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ABI Research Finds Widespread RFID Market Growth

The latest quarterly RFID market forecast from ABI Research predicts strong growth for most technology and application segments. The study predicts 15% compound annual revenue growth from 2007 to 2013, with slowing growth in mature segments and falling prices masking stronger advances in unit sales and emerging sectors.
May 22, 2008This article was originally published by RFID Update.

May 22, 2008—RFID sales are growing for many applications and technologies, with new segments of the industry gaining momentum to make up for slowing sales in mature markets, according to the latest quarterly forecast from ABI Research, which was released this week. The Oyster Bay, New York, industry research and analyst firm predicted revenues for the overall worldwide RFID market will experience a 15 percent compound annual growth rate between 2007 and 2013, when total revenues will reach $9.7 billion.

Sales of RFID equipment and tags are outpacing revenue growth rates because prices are falling in many technology categories, ABI Research director Michael Liard told RFID Update.

"Hardware cost must be looked at when assessing market growth now," Liard said. "Volume shipment growth is very healthy, but price points are coming down. The fall in hardware prices is starting to take some revenue out of the market."

Falling prices are not limited to 13.56 MHz and Gen2 UHF systems, but are evidenced in most technology categories, including active and RTLS, according to Liard.

"The 15 percent overall revenue growth rate is being brought down by slower growth in some of the oldest, highest-volume segments, like access control, automobile immobilization, and toll collection, which have high single-digit to low double-digit growth," Liard said. "There is growth across all technologies -- HF, UHF, and active -- and some segments are really coming on strong."

Closed-loop (non supply chain) applications are currently experiencing some of the strongest adoption growth, particularly asset management applications, according to ABI Research. The firm also said there has been strong adoption of library/rental management, work-in-process tracking, yard management, reusable shipping container management, airline baggage tracking, and parts tracking applications.

Well-publicized supply chain initiatives by Airbus, Sam's Club, Wal-Mart, METRO Group, and the US military are also having a material effect on the market, according to Liard. These programs contribute to strong sales of Gen2 and other passive UHF technology. For coverage of these activities, see the following articles: Passive UHF sales currently account for 20 percent of overall RFID revenues, and there will be 45 percent unit growth annually for passive UHF tags through 2013, Liard said.

Emerging active and WiFi-based RFID systems could serve some traditionally passive RFID markets, primarily because there is a growing trend to install systems that use multiple RFID technologies, according to Liard. Falling active and RTLS tag prices also make the technologies more attractive to potential users.

However, Liard found no evidence of a widespread shift to these technologies for applications typically served by passive. The status quo will remain mostly unchanged for the foreseeable future, he said. "There is nothing right now with immediate potential to be disruptive to current RFID technologies."

According to Liard, the obstacle that could most likely prevent RFID sales from meeting projections is a failure to educate prospective buyers about the technology's performance, value, and privacy and security issues. Legislative activity that seeks to put restrictions on RFID use could also suppress the market, he said.

"There is still a lot that needs to be done in terms of RFID education and awareness. Vendors have to increase understanding among enterprise end users and among consumers," Liard said.

See the ABI Research announcement here.
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