The Booming RFID Business in 2010June 23, 2010
The toughest market for passive RFID has been UHF labels for consumer goods suppliers to put on pallet loads and cases at the behest of the retailers but this business has largely collapsed because of technical and payback problems. Indeed, with RFID suppliers and consumer goods companies taking hundreds of millions of dollars of losses on this work over the last five years it has seemed more like a death wish than a market. There never was a prospect of payback for the CPG companies because having a silicon chip in the tags ensured that they could never drop to the necessary one cent or less in price. However, printed RFID tags with no silicon chip are now appearing in passive RFID tags initially in the form of contactless smart tickets.
Where the chip is needed in a UHF passive tag, price rises of around 10% have been accepted recently, partly because item level taggingis booming, notably of apparel for both civil and military purposes. These UHF labels have little water or metal to contend with, that upsets the signal, and the relatively high value of apparel means that paybacks are easily obtained.
In the case of retailing that means reducing stockouts though many other benefits also accrue. For example, over 100 retail chains now require suppliers to tag apparel and both they and their suppliers benefit from this, resulting in hundreds of millions of RFID labels being used yearly for such purposes. Just one Army base in the USA, Lackland Airforce base in Philadelphia, is processing about five million items of tagged apparel yearly.
Of course, some countries are adopting RFID faster than others. The Top 10 countries using RFID by number of projects recorded are:
United States - 1,352
United Kingdom - 394
China - 299
Germany - 219
Japan - 189
France - 170
Australia - 112
Canada - 98
Netherlands - 89
Italy - 86
(Source IDTechEx Knowledgebase.)
However, most RFID projects in China are kept secret. Today, China probably has more RFID cases than the UK though not as many as the USA. Indeed, although the UK Government was planning to place the world's largest RFID order - for a $5-15 billion national ID card scheme, this has now been cancelled. In market value, China rivals the USA because it has many large projects. For example, it installs more library tags than the rest of the world combined. In some years, China rivals the USA in money spent on RFID, depending on which major project is kicking in at the time. For example, with 150 million pet dogs and 1.2 billion pigs slaughtered yearly, new laws in such areas will have a big impact on the RFID market.
As always, local and national government initiatives drive most of the RFID market. Governments create new laws, such passport tagging and the recent requirement that all dogs in New Zealand be tagged. This year, the European Commission required that sheep and goats -about 110 million of them - be tagged in Europe. In two years, European and probably New Zealand cattle must be tagged as well, copying the situation in Canada, Australia and elsewhere. In all these cases it has to do with disease control but efficiency improves as well. On the other hand, governments usually fund military, prison and library tagging and some city cards and mass transit and airport tagging.
Growth by diversity
The RFID market is also growing by diversity. At the time of writing, the recent entries into the RFID Knowledgebase have been very different applications in Morocco, India, Brazil, Colombia and Australia. Those cases include tagging people in hospital, vehicles for non-stop road tolling, assets in a mosque and public transport ticketing. Other recent projects include trees in Hawaii (conservation), vehicle number plates in Mexico (tax evasion, theft) and railway wagons in Italy (efficiency, theft). There is increasing diversity. It now looks highly likely that the three billion disposable tickets issued yearly by the Chinese National Railway System will become RFID for reducing queues and fraud. However, for now, projects with even tens of millions of tags yearly are rare. That results in average spend on the systems exceeding average spend on the tag. Only huge numbers of tags per reader will reverse that situation - think letters in the post, all prescribed pharmaceuticals or everything in the supermarket but all of those applications remain distant dreams.
IDTechEx is hosting a number of events that cover RFID in various aspects. RFID Europe, being held in September in Cambridge, UK, provides a vital global communication forum for end users, system integrators and manufacturers. This conference and exhibition covers active and passive RFID and all the applications, full details can be found at www.IDTechEx.com/RFIDeurope.
In November, IDTechEx will be hosting the Energy Harvesting & Storage USA and Wireless Sensor Ntworks & RTLS Summit 2010. A two day conference and exhibition, this event focuses on the uses, potential users and market forecasts as well as giving the latest technology developments and trends, is the meeting place for users, investors, suppliers, developers, system integrators and government representatives.
By Dr Peter Harrop, Chairman, IDTechEx
RFID Europe 2010 | September 28-29 | Cambridge, UK www.IDTechEx.com/rfidEUROPE
Printed Electronics USA 2010 | Dec 1-2 | Santa Clara, CA www.IDTechEx.com/peUSA
Photovoltaics USA 2010 | Dec 1-2 | Santa Clara, CA www.IDTechEx.com/peUSA