This article was originally published by RFID Update.
February 25, 2008—Gartner today announced new data on the RFID market, the first time the research firm has done so in over two years. Following are the key findings:
- Worldwide RFID revenues will reach $1.2 billion in 2008, up 31 percent from last year’s $917.3 million. Gartner predicts the market will reach $3.5 billion in 2012, for a compound annual growth rate of about 24 percent. By way of comparison, IDTechEx, which is focused more closely on RFID, pegs this year’s revenues at $5.29 billion (see IDTechEx Releases RFID Market Predictions for 2008). The large discrepancy between the two firms’ findings is likely due to the inclusion of different factors in their calculations.
- The firm cited the well-documented excitement then disappointment around compliance-driven adoption. “Much of the initial adoption of RFID was driven by mandates from the US Department of Defense and Wal-Mart where compliance with a retailer directive rather than business competitiveness was often the underlying driver,” research director Chad Eschinger was quoted. “Early adopters faced tight profit margins and pressed technology providers for lower hardware costs. Fortunately for the market, this trend has waned and innovation rather than cost is becoming a key driver for adoption.”
- Demand for RFID has more recently been “rejuvenated,” thanks to standards and new applications, particularly in asset tracking and retail. Gartner notes that the locus of RFID adoption is not in the supply chain, as before, but rather in-store. Evidence of this abounds, from Wal-Mart’s in-store promotions tracking (see Wal-Mart’s RFID Refresh) to METRO’s Galeria Kaufhof store (see METRO Unveils Warehouse-to-Checkout RFID System).
- Gartner characterizes the market as fragmented across many small players. This dynamic does not help adoption, in that it leads end users to believe that the technology and solutions generally are still immature. The firm predicts that 2008 will see considerable consolidation, as well as renewed interest in the market by bigger technology players, who will present a threat to the existing smaller players. It is therefore “imperative for smaller providers to win as much market share as possible in the near term.”
- As for vertical markets, Gartner ranks discrete manufacturing, national and international government, and transportation as the three largest contributors to worldwide RFID revenue in 2007, with 21 percent, 20 percent, and 20 percent, respectively.
The release of new RFID research by Gartner is itself a positive sign for adoption. The research firm, one of the largest and most well known in IT, had been quiet on RFID adoption for the last couple years, presumably waiting for the market to pick up again before investing resources to cover it. RFID Update last covered research by Gartner in late 2005, when the firm predicted the worldwide market would reach $3 billion by 2010 (see Gartner: RFID Market $3 Billion in 2010).
Read the announcement from Gartner
