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RFID World Reveals Opportunity Outside Mandates

This year's RFID World demonstrated that vendor and end-user focus has shifted away from compliance, to the point that asset tracking and closed loop implementions have established themselves as the applications de jour for the RFID industry.
Mar 30, 2007This article was originally published by RFID Update.

March 30, 2007—At the conclusion of RFID World 2006, RFID Update observed that mandate compliance was no longer an industry obsession. This year's show demonstrated that the interim year has seen vendor and end-user focus shift even further away from compliance, to the point that asset tracking and closed loop implementations have established themselves as the applications de jour for the RFID industry.

While the trend away from compliance toward more internally-driven deployments has been ongoing for the last 12 to 18 months, RFID World 2007 revealed just how far that trend has come. Whereas before such applications were considered a stopgap source of revenue that might sustain compliance-oriented vendors until the huge supply chain volumes finally materialized, they are now celebrated as compelling opportunities in their own right. Consider Fluensee, who was exhibiting a sub-$10,000 RFID starter kit. In years past, such kits targeted end users under mandate. Fluensee's, by contrast, targets asset management. One well-known systems integrator told RFID Update that its business was 100% compliance a couple years ago. Now compliance only represents 30%, and that number is expected to shrink further. A leading tag and reader provider shared similar numbers, also expecting its compliance business to lessen as a percentage of total revenues.

Perhaps one of the reasons that non-compliance adoption has become so attractive is that vendors have realized the volumes at stake. Historically, it was hard to see how tagging enterprise assets could compete in number with the millions of pallets and cases that travel through the supply chain. No longer. Whether it be books in a large book store, reusable transport items (RTI) like plastic pallets, or carts and trolleys within million-square-foot distribution centers, the very significant volumes of taggable items across the world's enterprises have RFID vendors taking notice. RFID Update asked the representative of a tag inlay supplier -- whose business demands large volumes in order to survive -- whether tag demand from non-compliance opportunities is large enough to be exciting. "Oh, absolutely. Yes."

None of this is to say that vendors have abandoned the supply chain opportunity. They are simply not waiting around for it anymore, wondering when it will come and trying to nudge compliance end users into more aggressive adoption. "When it comes, we'll be ready," said one vendor. "In the meantime, we're focused on very real opportunities that exist today."

This should all be perceived as a positive for the industry. While the last couple years have been disappointing, even painful, for vendors heavily focused on compliance, these same vendors seem to have successfully regrouped and restructured their business plans to deliver something that is always in high demand: return on investment.
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