Market Study Covers The Future Of RFID

May 6, 2008 2:44 PM

           

According to the latest Market and Policy Overview from the Security Industry Association (SIA), the Stanford Washington Research Group (SWRG) says that most of the excitement and promise of Radio Frequency Identification (RFID) supply chain adoption is still three to five years away.

SWRG, which focused on HF, UHF and active RFID technologies designed primarily for inventory and supply chain applications, covers the Radio Frequency Identification (RFID) industry's potential and stumbling blocks, as well as a market forecast in the study, as reported by the SIA Research and Technology Department.

SWRG did not include identity card applications using ISO 14443 “contactless smart card” technology, such as ePassports, contactless credit cards, the Transportation Worker Identification Credential (TWIC) and HSPD-12 U.S. government ID cards in the research because they are part of an identity solutions market that is distinctly different from the way most investors view the traditional RFID market – a view focused on identification of things and assets, not people.

In the report, SIA says that Gartner Dataquest forecasts an RFID growth rate of 31 percent from 2007-2012 and SWRG forecasts an 18 percent growth rate in U.S. government applications. All signs suggest that RFID will emerge as a complementary technology – but not a replacement technology – to barcodes in the supply chain sector. A detailed analysis of U.S. government projects forecasts that Department of Defense (DoD) and border control/credentialing projects will drive 2008 government RFID spending by 72.9 percent to $287 million – but shows that spending in 2009 and beyond will be relatively flat.

The end-users surveyed for the report were seemingly excited about the potential of RFID, however few are doing more than technology pilots or evaluations. Enterprise-level deployments remain few and far between, and channel checks suggest this trend is not yet on the verge of reversing. One key takeaway, among others listed, from SIA's discussions with industry and government sources includes:

• SIA says that in order for the industry to "really take off," DoD and Wal-Mart need to make the effort to embed RFID in their own supply chains, rather than the current mandate of using “slap and ship” RFID-enabled labels on boxes at the shipping point.

Also presenting market opportunities, the report breaks down the market by total market size and the portion of the market driven by the U.S. government. SWRG estimates that U.S. federal government initiatives will drive $1.4 billion of RFID business over the next five years (FY08-12). Further DoD RFID adoption, combined with the introduction of RFID into human identity card initiatives tied to the Western Hemisphere Traveler Initiative (WHTI) – such as the Passport Card and Enhanced Drivers License (EDL) – will be the primary drivers. In the United States, these core government programs, along with the Consolidated Trusted Traveler Program (CTTP), are driving RFID spending.

However, the report says that the addressable market for RFID extends well beyond government, as well. In the commercial sector, Gartner forecasts total RFID sales of $11.1 billion over the next five years (2008-2012). Gartner’s January 2008 RFID Market Trends study estimates that total 2008 RFID spending in the commerce sector will be up 31 percent this year.

The report also gives a detailed market breakdown, showing that North America leads but international is growing fast. Looking at the market by region, Gartner predicts that North America continues to lead the pack in RFID, with Europe a distant but fast-growing second. It is also broken down by industry segment, making discrete manufacturing, government and transportation the three leading sectors. However, health care and process manufacturing are forecast to have the highest growth rate over the next five years.

Also included is outlook of the RFID printer market. "It is growing – but is tiny compared to the total printer market," the report says. A study on RFID printers by Frost & Sullivan found optimistic and pessimistic forecasts for 2012. Optimistic was a total 2012 market size of $209.3 million; pessimistic was only $84.8 million.

For the entire report, including Project Profiles on: DoD Passive RFID; DoD Active RFID; Western Hemisphere Travel Initiative (WHTI); Passport (a.k.a. PASS) Card; Enhanced Drivers License (EDL); FDA Counterfeit Drug Prevention; and charts on RFID revenue by industry and more, click here.

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