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VDC on RFID Adoption in 2006

Market research firm Venture Development Corporation of Natick, Massachusetts, recently released a number of findings on the RFID market in 2006. This article highlights the key points.
Jan 29, 2007This article was originally published by RFID Update.

January 29, 2007—Market research firm Venture Development Corporation of Natick, Massachusetts, recently released a number of findings on the RFID market in 2006. Following are the key points.
  • The worldwide market for RFID systems exceeded $2.3 billion in 2006. At $1.355 billion, hardware accounted for 59 percent of the market. Services with $786 million and software with $171 million accounted for 34 percent and 7 percent, respectively.
     
  • VDC projects the market will jump to $3 billion by the end of this year, and grow 35 percent (CAGR) through 2008.
     
  • The RFID industry is "ripe for consolidation", according to VDC. The highly fragmented and increasingly competitive field, combined with disappointing demand, may conspire to cause a number of vendors to merge, acquire, or otherwise exit the industry.
     
  • The number of EPC tags shipped in 2006 did not meet expectations. Despite this disappointment, however, the EPC tag market will experience phenomenal growth going forward. Specifically: 88 percent through 2009. A number of factors will contribute to the ramp-up, including increased availability of the technology from vendors and a virtuous cycle of higher volumes and price reductions.
     
  • It is widely agreed that the lack of publicly available business cases and ROI models is hurting RFID adoption. But while the conventional wisdom has held that it is the end users who are reluctant to publish such information for fear of losing hard-earned competitive advantage, VDC maintains that the vendors are also complicit. "In VDC's discussions with vendors and channel organizations, an overwhelming portion of the respondents would only share this type of information with their current and potential end users -- often citing effective ROI models and ROI testimonials as critical sales advantages."


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