RFID Entering New Phase
Companies involved in supplying radio frequency identification technology are on the verge of substantial revenue increases, according to a study by Gartner Research.
Worldwide revenues for RFID are projected to reach $1.2 billion this year, a 30.9 percent increase over 2007. Gartner forecasts revenues reaching $3.5 billion by 2012.
Retail (14 percent of the market) ranks fourth among industries globally that are using RFID. The top segment is discrete manufacturing (21 percent) followed by national and international government (20 percent) and transportation (20 percent).
“The market for RFID technologies has begun to transition from being compliance-oriented to being revenue-generating and innovative,” said Chad Eschinger, research director at Gartner, in a press release.
“Much of the initial adoption of RFID was driven by mandates from the U.S. Department of Defense (DOD) and Wal-Mart where compliance with a retailer directive rather than business competitiveness was often the underlying driver,” Mr. Eschinger said. “Early adopters faced tight profit margins and pressed technology providers for lower hardware costs. Fortunately for the market, this trend has waned and innovation rather than cost is becoming a key driver for adoption.”
According to Gartner, there are a number of key trends behind this new phase in RFID technology’s progression including a growing interest in asset management and a growing focus on in-store inventory management rather than broader supply chain management.
Today, companies are increasingly focused on RFID’s ability to help advance their competitive position. Globalization is also a factor as businesses seek to use the technology to speed the time to market for products.
For many, however, financial realities still require a take-it-slow approach to RFID adoption.
“Today’s buyer is more discriminating than in the past and cautious of over-hyped technologies,” said Mr. Eschinger. “They will be looking for greater functionality and return on investment.”
One of the factors that has impeded wider adoption of RFID, according to Gartner, is the lack of a provider offering end-to-end solutions. The research firm is looking for this situation to change as the industry begins to consolidate.
Discussion Question: Do you see radio frequency identification (RFID) entering a new phase of development in retailing and related businesses? At this point, where do you see the greatest practical use of the technology?