Worldwide radio frequency identification (RFID) revenue is forecast to total $1.2 billion in 2008, a 30.9% increase from 2007's revenue of $917.3 million, says independent analyst firm, Gartner. By 2012, it expects worldwide RFID revenue to total $3.5 billion.
"The market for RFID technologies has begun to transition from being compliance-oriented to being revenue-generating and innovative," says Chad Eschinger, research director at Gartner.
"Much of the initial adoption of RFID was driven by mandates from the US Department of Defence and Wal-Mart, where compliance with a retailer directive rather than business competitiveness was often the underlying driver," Eschinger says.
"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."
Gartner maintains the forced adoption of RFID created faster uptake than would have occurred normally within a technology cycle.
Globalisation is a primary driver for RFID, as businesses seek to accelerate time to market for new products, services and geographies, adds the analyst.
"However," Eschinger says, "much of the RFID market is not yet at the tipping point, and while many companies know that the technology will need to be explored, it may not be practical for them to adopt it at present.
"While the interest in RFID technologies is high, today's buyer is more discriminating than in the past and cautious of over-hyped technologies. They will be looking for greater functionality and return on investment."
Gartner found that RFID technologies are being considered irrespective of industry. It predicts that as businesses seek to maximise technology investments, demand for industry-specific solutions and expertise will continue to grow. The leading industries for global RFID revenue in 2007 were discrete manufacturing (21% of market), national and international government (20%) and transportation (20%). Retail trade ranked fourth with 14% of the market.
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