RFID Market Projected to Grow in 2010

March 11, 2010

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Despite challenging economic conditions, the RFID industry grew last year and is expected to continue expanding in 2010, according to new reports. Will this growth be sustainable given the obstacles to RFID technology adoption?

Radio frequency identification (RFID) technology relies on compact circuitry and transmission functions to track objects, people and animals using radio waves. It is already employed in identity security, product tracking, inventory management and even human implantation.

Following a surge in RFID orders in 2009, experts predict the technology will continue to grow through the coming year and beyond. Despite continued challenges regarding RFID adoption, new applications are expected to emerge in the commercial and industrial sectors.

A new report from market intelligence firm ABI Research forecasts the global RFID market to grow to $5.35 billion in 2010 (or $4.47 billion excluding automobile immobilization, which is the largest single RFID application but with a slow growth rate), a 15 percent increase over the total for 2009. The market is also expected to see steady growth over the next five years, exceeding a total value of $8.25 billion by 2014 (or $7.46 billion excluding automobile immobilization), representing a 14 percent compound annual growth rate.

"Not all segments of the RFID market are created equal," according to Michael Liard, practice director for ABI Research. "To 2014, the greatest growth will be found in RTLS (Real Time Location Systems), baggage handling, animal ID and item-level tagging in fashion apparel and retail."

Additional growth is expected to derive from expanded RFID use in electronic vehicle registration, electronic IDs, government initiatives, library systems and supply chain management.

According to ABI Research, the more "traditional" RFID applications, which constitute 61 percent of the current market and include access control and automobile immobilization, are expected to grow at 6 percent annually through 2014. Meanwhile, "modernizing" applications, such as cargo tracking and asset management, are projected to grow at 19 percent annually over the same period.

The United States is poised to remain at the forefront of the global RFID market. In January, a report from IDTechEx concluded that of the 3,900 ongoing major RFID projects worldwide, the U.S. is home to 1,298 of them, followed by the United Kingdom with 384 projects and China with 267.

"Radio-frequency identification technology has received a lot of interest for its usefulness in tracking inventory. Attach an RFID tag to just about anything, and the item can be easily tracked through the supply chain," the Wall Street Journal explains. "Getting less attention are a host of businesses that are finding innovative ways to use RFID internally, to keep track of high-value items like computer equipment, for instance, or of things that get used over and over, like legal files — or sushi plates."

Versatility is likely to drive future growth in radio-frequency tracking systems, and as the technology advances into new fields, additional capabilities and design enhancements could push RFID adaptability even further.

However, experts also see numerous challenges to RFID adoption under present circumstances.

"RFID is an emerging technology, and like all new entrants, it takes time for people to become familiar with its capabilities, understand where it can be used, discover its value and evaluate its ability to scale," RFID Monthly explains. "It also takes time for vendors to sufficiently develop the technological capability where it can properly function in a live environment. In our view, most people still see RFID as too new and unproven to even evaluate."

In addition, given the lingering effects of the economic downturn, "CFOs have been protective of capital, and new projects using new technologies have not been high on the priority list." Overcoming this reluctance may require additional education on RFID adoption for both end users and system integrators. Building and spreading skills for implementing RFID technology, even on a pilot program level, is likely to be a priority for the RFID industry if it is to maintain long-term growth.

Earlier

Outsmarting Tech-Savvy Criminals

RFID Orders Swell in 2009

Governments Spur RFID Growth

Resources

RFID Market to Reach $5.35 Billion This Year ABI Research, March 5, 2010

Printed RFID in 2010 IDTechEx, Jan. 7, 2010

Business Solutions: New Ways to Use RFID The Wall Street Journal, June 2, 2009

The RFID Knowledge Vacuum RFID Monthly, Feb. 16, 2010

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