New applications to spur growth in RFID market

Nov. 4, 2008
Global RFID market projected to exceed $5.3B in 2008

A forecast released earlier this week by ABI Research projects that the global RFID market will surpass $5.3 billion this year and with the exception of automobile immobilization applications, the market is expected to grow at a compound annual growth rate of 15 percent through 2013.

Though traditional RFID applications such as access controls, automobile identification and ID documents continue to make up about two-thirds of the market and will continue to see moderate growth, Michael Liard, research director for RFID and contactless markets for ABI, says that emerging uses for RFID technology will be primarily responsible for the market’s growth over the next several years.

According to Liard, some of the emerging applications in the RFID market include such things as item level tracking in supply chains to prevent counterfeiting of apparel and pharmaceuticals, real time location systems in the healthcare and transportation industries, cargo tracking and security, palette and case level tracking among big box retailers like Wal-Mart and Sam’s Club, contactless payment systems, baggage handling, and animal identification.

"You’ve got about a $5 billion market size today and about 66 percent of that is in these 4 application areas (access controls, automobile identification, automobile immobilization, ID documents) or this historical application area for RFID, but if you look at these more modernizing or emerging RFID market, the other third of the RFID market, you’re starting to see some really compelling growth rates," Liard said.

In fact, if those 4 traditional applications are removed from the equation, the CAGR for RFID systems revenue between 2008 and 2013 exceeds 20 percent, Liard said in a prepared statement. However, traditional RFID applications are projected to see moderate growth over the next several years.

"They continue to grow, but things like automobile immobilization, for example, its been around for sometime, it’s in the eight to 10 percent (growth) range, security access control is in high single digits as well, and ID documents, because of the influence of (a recent Chinese national ID program) is low double digit growth," he said.

While it is still too early to determine what the effect of the recent economic downturn will have on the RFID market down the line, Liard said that there has not been a big impact on the market as of yet.

"The crisis is somewhat fresh in the minds of enterprises and consumers out there today. We’re not seeing much of an impact today, according to end users and vendors in this space, but that might change three to six months from now depending on what the fall out might be from the souring economy," he said. "But the other thing to appreciate to is not just the time of impact, but RFID in many cases might be a pilot program or a limited deployment and it may escape the watchful eye of an enterprise that might be looking around tightening IT spending. “Because the projects are so small, they may be immune from some of this economic impact in some enterprises."

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