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EU RFID Spending to Near $1.9 Billion

The western European RFID market will approach $1.9 billion by 2009, up from $464 million in 2004, according to a report.
By Jonathan Collins
Mar 03, 2005The western European RFID market will approach $1.9 billion by 2009, up from $464 million in 2004, according to a report from Juniper Research.

"We are talking about a market with around 30 percent year-on-year growth, and that's a significant growth rate and a serious market," says Susan Griffin, a consultant at Juniper Research, which is based in Basingstoke, England. Griffin cowrote the report, RFID Opportunities: Markets and Technologies in Western Europe.

Susan Griffin
According to Juniper, the bulk of spending on RFID in western Europe will come from supply chain deployments—a sector that already represents the largest market and will continue to do so through 2009. The bulk of the uptake of RFID will be in the supply chain and logistics sector, where RFID will be used to drive increased efficiencies from producer to retailer. Other RFID markets set to use RFID will include pharmaceuticals and mass transportation, as well as niche applications such as in libraries.

Spending on RFID deployments in supply chain applications in western Europe reached $185.8 million in 2004 and will reach $575 million by 2009, according to Juniper. By comparison, in 2004 the second-largest market for RFID spending was retail, valued at $92.9 million. By 2009, pharmaceuticals will be the second-largest RFID market, valued at $408 million, and mass transportation will be the third-largest RFID market, valued at $371.3 million. Retailer spending on RFID will reach $315.6 million by 2009, making retail the fourth-largest RFID market.

While spending will vary across industries, it will also vary from country to country. According to Juniper, spurred on by the government backed "Chipping of Goods" RFID project in the U.K. (see The U.K. Chips In ) and the RFID deployment of German retailer Metro Group (see Metro Group Reaps Gains From RFID), the U.K. and Germany account for 40 percent of the market for RFID in western Europe—a region that includes all the European Union countries and Switzerland. Juniper believes that in 2009, those two countries will still account for 40 percent of western Europe's RFID market.

The biggest growth for RFID, according to the report, will start late next year. "The take-off point is likely to come at the end of 2006 and through 2007 as tag prices fall and more and more companies see the return on investment possibility of deploying RFID," Griffin says.

Juniper maintains that key to the ongoing investment in RFID within western Europe is the adoption of a EU-wide standard for RFID tag and reader implementations. "The new ETSI standard is absolutely crucial to the growth of RFID in Europe because Europe is a relatively small place, and so there needs to be a unified RFID adopted by everyone," says Griffin.

In November the European Telecommunications Standards Institute (ETSI), set out new regulations, dubbed ETSI 302-208, that will allow European RFID readers operating in the UHF band to perform nearly as well as UHF readers operating under Federal Communication Commission rules in the United States by providing an additional frequency range from 865 to 868 MHz in which RFID readers can operate (see New ETSI RFID Rules Move Forward). Currently, RFID readers in Europe operate between 869.4 and 869.65 MHz.

According to the report, companies that implement RFID in their supply chains may well opt to deploy RFID as part of a larger solution to track items and shipments.

"If you look at tracing and monitoring items—there are other technology solutions already available that may be cheaper and easier to deploy. If you are tracing something at a macro level, geographically speaking, then things like GPS seem to be an option. Within a micro environment, such as a warehouse, then RFID as envisaged today may be more appropriate," Griffin says.

Juniper, which focuses its research primarily in the telecommunications market, says that demand for RFID deployments will create opportunities for companies with experience in implementing mobility solutions and business-process reengineering to offer assistance in implementing RFID. The full report, which also explains the basics of how RFID technology works and describes the steps that companies deploying RFID must take in preparing their RFID projects and deployments, is available for single-user license for £1,490 ($2,750) at www.juniperresearch.com.
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