This article was originally published by RFID Update.
April 7, 2006—Market research firm In-Stat of Scottsdale, Arizona, this week released a report covering the WiFi segment of the overall realtime location systems (RTLS) market. The firm predicts shipments of WiFi tags will reach almost 2 million in 2010. RFID Update spoke with Gemma Tedesco, author of WiFi Finds Itself in the Real Time Location Systems Market, about the findings.
“It’s a very small market yet,” said Tedesco referring to the WiFi segment of RTLS. But it’s growing, as WiFi infrastructure becomes more common worldwide and RTLS itself finds new applications. Last year, only about 20,000 WiFi tags were sold collectively by Ekahau, PanGo Networks, and AeroScout, the three leaders in WiFi RTLS solutions. At roughly $50 per tag, that amounts to $1 million in tag revenue.
While this sum is small indeed, it is expected to grow dramatically. In-Stat estimates that at the projected 2 million tags for 2010, tag revenues could reach $28 million. This estimate assumes $14 tag cost, which seems likely given technology innovations, recent and future.
Tedesco cited the new RTLS chipset technology from G2 Microsystems, officially released last week. The chipset is expected to dramatically decrease the cost and form factor of RTLS tags. By some estimations, the current tag price of roughly $50-60 could fall to $30-40 in the near term. “It’s just going to get cheaper and cheaper and cheaper,” said Tedesco. (For more, see our article on the G2 announcement.)
Regardless of the tag pricing trends, Tedesco emphasized that the WiFi RTLS providers are not staking their futures on tag revenues. They recognize that tags will eventually become a low-margin commodity and are instead looking to software solutions and applications as their profit center. “The tags will be commodities, and [the WiFi RTLS providers] really won’t be making much money on them. So they’re really focusing on their software solutions,” said Tedesco.
Another point noted by Tedesco was how big a customer the healthcare industry is for the WiFi RTLS providers. WiFi RTLS is “a perfect application for healthcare,” she said, because the high value of commonly lost or misplaced assets like wheelchairs and medical equipment justifies attaching expensive tags. But healthcare alone cannot provide long-term high-growth opportunities, so a challenge for the WiFi RTLS providers will be penetrating other verticals. “It remains to be seen if WiFi can prove itself as a technology suitable for environments beyond just healthcare,” commented Tedesco. She cited other markets where employee safety is an issue, like mining, but said that those markets have yet to yield big sales. Again, the anticipated drop in tag prices will help.
Note that WiFi represents just one segment within the overall RTLS market. Those RTLS providers that do not use WiFi technology in their solutions (like Radianse, RF Code, and WhereNet) were excluded from the In-Stat report. For more on the technology differences among RTLS solutions, as well as projections for the entire market, see the following four-part series from RFID Update, contributed by Yankee Group analyst Marcus Torchia:
- The Active RFID Market, Part 1
- RTLS Market To Exceed $1.6 Billion by 2010
- Overview of 802.11 RTLS Vendors
- Overview of Legacy RTLS Vendors
Read the announcement from In-Stat