RFID revenue projections take a tumble

The radio-tagging market will be worth 15 percent less than expected next year, according to analysts who say it's a sign of market maturity, not failure

US analyst group ABI Research has slashed its predictions for the growth of the RFID market, but denied that this means the technology is failing to meet expectations.

Radio-frequency identification (RFID) tagging allows individual items to be tagged and then electronically tracked. It can be used by retailers to track shipments and monitor stock levels, both in the supply chain and on the shop floor. RFID tags are also used in some travel cards, such as London's Oyster cards.

ABI Research announced on Thursday that it had reduced its 2007 market forecast for RFID software and services revenue to $3.1bn, a drop of approximately 15 percent from its previous estimates.

However, the group denied that this indicated RFID was struggling. Instead, ABI says it has detected four factors that mean users won't have to spend as much on the technology as previously thought.

"Four interrelated factors, particularly within asset-management and supply-chain-management RFID markets, have led us to revise our forecasts," said RFID practice director Michael Liard. "They are: market consolidation; collaborative solutions; the growing availability of off-the-shelf commercial RFID software packages; and the improving level of skills in RFID project planning."

Liard believes that RFID is becoming more standardised, as increasing numbers of retailers test and deploy it. A study conduct by ABI Research found evidence that companies are being offered "off-the-shelf" software packages for their RFID systems, rather than having to get a custom version created — which also cuts costs.

RFID tagging has sparked opposition from some activists, who believe it threatens personal privacy. The European Commission recently launched a public consultation into RFID.

But despite these concerns, many companies have embraced RFID. Recently, Tesco started using radio tags to track its milk deliveries. It plans to use RFID tags on trolleys and cages through the supply chain to all its shops and depots in the UK over the next few years.

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