RFID's high cost barrier for companies
radio frequency identification (RFID), many are reluctant to jump
on the technological bandwagon due to the high costs involved
according to a new survey.
Retail firms and some governments are mandating that suppliers use RFID to track and trace their products through the supply chain. The forced march toward wider RFID use has led analysts toforecast huge growth rates for the global market. IDTechEx, for example, forecasts that the RFID market will reach €20bn by 2015 as the implementation of new laws and demand shape the fledgingindustry.
Global sales of RFID services and equipment are expected to reach $2bn in 2005, up from $1.49bn in 2004, according to Marketstrat.
The new AMR Research report, which surveyed 500 executives in three industry types, indicates that potential buyers are wary of the costs and promises surrounding the technology. The firm instead predicts thatprojected spending on RFID technology among end users won't accelerate significantly until after 2008 at the earliest.
While only eight per cent of companies are in full deployment, 61 per cent plan to evaluate, pilot or implement RFID in 2005. The average RFID budget in 2005 is estimated at $548,000, which willincrease to $771,000 by 2007.
The high costs of RFID hardware, software and services, the immaturity of the technology and the lack of common standards contribute to the reluctance among companies to adopt it, stated the firm'sresearch director, Dennis Gaughan. The adoption of RFID technology is being spurred by retailer and government mandates, which is pushing many end users into using a technology they would nototherwise use until it was more affordable and mature,
"RFID is still in its formative years," he stated. "The market will be hotly contested across all technology segments from tags and readers through middleware and enterpriseapplications."
Overall, 44 per cent of the respondents believe that today's RFID standards is enough to deliver a ROI. However, only 29 per cent of process manufacturers, those who make of gasoline, ore, drugs,chemicals, food and other consumer products that are produced in batches, believe the standards have reached an appropriate level of maturity.
AMR predicts that RFID deployments will still be largely limited to pilot projects until 2008 rather than full deployments. The firm bases its forecast on the respondents' RFID budget forecaststhrough 2007. The survey shows an average growth in RFID spending of 16 per cent from 2005 to 2006 and a 20 per cent increase the following year.
