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NXP Shows RFID Is Coming of Age

A technology with a single supplier bringing in $600 million in sales can no longer be considered a "niche technology."
Posted By Mark Roberti, 08.01.2011
I've written a lot about emerging "gorillas" in the radio frequency identification market during recent months. "Gorilla," you might recall, is author Geoffrey Moore's term for a dominant technology provider—the company that achieves the vast majority of sales when a technology enters the phase of mass adoption that he dubs the "tornado" (see The (RFID) World According to Moore, Moore Has Spoken—Were RFID Vendors Listening?, Geoffrey Moore Discusses RFID Adoption Strategies and Waiting for the Gorilla).

A recent press release put out by RFID technology provider NXP Semiconductors suggests just how large the RFID market is becoming, and that NXP could become the first gorilla. NXP's identification business unit, the release indicates, posted global revenues of $589 million in 2010 across its three product lines: secure transactions, secure identity, and tagging and authentication. In the first half of this year, the release adds, NXP reported revenues of $383 million in identification.

A technology with a single supplier bringing in sales of $600 million can no longer be considered a "niche technology."

NXP is clearly emerging as the gorilla in the high-frequency (HF) market, which includes Near Field Communication (NFC) technology. "NXP is the volume leader in many of these application areas, particularly within HF-based markets," according to John Devlin, ABI Research's practice director for automatic identification and smart-card IDs. The release claims that NXP is the top provider of HF technology for electronic passports, electronic payments for transportation fare-collection systems, NFC and mobile transactions, and other HF markets.

Moore claims that a gorilla must emerge before a technology can gain mass adoption, and NXP's leadership in the NFC market could be a sign that the technology is nearing widespread adoption. A growing number of cell-phone manufacturers are adding NFC capabilities to their handsets, and NFC seems poised to dominate the mobile-payments market. That would create a huge revenue source for NXP, which could then supply the chips used for myriad NFC applications. (Avery Dennison RFID is positioning itself to be the gorilla that provides the labels—with NXP chips—for NFC applications.)

With $600 million in revenue from RFID alone, NXP has resources to invest in RFID, and will thus be difficult to compete with in the markets in which it is dominant. What's more, NXP is clearly going after the emerging ultrahigh-frequency (UHF) market as well. Last year, the firm unveiled two passive UHF transponders that require less energy from a reader (thereby improving readability and performance), and that have new security and privacy features (see New NXP RFID Chips Bring Multiple Functions to Item-Level Tagging).

It's not yet clear whether NXP will become the HF gorilla, or which provider will eventually dominate the UHF market, but there's no doubt that the RFID industry is growing, and that companies are making money and fighting for market dominance.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog, the Editor's Note archive or RFID Connect.

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