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4 Trends in the RFID Software and Services Market

ABI Research today announced that it has revised down its forecasts for the RFID software and services market in 2007 by 15%. This smaller figure does not indicate bearishness on the part of ABI. On the contrary, the firm believes four particular trends in RFID software and services are responsible, and that they represent positive signs of market maturation.
Aug 10, 2006This article was originally published by RFID Update.

August 10, 2006—ABI Research of Oyster Bay, New York, today announced that it has revised down its forecasts for the RFID software and services market in 2007. ABI now pegs the market at $3.1 billion (for all applications and markets), down 15% from earlier projections. This smaller figure does not indicate bearishness on the part of ABI. On the contrary, the firm believes four particular trends in RFID software and services are responsible, and that these trends represent positive signs of market maturation. They are:
  1. Consolidation. ABI expects "considerable consolidation", both across companies and within them, to eliminate redundancy in RFID software and service offerings and to streamline solutions delivery, ultimately resulting in a more efficient market. Among other factors, the consolidation will be driven by existing relationships between enterprises and their IT solution providers. As those enterprises look to adopt RFID, they will turn to their established IT provider. If the provider does not yet have adequate RFID solutions in-house, it might acquire a third-party RFID software and services provider to meet its customer demand.
     
  2. Vendor collaboration and partnerships. Companies in the RFID industry, as in the wider IT industry, often announce partnerships with complementary solutions providers. An RFID reader manufacturer might partner with a middleware provider, for example, or a system integrator, printer/encoder vendor, and RFID applications provider might announce a three-way partnership. The announcements can often be vague and light on details, and it can be difficult to determine how meaningful the partnerships really are. But ABI argues that taken in the aggregate, these vendor partnerships have a positive effect on the industry, in that they allow end users to obtain an RFID solution from one source rather than having to assemble it piecemeal. According to the company, "RFID technology is becoming increasingly standardized, which is fostering ... "ecosystems of partners", each contributing elements to a common solution. These collaborative efforts mitigate software costs because users do not need to seek multiple sources."
     
  3. Off-the-shelf solutions. As adoption matures, RFID software and services will become less customized and more "off-the-shelf". Customized solutions are of course more expensive, so this trend will mean end users enjoy lower costs on RFID software and services. "ABI Research expects many parts of RFID logic, event, and business process oriented challenges to be met with software that requires limited change." The IBM pharmaceutical track-and-trace solution announced on Tuesday (see IBM Launches End-to-End RFID Solution for Pharma) is an example. John Del Pizzo, global solutions executive for the Sensor & Actuator Solutions division at IBM, told RFID Update, "Eighty percent of the base functionality is available out-of-the-box. [Pharma manufacturers] will only have to incrementally customize the additional 20%."
     
  4. Experience. Lastly, a lot has been collectively learned over the last few years, and enterprises are simply more experienced with RFID. Lower deployment costs will be a positive byproduct of these hard-won skills. ABI's RFID practice director Michael Liard said, "With today's better planning, there's less waste, and less software needing premature replacement. End users are taking a more managed approach to budgeting and integrating RFID solutions internally."


Read the announcement from ABI Research
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