Strong sales growth expected for RFID tags

REVENUE from the North American RFID market is expected to climb steadily to nearly a half-billion US dollars in the next six years, according to a new study released by research and consulting firm Frost & Sullivan.

REVENUE from the North American RFID market is expected to climb steadily to nearly a half-billion US dollars in the next six years, according to a new study released by research and consulting firm Frost & Sullivan.

Priyanka Gouthaman, author of the study, Passive RFID Tags Market: Will Future Growth Rates Match Hyped Expectations? predicts sales in the US, Canada and Mexico to experience a “highly positive growth rate”.

Gouthaman expects revenue to grow at a compound annual growth rate of 21.5% between now and 2013, to $US486.6m, with RFID shipments growing at 29% between 2007 and 2013.

At present, the US has for the lion’s share of the North American RFID market, about 88.3%, with sales totaling $US124.6m.

However in the next five years, the US will account for only about 65% of the market, as RFID adoption rises in Canada, according to Gouthaman.

The key industries spurring RFID’s growth in North America are health care, retail, industrial, automotive, aerospace and government. What’s changing is a growing interest in RFID’s ability to provide businesses with a ROI.

RFID’s growth still largely appears to be driven by mandates from the likes of Wal-Mart and the US Department of Defense, Gouthaman said, adding that the RFID market is still in an early growth stage.

She says the most powerful market driver, particularly within the passive RFID market, has been standardisation, such as the acceptance of EPC Gen 2, with one of the biggest markets for RFID the supply chain.

“Standard RFID technology is more likely to provide businesses with complete visibility of their supply chains, which often stretch across countries, industries and companies,” Gouthaman said.

“There are growth-inhibiting challenges too,” she said.

“The technology is still considered disruptive to current business processes because it can require a significant investment in time and money.

“Also, data from RFID typically provides true value only when it is integrated with back-end systems, which adds to the money and time it takes to make RFID a more integral part of business processes.

“What’s more, environmental factors that affect tags’ accuracy still continue to thwart RFID’s overall growth, although tag read rates have improved overall,” she said.

The study highlights emerging RFID market trends, including the fact that the technology is increasingly appealing to traditional bar code vendors.

“To remain technically relevant to changing market demands, bar code manufacturers are starting to offer RFID,” Gouthaman said.

Printed RFID electronics and the combination of sensors and passive RFID are starting to emerge on the scene, too.

“Sensors have typically been used with active RFID, but the combination of sensor capabilities and low-cost passive tags is particularly interesting for supply chain markets that are already challenged with trying to cut costs,” Gouthaman said.

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