Sep 07, 2005This article was originally published by RFID Update.
September 7, 2005—Although the real-time location systems (RTLS) market is still forming, it will play a significant role in shaping the compelling strategic WLAN landscape. Strategic WLAN rests squarely on ushering in enterprise applications that spawn efficiency, profitability and growth for its adopters. As a market, RTLS will have less than $20 million in revenue for 2005. However, rapid growth will happen in the next several years: global revenue will exceed $1.6 billion by 2010.
Yankee Group defines the RTLS forecast as the combinative system of software, hardware, and services necessary to deploy an RTLS. Specifically: hardware components—readers, tags and exciters/choke point readers; software modules—applications, location engines, device (tag) management and mapping; and professional services. The forecast does not include WLAN infrastructure like access points and bridges; WLAN system management software; security software; passive RFID components, systems or services; or GPS components, systems or services.
RTLS Will Go from Niche to Mainstream in the WLAN Market
By 2007, more than 1 million active RFID tags will be tracked spanning diverse industries such as manufacturing, logistics, healthcare, retail, hospitality and government. Yankee Group expects that number to cross the 10-million mark by mid-2009.
RTLS is poised to emerge from niche custom solution to mainstream enterprise application in the strategic WLAN space. The market is entering a higher growth phase broadly powered by increasing enterprise Wi-Fi deployments and improving active RFID technology. Supplying this market is a raft of young companies that build complete RTLS solutions. As the companies go, so goes the market as it matures from an early adopter to a growth market powered by pragmatic buyers.
RTLS vendors are realizing strong demand in leading segments that include healthcare, manufacturing and logistics. Companies in these segments turn to RTLS to help locate and manage high value assets in daily operations. RTLS further accelerates ROI when the asset’s process value can be increased to eliminate business process disruptions that cause inefficiencies and ultimately loss of profitability. Currently, this is the standard customer profile, but it will begin to change as system and component costs move down the curve.
RTLS Market Growth Is a Moving Target
Although this forecast is conservative, there is tremendous growth opportunity if the industry works on growing the available market. The available market will expand by moving into more cost-sensitive segments such as retail, non-military government and education in the United States. In the Europe, Middle East, and Africa region (EMEA) and Asia-Pacific, adoption will broadly increase as RTLS becomes affordable to the SMB segment, which represents the vast majority of businesses in those regions. Several dynamics—which rely on greater standardization, scaled distribution and technology development—will fuel market growth.
Market Predictions
- The RTLS market will be a key beneficiary of the enterprise Wi-Fi adoption trend—global market sales will reach $1.6 billion by 2010. National security initiatives will accelerate adoption in government/logistics/shipping markets in North America and EMEA. Individual privacy concerns will stall human asset tracking in European markets and union-represented industries.
- Enterprises with Wi-Fi deployed will have faster adoption rates and sales cycles of less than 6 months as customer successes are communicated, and vendors and systems integrators build implementation competencies.
- Through 2007, expect 6- to 9-month sales cycles where customers that lack Wi-Fi networks for buildout and RTLS trials start to cut over to full production systems.
- Legacy-based solutions will degrade into a weaker competitive position against Wi-Fi-based solutions in the midterm; IEEE 802.11k and 802.11n will be ratified. ANSI 371.3 presages the eventual need for a common API (e.g., access point location determining software).
- Emerging wireless technologies will enter the RTLS market (e.g., ZigBee, 802.11n, 802.16, UWB). Beginning in 2006, passive RFID and greater rationalized enterprise application ecosystem integration will create a strong need for middleware to integrate applications and networks in the midterm.
- Beginning in 2006, low volumes of tags will be integrated into market-specific asset classes (e.g., medical IV pumps, shipping containers). This trend will stall if tag and access point interoperability is not achieved across a critical mass of vendors. Standards will mitigate substantial risk for OEMs to then green-light RTLS tag integration.
