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12/14/2005
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RFID Market To Reach $3 Billion By 2010

A Gartner analyst pegs the industries with the greatest opportunities to use RFID as retail, aerospace, and defense, while the health-care, logistics, and pharmaceutical industries will adopt the technology the fastest.

Gartner Inc. expects the radio frequency identification technology (RFID) market worldwide to reach $504 million in 2005, up 39 percent from the previous year, the research firm reported Tuesday.

As more industries adopt the technology toward the end of 2006, new license revenue will climb to $751 million. By 2010, Gartner forecasts worldwide RFID spending to surpass $3 billion.

A big variable remains: Will adopters carry through with planned projects? "The underlying phenomena that makes the RFID market difficult to calculate is the binary nature of deployment decisions," said Jeff Woods, research vice president at Gartner. "Either Boeing deploys RFID or they don't. These companies are large and cause enormous swings that make the market volatile."

Balancing the market is the sheer number of applications that Woods estimates at more than 100. Industries with the greatest opportunities to use RFID include retail, aerospace and defense, while the healthcare, logistics and pharmaceutical industries will adopt RFID the fastest.

Retailers such as Wal-Mart Stores Inc., Target Corp., and Best Buy Inc. that have deployed RFID, say benefits come from increased visibility on where products are in the supply chain at any given time. This helps to keep store shelves stocked with merchandise customers demand most.

IT-savvy retailer Wal-Mart already runs sophisticated analytic software to manage merchandising. It also has detailed business processes to determine the required merchandise in each store. In-store operational processes for many retailers is where quantitative processes breakdown, Woods said. "That's what RFID can help a retailers do, bring analytic capabilities to the last frontier, the store floor," he said.

The potential for high-rewards in exchange for managing store operations better has generated interest. Woods said "retailers want to know how merchandise sells" without directly reviewing point-of-sale (POS) data.

A store could benefit from its managers having the ability to stand in front of an end-isle product display stacked with merchandise being able to see a graphical representation in red, yellow, and green on a tablet PC of the best selling items. The products would link to an RFID electronic product code that the tablet PC could read.

Putting RFID tags on individual items isn't necessary. Cases could be tagged instead, Woods said. "You'd have to fill in some missing gaps, but it could be done."

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