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Evolving market pushes RFID tech to step up

Posted: 28 Jan 2011 ?? ?Print Version ?Bookmark and Share

Keywords:RFID? technology evolution? RFID innovation?

There is evidence that RFID adoption is entering the next phase of the technology's evolution. Projects are scaling, infrastructure deployments continue, integration is deepening, the end user is more committed and investment is up. Applications lying at the core of the RFID potential, supply chain management, inventory control, ticketing, ID and e-Government are experiencing unprecedented growth.

RFID adoption is broader and deeper and has moved throughout the value chainfrom the point of manufacture through the point of sale. Although most activities for several blockbuster applications are occurring within the Americas and Europe, the Middle East and Africa, and the Asia markets will eventually be a hub for the global market, especially as production continues to shift toward the region and source-tagging (affixing the tag at the point of origin) becomes a more standard practice.

RFID end users now have a better understanding of the technology's strengths, limitations and multiple value propositions. Additionally, most end users have finally come to understand that RFID is a complementary solution to other AIDC technologies, not an immediate displacement. They are increasing their investment in the technology (in some markets up to 200 percent over 2009), are converging it with other core systems (barcode, sensors, EAS, DAQ and GPS) and are piloting/evaluating solutions in less time. In short, the end user is adopting a broader vision of how to use the solution throughout the enterprise and value chain and is thinking more broadly about the role the technology will play in the future (Figure 1).

Most leading RFID suppliers, happy to meet today's increasing demand, are also beginning to develop and introduce products that will meet the needs of tomorrow's more complex, converged applications. This is most prevalent in the IC supply community. Nearly every major supplier of RFID ICs (e.g. NXP, Alien, Impinj) has introduced a new product with more advanced features over the last 18 months. Although ICs for each product, frequency and market can vary significantly, there are overarching trends that most of these new features are addressing, including enhanced security, information sharing and control, increased memory, programmable triggers or alarms, and integration and support of other technologies and solutions (i.e. sensors, multi-functional tags).

According to the end user survey from VDC's 2010 RFID Business Planning Service (with 582 total number of respondents), more than 80 percent of existing users expect to extend their current RFID solution's functionality, further integrate it within other core systems, and expand it to cover more objects, departments, divisions and facilities. According the end users from this survey, the increased penetration of RFID within the enterprise and value chains will require these advanced feature sets. For example:

  • 77 percent of WIP/component/assembly and device manufacturers stated that they would most likely require more memory so they could provide more product-specific documentation and improve visibility and accountability;
  • 68 percent of transportation/logistics providers stated that they would look to integrate a sensing/environmental monitoring solution to their current RFID system within the next 3 years (12-18 months for those specializing in the distribution of environmentally sensitive product);
  • 72 percent of current users of RFID within the supply chain indicated a strong and near-term preference for sharing and controlling access to information stored on the tag with other value chain participants;
  • 89 percent of the same supply chain end users also indicated enhanced securitydigital and physicalas a primary near-to-mid term requirement as a means to further ensure a more secure supply chain and improve authentication and anti-counterfeiting capabilities;
  • More than 60 percent of retailers currently using/evaluating RFID stated that they would most likely be converging their solutions with other in-store systems, such as EAS, within the next 24-48 months.

Although these features are a bit too robust for today's high volume, more closed-loop applications, they will become critical to future applications that will also support open and global value chains. Today, the IC can account for between 30 to 65 percent of a transponder's cost, depending upon technology, feature set, frequency and form factor. And as the market continues to become more commoditized and price sensitive, the advanced feature ICs designed for next-generation solutions will have to remain price competitive, be available in higher volumes and remain aligned with the leading applications.

As a means to provide context on the RFID market's growth, estimates and forecasts for the leading RFID applications are provided in Table 1.

RFID is experiencing unprecedented adoption and clearly has significant near, mid and long-term potential. However, to maintain the momentum, the supply community must continue to satisfy the future requirements and demands of the end user and their applications. Suppliers that can innovate and satisfy current demand will be better positioned for success.

Figure 1: Most leading RFID suppliers are beginning to develop and introduce products that will meet the needs of tomorrow's more complex, converged applications.

Table 1: RFID is experiencing unprecedented adoption.

- Drew Nathanson
Director, VDC Research Group Inc.

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