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The huge growth potential of the global RFID applications market is being restrained by the lack of established industry standards, with manufacturing prices being likely to rise if companies have to bring out products with multiple-standards compatibility, according to a new report from Frost & Sullivan.
The report, entitled 'World RFID-Based Applications Market', revealed that the RFID industry generated revenue totalling some US$1.7 billion in 2003, and predicts that revenues could reach US$11.7 billion by 2010.
"A more structured standards framework is necessary to enable better innovations in technology and product development," said Frost & Sullivan research analyst, Karthik Nagarajan. "With the exception of electronic product codes (EPC), the industry is still fragmented in its choice of standards for emerging applications."
Strong demand
However, according to the report, demand is still strong in established applications such as toll collection, security and access control, and vehicle immobilisation. Numerous pilot projects have been set up in the past two years to try to stimulate RFID deployment on a wider scale.
But Nagarajan suggests that converting pilot projects into full-scale projects could prove to be a major challenge for markets such as security and re-engineering systems, which are yet to recover from the recent economic downturn. However, falling prices, supplemented by increasing end-user knowledge, are at least expected to trigger more deployments in more stable market segments such as point-of-sale payment and baggage tracking.
Compulsory support?
Of course, RFID solutions are also being promoted by mandate issuers such as the US Department of Defense, Wal-Mart Stores, and others that are making tagging mandatory for suppliers. The market continues to expand into fresh markets, based on innovations such as livestock tracking and sports timing applications, and more flexible form factors are making the technology easier to deploy. "With RFID tag and reader prices falling steeply, more retail establishments are beginning to deploy it for asset management," noted Nagarajan.
Merging technologies
According to Frost & Sullivan, convergence with other technologies is also widening the scope for RFID technology in secure payment and identification applications. For example, the technology is an integral part of contactless smart cards, and is already often merged with biometric identification technologies.
In the short and medium term, supply chain management applications are expected to drive the growth of RFID technology given that it can increase operational efficiency and speed up returns on investment for end users. "Deploying RFID-based supply chain management can substantially increase operational efficiency, offering benefits that include just-in-time inventory management, prevention of out-of-stock situations, and greater supply chain visibility," explained Nagarajan.
About the report
The report, which is part of the Frost & Sullivan Auto ID Subscription, provides insights into the global market for RFID-based applications, analysing market drivers and restraints, and offering forecasts for potential growth areas. The study covers applications in supply chain management, transportation, security, access control and asset management, besides other applications.
Source: Frost & Sullivan
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