The market for RFID software, hardware and services will reach $2.2 billion in 2005.
The RFID market is currently overhyped, and Datamonitor has tempered its market forecasts relative to other industry experts. RFID services are currently a large contributor to the overall RFID revenue line and represented 35% of the total market value in 2004. By 2010, this figure will have only slightly increased to around 38% but will still represent a sizeable goal for services vendors, Datamonitor’s research suggests. But the majority of costs being borne by those implementing RFID projects currently are to be found in the cost of the new and upgraded hardware that is required.
The market for RFID is currently just moving on from an early-adopter position. There is still a significant amount of skepticism being expressed by those reluctant to invest in unproven technologies. Furthermore, there is a distinct lack of best practice models being shared by those companies that have already implemented RFID successfully.
Out in the field there has so far been a tendency for manufacturers to select smaller niche vendors that are able to offer some precise vertical expertise, and some of the larger software companies are still trying to establish themselves in that space.
Adoption in the retail sector is expected to start to pick up after 2005 as more products start to arrive that are RFID-enabled. Items such as smart shelves will initially come with a high price tag, but prices will drop as they move towards becoming a more common product around 2008.
Retail faces a problem that, if not dealt with properly, could have a large impact on the RFID market overall. Since retailers are the companies in the supply chain that deal with customers, they need to allay fears surrounding the privacy of the technology.
Instead of a magic price point, RFID uptake will be more gradual. The impact of factors such as mandates on manufacturers by their customers, will continue to drive the greater RFID market to a point where not complying with mandates becomes more expensive than compliance. In the market today, this is shown by many manufacturers only implementing ‘slap and ship’ operations.
