RFID market poised for a boom

Independent market analyst Datamonitor predicts that RFID technology, including hardware, software and services across all verticals, will be a $6.1bn market by 2010, three times that of today. The report ‘RFID in Manufacturing: The race to radio-tag is heating up in manufacturing’, predicts that 43 percent of revenues will be derived from North America, 33 percent from Europe, the Middle East and Africa and 21 percent from APAC. Central and Latin America will account for 3 percent of global expenditure (about $185m).

Datamonitor’s report looks at RFID technology, its application in manufacturing, impediments to its wider adoption, and the options available to manufacturers. According to the report, RFID networks are becoming more widespread, and the number of features supported by readers is growing rapidly. Therefore, the expenditure on readers, which in 2004 represented 29 percent of global hardware spend, is expected to grow to 32 percent by 2010.

The report adds that RFID middleware, like ERP, will be the key to unlocking financial, process and efficiency benefits from RFID deployments. According to Datamonitor’s report, Germany and the UK are expected to be the dominant European countries for RFID from 2004 - 2010 and, likely, into the future. In APAC, Japan will be the key country in the adoption of RFID. While currently its market share is twice that of China, after 2009, the latter will take over with a share of 33 percent compared to Japan’s 28 percent, equating to an extra $57 million revenue opportunity.

The report names the pharmaceutical industry, the consumer packaged-goods industry and the automotive industry as the three verticals that will drive RFID expenditure over the next three years.

It is Datamonitor’s view that most manufacturing RFID projects in 2005 will be pilots where an implementation is limited to a single location, production line or product type. The report states that when manufacturers recognise a return on investment generated by data flowing from the plant floor, RFID adoption will grow at a faster rate.

Datamonitor expects that by the second half of 2006, this trend will see more companies expanding on their initial pilots resulting in total expenditure for the year reaching a touch over $3 billion worldwide.