October 01, 2005
RFID value chain
The RFID value chain begins with the chip makers who conduct horizontal marketing and sell their product to any interested party. The systems providers and the operators have specializations, for example Savi Technology specializes in integrating RFID in the military and Trans-Core has concentrated on non-stop road tolling. Currently, the major beneficiaries in the RFID value chain are the systems providers and the facility managers, for example the order of $ 1.6 billion that Transys obtained from the UK government for implementing a card system on the buses and trains in London. In China, a consortium of small companies is implementing a national identification card system worth $ 6 billion.
This implies that manufacturing hardware is not sufficient for landing big orders; systems integration skills that are of use near the end of the value chain also need to be developed. Tag making will come into its own when the tag orders run into trillions of tags and the tag costs account for 50% of the total cost of owning an RFID system. Chipless RFID tags will play an important role in ensuring the complete proliferation of item-level tagging in the supply chain and sustained profits for all. RFID vendors who target niche markets may not grow in size but can reap in quick benefits. Examples of such companies include Alanco Technologies that tags prisoners, Digital Angel, which prepares tags for high-risk patients, and Triteg that prepares tags for hot air balloons to enable their tracking by radar.
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