Independent market analyst Datamonitor (DTM.L) predicts that RFID technology including hardware, software and services across all verticals, will be $6.1bn market by 2010, three times that of today. The report 'RFID in Manufacturing: The race to radio-tag is heating up in manufacturing', predicts 43% of revenues will be derived from North America, 33% from Europe, the Middle East and Africa (EMEA) and 21% from Asia Pacific (APAC). Central and Latin America will account for 3% of global expenditure ($185m). "With EPCGlobal acting as an industry led standards body, and cheaper hardware becoming available, the manufacturing industry is starting to re-evaluate its position on RFID technology," says Adam Jura, Datamonitor analyst and author of the report. "Previously, the associated high cost and lack of internationally accepted standards saw many put strategies on the backburner."
The recent mandates being issued to manufacturers by Wal-Mart and the US Department of Defense, have pushed RFID technology into the minds of many businesses. In the U.S, pharmaceutical manufacturers are also moving to respond to mandates issued by the US Food and Drug Administration. In Japan Toyota and other manufacturers' cutting edge RFID applications to manufacturing processes, along with radical retail stores, has given it good profile. In Europe, the relatively early low-level adoption by multiple companies like Tesco (UK) and Metro (Germany) has seen a greater interest develop in their respective countries.
Datamonitor's report looks at RFID technology, its application in manufacturing, challenges to its wider adoption, and implementation options available to manufacturers. The report also provides an analysis of the RFID technology stack (tags, readers, middleware, applications and others).
The report confirms that the cost of RFID tags, which accounted for 25% of total global RFID expenditure in 2004, was a significant inhibitor to the uptake of RFID. However, by 2010, Datamonitor estimates the RFID tag share of the total market will decrease to 19%, reflecting a lower tag price due to economies of scale experienced by RFID chip manufacturers, in turn generated by a higher demand and resultant output.
Expenditure on Readers, which in 2004 represented 29% of global hardware spend, is expected to grow to 32% of hardware expenditure by 2010 as RFID networks become more widespread and the number of features onboard each reader grows.
RFID middleware, the layer of software between the RFID readers and enterprise applications, such as enterprise resource planning (ERP), will be the key to unlocking financial, process and efficiency benefits from RFID deployments.
"RFID is all about making the data work for you," says Jura. "Managing the information flowing from RFID tags and readers into a cohesive format that integrates with enterprise applications is a challenge that many software vendors such as SAP, Oracle and Vizional are focussing on."
Germany and the UK are expected to be the dominant European countries for RFID from 2004 - 2010 and, likely, into the future. In APAC, Japan's historic strength in manufacturing and its upbeat approach to manufacturing and the use of technology therein means it will be a key country in the adoption of RFID. While it's market share is currently twice that of China, after 2009 the economic giant will take over with a superior share of 33% compared to Japan's 28%, equating to an extra $57m revenue opportunity.
The three manufacturing industries that will drive RFID expenditure over the next three years are pharmaceutical, consumer packaged goods (CPG) and automotive.
"We're only just leaving an early-adopter phase in RFID technology's lifecycle. It is Datamonitor's view that most manufacturing RFID projects in 2005 will be pilots where an implementation is limited to one location, production line or single product type. Once manufacturers are able to recognise a return on investment (ROI) generated by the data flowing from the plant floor, we'll start to see RFID adoption grow at a faster rate," says Jura.
Datamonitor expects that by the second half of 2006, this trend will start to see more companies expanding on their initial pilots resulting in total expenditure for the year reaching a touch over $3bn worldwide.
Add a Comment
No messages on this article yet