RFID market set for strong growth

Global sales of radio-frequency identification services and equipment are expected to exceed $2 billion in 2005, up from $1.49 billion in 2004, according to a new marketing report from Marketstrat Inc. of Fremont, Calif.

RFID-related professional services are expected to grow from $350 million in 2005 to $850 million in 2010, the report said. Services currently represent about 19 percent of the total RFID market.

RFID hardware components accounted for 72 percent of the market, with the largest share going for passive tags, 29 percent; readers, 20 percent; active tags 14 percent; and integrated circuits, 9 percent.

RFID technology has been growing steadily in the past three to four years and is expected to grow rapidly between 2006 and 2009, before stabilizing and settling on a steady growth path, Marketstrat said in a news release.

"The year 2004 was marked by excitement related to mandates, entry of new players, repositioning of some companies as 'RFID focused,' new product and service launches, technology advances, standards evolution, partnerships & alliances, mergers and acquisitions, and general market awareness," the report said.

Several federal RFID projects are under discussion, including the State Department's move to issue RFID tags on new passports and the Agriculture Department's consideration of RFID technology in its livestock tracking plans. The State Department is considering additional security measures before proceeding on the new passports, however.

However, the rapid growth rates predicted for RFID based on a Wal-Mart compliance deadline of January 2005 "did not come true," Marketstrat said.

The most popular global applications in the RFID market are supply chain management, 29 percent; access control, 20 percent; asset management, 12 percent; and point-of-sale applications, 10 percent. RFID also is used for tracking animals, tires and baggage and vehicle identification.

Access control applications on their own are expected to bring in $191 million in revenues in North America in 2005.

The Asia-Pacific market for RFID software was $12.9 million in 2003, and is expected to grow to $339 million by the end of 2012, the report said. "Asia-Pacific is behind North America and Europe in implementing supply chain management and execution systems and related software," Marketstat said.

Challenges facing the RFID market include data ownership and partner data integration, data security and privacy, integrating data across multiple facilities and managing large volumes of data.