RFID tag market will reach $2.8 billion

By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 4/19/2005

The market for RFID tags will grow from an estimated $295 million in 2004 to $2.8 billion by 2009. That’s a compounded annual growth rate of 57% for the next five years.

The remarkable pace of growth of this industry is one of the findings from “RFID Tags And Chips: Changing The World For Less Than The Price Of A Cup Of Coffee,” a study by Allen Nogee, principal analyst with In-Stat (480-609-4538), a division of Reed Business Information that specializes in high tech market research.

Nogee also expects the number of RFID tags in use to grow by leaps and bounds as well, from an estimated 144 million tags last year to over 25.5 billion by 2009.

“This was the first look we’ve taken at the variety of tags on the market to come up with a forecast for RFID,” says Nogee.

All in all, he adds, RFID is turning out to be one of the most interesting wireless technologies introduced in a long time. “Certainly we are a long way from having all the issues of the new technology worked out, but this is not unlike the issues raised by any new technology,” Nogee says.

Nogee believes one word sums up the growth of the market: Wal-Mart. “This year, Wal-Mart is expected to handle over 4 billion cartons, and next year that figure is expected to rise to 5 billion,” Nogee says. “Wal-Mart alone will handle roughly 10% of all cartons shipped to retailers in North America. It is this clout that lets Wal-Mart get what it wants.”

Thanks to Wal-Mart, Nogee estimates that supply chain applications will account for 18 billion tags, or 70% of the market by 2009, with an average cost of 5.5 cents per tag.

Still, he says, adoption in the supply chain does face hurdles.

“There’s still a lot of companies questioning the return on investment and dragging their feet,” Nogee says. “Things have not happened as fast this year as many had expected.”