RFID revenue on the rise

Worldwide RFID revenue is forecast to total $1.2 billion in 2008, a 30.9 per cent increase from 2007, according to Gartner. And by 2012, it is set to hit $3.5 billion

The leading industries for RFID revenue in 2007 were discrete manufacturing (21 per cent of market), national and international government (20 per cent) and transportation (20 per cent). Retail trade ranked fourth with 14 per cent of the market. “The market for RFID technologies has begun a transition from being compliance-oriented to being revenue-generating and innovative,” says Chad Eschinger, research director at Gartner. “Much of the initial adoption of RFID was driven by mandates from the US Department of Defence and Wal-Mart where compliance with a retailer directive rather than business competitiveness was often the underlying driver. Early adopters faced tight profit margins and pressed technology providers for lower hardware costs. Fortunately for the market, this trend has waned and innovation rather than cost is becoming a key driver for adoption.”

Key trends currently driving growth in the market include growing interest in asset management projects as companies struggle to manage non-maintained or disposable assets, and the fact that in-store inventory management – as opposed to supply chain management – is driving many non-compliance retail projects. The RFID market is beginning its second wave of adoption – which can be characterised as the exploration phase (beyond initial pilots) – in which businesses are relying on RFID to increase their business competitiveness. Globalisation is also a primary driver as businesses seek to accelerate time to market for new products, services and geographies.

However, much of the market is not yet at the tipping point, and while many companies know that the technology will need to be explored, it may not be practical for them to adopt it at present. “While the interest for RFID technologies is high, today’s buyer is more discriminating than in the past and cautious of over-hyped technologies,” says Eschinger. “They will be looking for greater functionality and ROI.”