XERAFY Company Blog
Guest blog on the future of RFID from VDC Analyst Drew Nathanson
June 17, 2010
As an analyst covering RFID, I’ve had the opportunity to study the industry from nearly every stakeholder’s perspective – I’ve shared in their successes and agonized with their defeats. I’ve seen the technology grow from its infancy, addressing technical (i.e.: Read On/Around Metals and Liquids) and commercial (i.e.: who can forget the 5¢ tag – which we still haven’t reached) barriers to become a viable solution for a diversity of applications. Let’s just say I’ve been riding the rollercoaster that is RFID for quite some time, watching the technology and the industry evolve from near and afar. And for the past 7 years, I’ve routinely conducted interviews with every RFID community – suppliers, channels and end users – enabling me to get a complete picture of the industry and how it’s changing. And it’s changing!
RFID growth was slowed in 2009 due to the economic turmoil in the global economies, but it did not contract. It seems to be rebounding strongly in 2010, with most RFID solution suppliers reporting a strong first half and claiming to have significant opportunity pipelines through 2011. This correlates with the end user’s perspective. In fact, for the first time during my tenure in RFID, the end users seem to be more optimistic than the suppliers.
Data taken from our 2010 RFID Business Planning Service (http://vdcresearch.com/market_research/autoid/product_detail.aspx?productid=2628 ) indicates that RFID budgets are up more than 200% (over 2009) and are expected to increase by nearly 100% (over 2010) in 2011. OK … so those stats would put a smile any vendor’s face, but the message is stronger than that. For example:
1. Rapid scaling is occurring in pilots/evaluations/small-scale installations that have been deployed greater than 18 months;
2. The rate of conversion from a pilot/evaluation to a commercial scale deployment has shortened by nearly 20%;
3. Emerging business models such as Managed Services are creating new opportunities and expanding the TAM; and
4. Adoption for green-field accounts is on the rise
Take a look at the following chart … it provides a view of the market of where the money is really coming from. Currently, about 80% of the total revenues in the RFID market are derived from accounts that have been using/evaluating RFID for at least 12 months. Due to increased commoditization and commercialization, the percentage share of new accounts is expected to dramatically increase around 2012.
So let that soak in for a second. Data coming from the end users – NOT THE SUPPLIERS - is indicating increased investment, massive volumes, shorter conversion cycles, and a significant increase in new accounts. The market for RFID is opening up … and for all those who have been able to persevere, there is light at the end of the tunnel.
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