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Public Sector Spending Driving RFID Markets

Government and military spending are the driving forces in current worldwide RFID markets, according to IDTechEx. The market research and consulting firm predicts global RFID sales will grow five percent this year to $5.56 billion.
Tags: Defense
Jun 29, 2009This article was originally published by RFID Update.

June 29, 2009—Overall global RFID sales will increase five percent this year over 2008 to $5.56 billion, according to a forecast released last week by international market research and consulting firm IDTechEx. The firm noted many segments of the industry are growing more than 10 percent, and that the overall growth rate is impacted by softness in some major markets plus the completion of the Chinese national ID card program, which has been responsible for billions of dollars in revenue in recent years.

Despite the end of the Chinese ID card program, public sector spending is still a significant source of RFID revenue. "Very much so. It is driving perhaps as much as 80 percent of the current market," IDTechEx chairman Dr. Peter Harrop told RFID Update. "New Zealand, by law, requires all dogs to be chipped; Australia is requiring 35 million heads of cattle to be tracked. Sichuan is considering requiring pigs to be tagged. There are more pigs in Sichuan than in the entire US, and it is just one Chinese state."

Harrop cited electronic vehicle registration and toll collection programs, and the $428 million RFID III active RFID contracts recently awarded by the US Army, as other examples of public sector spending. He noted more than 70 countries now require RFID chips in their new passports.

Many of the ID card and public transportation programs that will generate significant revenue in the next year are occurring outside the US, including personal identification programs in Lithuania, India and the UK. However, IDTechEx said most current market activity is occurring in the US, particularly for RTLS sales to hospitals. The firm found several applications growing more than 10 percent annually, but retail is not among them, especially in North America.

"Retail is generally disappointing," Harrop said. "The retail market is not black and white. It is a case where Wal-Mart mismanaged it, but a number of other retailers have done it better. Now a variety of retailers from Finland to Portugal are putting it in." See Sam's Club Letter Outlines Changes to RFID Requirements for details about changes to the RFID program at Wal-Mart's Sam's Club subsidiary.

"Retail is not the story for the RFID market now. It's government, government, government," Harrop said.
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