Global RFID Mkt Looks Upbeat With Rising Adoption

Prospects for the global RFID market look upbeat as rapid advancements in technology have spiked adoption across different verticals. RFID tags accounted for more than 50 percent of the world’s RFID revenues in 2009, with figures reaching between US$1.5 to US$2.5 billion. As tags are evolving into smaller form factors to meet the requirements of different environments, more features and capabilities are being added for optimising performance and enhancing accuracy for applications.

Companies are striving for operational efficiency in processing, especially in controlling asset integrity and in improving inventory visibility in the supply chain to stoke business progression. Emerging applications have the potential to unleash new opportunities for growth in the market.

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New analysis from Frost & Sullivan, Global RFID Market, finds that while the market earned revenues in the range of US$3 - US$4 billion in 2009, it will witness a compound annual growth rate (CAGR) of over 12 percent until 2016.

“Convergence of RFID with other technologies such as real-time locating systems (RTLS) and Wi-Fi will be a strong trend in the coming years for niche applications, adding intelligence to business processing needs,” says Frost & Sullivan Research Analyst Susan Sahayan. “Active RFID technology incorporated in wireless sensor networks (WSN) is another development that is gaining traction and creating more applications, which were earlier considered impossible.”

Some popular examples are the monitoring of natural disasters, vehicle crash monitoring on highways, waste management, and smart grid data monitoring.

Although the outlook for the market is bright, some impediments are proving to be growth bottlenecks. Evidence points to a reluctance among businesses to implement RFID due to the risks involved and the current market situation. End users are in a wait and watch mode, unsure of the outcome of RFID implementation.

In some cases, inadequate infrastructure hampers the growth of RFID. In instances where RFID solutions need to be fully integrated into backend management systems, deployment of full-fledged systems can skyrocket implementation costs. This is a major challenge for businesses in the industry.
Pricing pressure is another factor restraining market momentum. Although RFID tag prices have significantly reduced in the past, the tag market continues to face pricing pressure due to over-expectation in the market. Vendors are known to be selling at low, no, or negative margins. This has created unhealthy competition in the market. Hence, newcomers in the RFID market are encouraged to be aware of the existing conditions and to promote fair competition.

The global market participants in the market continue to be strong with the high emphasis placed on quality and continuous improvement. RFID vendors need to understand the dynamics of the RFID ecosystem, identify opportunities for growth, and focus on delivering innovative solutions for the unmet needs of the market. Education and training of channel partners and end users are of vital importance for successful implementation.

“Participants in this domain must prioritise customer relationship management initiatives and step up efforts to raise awareness on the benefits of RFID implementation,” says Sahayan. “Businesses must consider upgrading their existing infrastructure, such as network and storage, to enable RFID systems to work seamlessly, as opportunities will proliferate if a more robust infrastructure is in place.”