Overall RFID market to hit $5.35 billion this year

A new market data report released by ABI Research ([url=http://www.abiresearch.com]http://www.abiresearch.com[/url])) predicts the overall RFID market to reach $5.35 billion this year, a glimmer of optimism after the economic slide required the firm to adjust its RFID forecasts downward for 2009 and 2010.

“The outlook is good for steady growth through the next five years,” said ABI Research's RFID practice director Michael Liard. “We expect the overall RFID market to exceed $8.25 billion in 2014, representing a 14% compound annual growth rate (CAGR) over the next five years.”

Not all segments of the RFID market are created equal, added Liard. “To 2014, the greatest growth will be found in real-time location systems (RTLS), baggage handling, animal ID, and item-level tagging in fashion apparel and retail.”

The report, Semi-Annual RFID Market Data
, contains extensive data on RFID revenues and unit shipments segmented by technology, application and vertical market.

All four RFID technologies: low-frequency (LF), high-frequency (HF), active and passive ultra-high-frequency (UHF), and microwave are included across numerous applications. Because the entire RFID space is so fragmented, said Liard, data is broken down into two application categories: traditional and modernizing.

“Traditional applications include uses such as access control, automobile immobilization and electronic toll collection that account for slightly more than 61% of the total market today,” he explained. “Those applications are expected to grow 6%, compounded annually from 2010 through 2014.”

“In contrast, modernizing applications such as asset management, cargo tracking and security, point-of-sale (POS) contactless payment, RTLS and supply chain management are forecast to grow roughly 19% in the same time period,” Liard said.

The growth, particularly in materials handling applications, can be attributed to an increased awareness of RFID's capacity to solve common business challenges such as asset management optimization and utilization, explained Liard.

“There have also been a lot of developments in the technology, particularly in passive UHF tags due to the Wal-Mart compliance initiative of a few years ago,” he added. “That drove the creation of standards and technological advancements, making the tags more accessible, more affordable and better performing than they were a few years ago.”

In surveying users, he said, ABI found that the increased affordability and better understanding of the value that RFID technology can bring are leading many enterprise and industrial users to deploy pilot and trial programs, which Liard predicts will lead to both limited and widespread deployments.

“If there's a value tied to a trackable asset or the goods that are inside it, more users are telling us they see the value in making that investment,” he said.