling RFID," Allen explained. "They could be involved in the system design stage or act as a consultant to help a customer deploy an RFID solution. Of course, they could be an ongoing supplier of RFID hardware."

Is There A Pot Of Gold To Be Made Right Now?
It's simple, really. VARs and integrators with RFID experience are in great demand because of an increase in applications which are the result of a decrease in the technology's cost. Consequently, margins are high and the spoils are going to the early adopters. Think for a moment - this is a contactless technology without line of sight issues that isn't restricted by harsh environments. Furthermore, new RFID technology operating in the UHF range of 902 MHz to 928 MHz is opening more warehouse and logistics applications.

Even small companies, as LeVan points out, may soon enter the RFID arena via "compliance tagging" mandates. "Compliance tagging will require a very basic encoding device, perhaps a printer/encoder, modestly priced tags, and probably a basic reader. In inflation-adjusted dollars, the 2001 RFID starting system looks like a pretty good value compared to the early '90's bar code system."

RFID is also being used to help create "smart" machines. For example, RFID tags can be attached to supplies such as factory-authorized printer cartridges or medical products. The tags authenticate the supplies for use in a machine and also calibrate the supplies. "Many of these applications are beginning to include RFID smart labels," Allen commented. "These labels provide a data link between a machine and its core materials in order to optimize the machine's performance."

The Next Step For RFID
Traditionally, RFID has been a short distance technology. However, new advancements with the technology have produced longer read distances and faster processing times for multiple tags. With this type of evolution, Uremovich predicts the RFID industry is headed in two directions:

• the expanded use of low cost "commodity tags" to displace bar codes and manual systems
• the use of wireless "smart tags" that can make decisions and perform multiple functions.

"Both paths will drive expanded use of RFID products across multiple industries," he said. "Consequently, there will be lucrative, high growth business opportunities for any VARs and integrators willing to step up to the challenge."