The tremendous growth potential of the global radio frequency identification (RFID)-based applications market is being restrained by the lack of established industry standards, says a new report from Frost & Sullivan. Manufacturing prices could rise if organizations have to bring out products with multiple-standards compatibility.
Frost & Sullivan's report, "World RFID Based Applications Market," reveals that the industry generated revenue totaling $1.7 billion in 2003. Revenues are expected to grow to $11.7 billion by 2010.
“A more structured standards framework is necessary to enable better innovations in technology and product development,” said Frost & Sullivan Research Analyst Karthik Nagarajan. "With the exception of electronic product codes (EPCs), the industry is still fragmented in its choice of standards for emerging applications.”
However, demand continues to be strong in established applications such as toll collection, security and access control, and automobile immobilization. Numerous pilot projects have been attempted in the last two years to stimulate RFID deployment on a wider scale.
Converting pilots into full-scale projects could prove to be a challenge in markets such as security and re-engineering systems, which are yet to recover from the recent economic slump. Still, falling prices and increasing end-user knowledge are expected to spur deployment in more stable segments such as point-of-sale payment and baggage tracking.
RFID-based solutions are also being promoted by the initiative shown by the Department of Defense, Wal-Mart Stores, and others in adopting the technology and making tagging mandatory for their numerous suppliers.
Convergence with other technologies is also widening the scope for RFID in payment and identification applications. For instance, RF technology is an integral part of contactless smartcards. Biometric technology is also in line to be integrated into RFID products.
In the short and medium term, supply chain management applications are expected to drive the growth of RFID technology given that it can increase operational efficiency and speed up returns on investment for end users.
“Deploying RFID-based supply chain management can substantially increase operational efficiency, offering benefits that include just-in-time inventory management, prevention of out-of-stock situation, and greater supply chain visibility,” says Nagarajan.
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