RFID software market maturing

Analysts say more affordable software will drive sales of RFID hardware

By Corinne Kator, Associate Editor -- Modern Materials Handling, 8/16/2006

Analysts at ABI Research reduced their 2007 revenue forecast for the RFID software and services market by 15% last week to $3.1 billion. But the reduction is actually a good signal for the overall RFID market, according to analyst Mike Liard.

The lowered revenue expectations, he says, are the result of evolution in the RFID software market, not of any decline in the industry. RFID software suppliers are consolidating and collaborating to offer less expensive, more integrated software, he says, and customers are making wiser software purchases. This all means less revenue for the software companies, but it's also a sign the RFID software market is maturing.

And achieving stability in the software market, says Liard, will drive sales of RFID hardware.

“I think Mike Liard is spot-on in both regards,” says Sue Hutchinson of EPCglobal. The current trend away from expensive, customized RFID software and toward off-the-shelf software packages is a sure sign of market maturity, she says. It also means more small- and medium-sized companies will be able to afford to implement RFID and that will drive sales of encoders, readers and tags, she says.

Hutchinson's and Liard's comments support recent research by analysts at Venture Development Corp., who predict shipments of printer/encoders will grow nearly 80% per year through 2010. They estimate printer/encoder sales were $11 million in 2005 and will reach $200 million within five years.