RFID trends: Global diversity, wider adoption

02/01/2007


Global uses, applications, and technology choices vary widely, as research shows adoption rates have increased significantly.

IDTechEx notes wide global variance. North America, by far the largest market for RFID in value, number of tags, and number of RFID case studies, is led by massive U.S. military use and widespread adoption in all sectors, with more than 840 recorded projects last year. U.K. is second in the IDTechEx tally of cases. In money spent, "China has more claim to fame and Korea and Japan are strong rivals." Diverse applications include entry cards, tags for personnel and livestock tracking, asset management, manufacturing, assembly, shipping (pallets, cases, boxes, items), logistics, baggage handling, libraries, and retail (stock as well as credit and debit cards).

Research firm Venture Development Corp . (VDC) calls 2006 a challenging year for the RFID industry because "sales expectations fell short, a high-profile IPO did not materialize, and the market continued to be commoditized before it is commercialized." Nevertheless, investment in RFID remained strong and the industry made significant strides toward resolving standards-related issues. VDC's 2005-2006 RFID Year-End Overview says:

  • Worldwide market for RFID systems exceeded $2.3 billion in 2006, with hardware accounting for nearly 59% of the total market. VDC anticipates nearly 35% compound annual growth rate (CAGR) through 2008, with total global revenues projected to exceed $3 billion by the end 2007.

  • The industry is ripe for consolidation over the next 12-18 months. Current market conditions, coupled with a highly fragmented and increasingly competitive market, may encourage several vendors to implement exit strategies.

  • North America continued to represent the majority of RFID-related activity. However, the Asia-Pacific region maintained its position as a 'lead adopter' as seen in its continued integration of the technology for public infrastructure applications (i.e. ticketing, access control, etc). As the "manufacturing capital of the world" and one of the largest markets for technology, China will be a major driver for the growth of RFID in this region - as long as it is able to develop a set of interoperable national RFID standards.

EPC UHF tag volumes were well below expectations in 2006; however, VDC predicts that this market will grow by nearly 88% through 2009. Primary factors influencing the increased adoption of EPC UHF include introduction of EPC Gen 2 standard; integration of EPC Gen 2 into the ISO 18000-6c standard; increased availability of Gen 2 hardware and silicon; and expected economies of scale and price reductions.

Although most RFID revenues generated in 2006 were derived from the transportation, automotive, and government verticals, significant growth is expected from the pharmaceutical, consumer product goods (CPG), and health care markets, especially when item-level tracking (ILT) applications become more pervasive in 2008/2009. VDC predicts that the pharmaceutical industry will pave the way for high-volume, item-level tracking applications in regulated industries. Pharmaceutical companies also are heavily integrated into other supply chains in other vertical markets such as CPG and health care. VDC's end-user research says more than 60% of firms whose supply chains intertwine with the pharmaceutical industry do not intend to implement ILT applications until there is a technology consensus from pharmaceutical manufacturers.

Little return on investment (ROI) information is public, though sharing more real-world data would significantly increase awareness and adoption, VDC says.

Read more by searching on RFID atop www.controleng.com . Watch for the "What's Your RFID Spin" cover story at www.controleng.com/archive , 2007 February.

—Edited by Mark T. Hoske , Control Engineering editor in chief





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