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Study Shows Big Growth for RFID Printer-Encoders

A report from Venture Development Corp. says the market will increase nearly 80 percent annually during the next four years.
By Mary Catherine O'Connor
Jul 25, 2006Item-level tagging and increased applications for RFID in the health care industry will contribute to the growth of the RFID printer-encoder and applicator industry over the next four years, according to a new report from Natick, Mass.-based market research firm Venture Development Corp.. The firm's research shows that the global market for UHF and HF RFID printer-encoders and applicators reached an estimated $11 million in 2005. Unit shipments approached 4,000 in 2005 and are expected to exceed 90,000 by 2010, increasing the market's size to $200 million. This would reflect a compound annual growth rate of nearly 80 percent through 2010, based on revenues, according to the report.

In its research, VDC divided the market by four main segments: consumer packaged goods (CPG), government, pharmaceutical and health care. In an "other" category, it placed users of RFID such as libraries, laundry services and some manufacturing. Companies that manufacture goods that fall into the CPG, pharmaceutical or health-care industries, however, were included in those respective segments.

Today, RFID label printer-encoders and applicators are being purchased mostly by retailers and manufacturers of the consumer packaged goods, VDC says, and those companies will still be the biggest consumers of printer-encoders and applicators in 2010. But by that time, the "other" segment, which currently only accounts for 1.8 percent, in dollars, of global shipments of the devices, will account for 16.9 percent of the market, the report says.

Andrew Nathanson, director of VDC's AIDC/RFID practice, explains that libraries will account for much of this increased use. Libraries will be purchasing the printer-encoders in order to print, encode and apply RFID labels to books and other media for automated checkout and inventory control. Many large library systems have begun using RFID recently, including New Orleans (see New Orleans Library Reopens with RFID) and a county in suburban Denver (see Colorado Library Checks Out RFID). Tech-savvy Singapore has deployed RFID throughout its national library system, and the library in the Chinese city of Shenzhen is deploying the technology.

But of all the users VDC surveyed, pharmaceutical companies will exhibit the biggest increase as consumers of RFID printer-encoders by 2010, especially those for high-frequency RFID tags. A number of pharmaceutical firms have started pilot programs using passive and usually high-frequency RFID tags to track and authenticate individual drug containers in order to fight counterfeiting. As these companies begin to integrate RFID tagging on a large scale and with many product lines, the number of printer-encoders and applicators they need will grow rapidly. In addition, many more pharmaceutical firms, following the strong recommendations made recently by the FDA (see FDA Issues New 'Counterfeit Drug Task Force' Report), will likely begin using RFID at the item level to secure their products.

Nathanson notes that while CPG firms currently represent the largest vertical market for consumption of RFID printer-encoders, their adoption was slower than expected in 2005. Early last year, CPG manufacturers purchased a considerable quantity of printer-encoders to meet Wal-Mart's tagging mandates, but then demand began to plateau, he says. And while many users of RFID have already or will soon be migrating from EPC Gen 1 tags to Gen 2 tags, most installed Gen 1 printer-encoders can be upgraded via firmware to read and encode Gen 2. Therefore, those users will not be replacing their printer-encoders. This, he says, "will continue to be a defining market characteristic over then next one to two years,"

The printer-encoder report is part of a series of research publications offered through VDC's RFID Business Planning Service. The subscription fee for a single report is $5,350.
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