VDC study indicates increased interest in RFID

Natick, Mass. - Analysis from Venture Development Corp. (VDC) reveals that global shipments of RFID systems (including transponders, readers, software, and services) reached $890 million in 2000.

By Gary A. Mintchell, senior editor December 26, 2001

Natick, Mass. – Analysis from Venture Development Corp. (VDC) reveals that global shipments of RFID systems (including transponders, readers, software, and services) reached $890 million in 2000. According to VDC’s market study entitled ‘Global Markets and Applications for Radio Frequency Identification Equipment and Systems,’ shipments of RFID systems are expected to increase by approximately 24.0% annually to reach $2.65 billion by 2005. As RFID further penetrates the automatic identification and data collection (AIDC) market, RFID’s future growth is expected to be fueled by the market’s interest in emerging economic sectors and applications segments.

Virtually every economic sector and industry where data needs to be collected contains potential applications for RFID technology. VDC’s research reveals that RFID hardware shipments were concentrated among industrial/manufacturing and transportation, distribution, and warehousing organizations in 2000. Future revenue growth within these economic sectors will primarily be driven by the development of the smart label market, particularly to support growing applications such as baggage handling and high-speed sortation. In addition, these two economic sectors are expected to account for the largest percentages of RFID hardware revenues in the near and long term; however, their annual growth will be slower in comparison to the annual growth of the emerging health care, commercial, and retail services sectors.

In terms of the future growth of the health care, commercial, and retail services sectors, the following points are relevant:

Interest is increasing among health care organizations to support applications such as waste management, high-value asset tracking, record/document tracking, and real-time location systems.

The commercial services segment is expected to grow rapidly through the emergence of consumer applications such as automated payment systems, m-commerce (mobile commerce), libraries, rental item tracking, and re-usable media.

Adoption of RFID systems in retail environments has been limited and concentrated primarily in security/access control applications. Future developments in the retail sector are largely focused on creating smarter EAS (electronic article surveillance) transponders to support, for example, the storage of pertinent product information within a retail item, such as warranty information.

While the potential for viable RFID applications within economic sectors appears virtually limitless, few applications have translated into consistent and profitable opportunities, with price often being the decisive barrier. Of the current applications, the majority of RFID shipments are attributed to the well-established, traditional security/access control and transportation applications where RFID has proven success. By 2005, supply chain management applications are expected to join these applications in holding the lion’s share of RFID market revenues, especially as the market for smart labels grows.

Over the next five years, point of sale (POS), rental item tracking, and baggage handling applications are anticipated to exhibit the fastest annual growth. Given the growth forecasts of these application segments, it is not surprising that current and potential RFID end users seem most interested in these applications’ possibilities. However, potential end users are evaluating RFID for use in virtually every application segment to improve efficiency, especially in supply chain management. Widely used and established applications such as security/access control and asset management are still being evaluated and will continue to grow, but perhaps not at the rate of the emerging applications.

‘The Global Markets and Applications for Radio Frequency Identification Equipment and Systems’ report is designed to provide subscribers with relevant up-to-date market intelligence to support product planning, market development, and channel partnering decisions. Volume I of the report covers RFID Equipment and Systems; Volume II addresses the RFID Transponder IC market; and Volume III discusses the International RFID Spectrum Allocations and Trends as well as RFID standardization. The RFID market is estimated, forecasted, and trended for a number of RFID offering categories, application clusters, end-user market segments, distribution channels, and regional markets. Volumes I and II provide in-depth analyses of current and developing competitive environments including supplier market shares by product category. Each volume of the study concludes with a discussion of major trends, issues and developments shaping structural changes to the market, the status of existing and emerging product developments, and strategic recommendations for leading and emerging suppliers of RFID equipment and systems.

The entire report can be purchased for $10,950. Each volume of the report can also be purchased separately. Volumes I and II cost $4,950 each and Volume III costs $2,950.