While DEMO is primarily a showcase platform for standalone startups, well-established companies launch products there too. This year Alcatel-Lucent has brought an internal startup pushing an RFID tag reading system called tikitag that aims to bridge the online and digital worlds. The Alcatel-Lucent employees pushing this hardware platform have used less than $10 million in corporate funds.

In the physical world, tikitag is a set of RFID- and Near Field Communication-enabled tags and a corresponding reader. The system is standards-based, so eventually it will work with most RFID tags and readers, while the NFC aspect is aimed at allowing NFC-enabled phones to read tags as well. The hardware is the entry point to a cloud-based database that uses both the ID of the tag and the location of the tag reader to pull up an appropriate application — a stored value payment system or a retailer’s loyalty program, for example — online or on a mobile device.

So far, there are 35 developers building applications for tikitag, a number the guys behind the startup expect to grow as the product leaves its controlled alpha. Tikitag officially launches today and the $50 hardware starter kit containing a reader and 10 tags will be for sale at Amazon.com on Oct. 1.

We’ve seen this effort to bridge the real and digital worlds before with CueCat or ad plays like Kwiry. I’m still skeptical, but with the ubiquity of RFID readers, the standards-based approach to the hardware is the best effort I’ve seen so far. If Alcatel-Lucent can entice devleopers to build compelling applications, they might drive the purchase of the hardware. Once the hardware platform takes off or developers get involved, Alcatel-Lucent plans to sell subscriptions for business users to link their applications with consumers, giving the company another foot in the services market as its equipment business gets more and more competitive.