This article was originally published by RFID Update.
August 16, 2005—Wired today ran an article on what the lay investor seeking to capitalize on RFID industry growth should consider. It starts off pointing out the market’s growth prospects, citing the Datamonitor prediction that the aggregate market size will triple between now and 2010, when it reaches $6.1 billion. (Similar statistics abound. Venture Development Corporation expects the total RFID market to reach $5.9 billion by 2008, and IDTechEx predicts it will surpass $24 billion by 2015.) But despite the near-unanimous expectation that demand for RFID hardware, software, and services will grow impressively in the years ahead, uncovering stock-pick beneficiaries of that growth is “a tricky proposition.”
In the first place, so-called “pure play” RFID companies are relatively rare on the public markets. The article names Zebra, Symbol, and UNOVA (parent of “emerging RFID heavyweight” Intermec) as possibilities. But otherwise, RFID will probably not have the singular positive effect on a company’s stock price that make betting on the technology straightforward. Take Philips Semiconductor and Texas Instruments as examples. Both companies will be major players in the RFID tag and chip market, but they are such large companies with so many business units that their RFID activity is hardly going to be the sole determinant of their fortunes. There are myriad other variables that will affect their growth and stock price trajectory.
Wired considers the RFID hardware market a more attractive investment opportunity than that of RFID software. It is a more mature space, and its capital-intensive nature ensures high barriers to entry that keep would-be competitors at bay. Software, on the other hand, is far cheaper to develop, meaning that everyone from start-ups to software heavyweights like Oracle, Sun, and SAP are competing for a slice of the pie. This reality is evident when considering the leaderless middleware field. Avicon CEO Marc Linster is quoted as saying that there are “more middleware vendors at an RFID conference than you can shake a stick at.” Indeed, last month ABI Research warned of a near-term shakeout in the space.
Lastly, consider the privacy issue. As everyone following the industry knows, there has been resistance to the use of RFID on consumer products from religious groups, privacy advocates, and civil libertarians. Wired warns that such pushback represents an unknown with respect to the successful growth of the RFID market.
Read the full article from Wired News