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RFID Tag Market to Swell Tenfold by 2009

  |  January 18, 2005   |  Comments

Cartons and consumer products cited as key growth verticals.

The worldwide RFID (define) tag market will grow nearly tenfold from $300 million in 2004 to $2.8 billion in 2009, according to an In-Stat report.

That would make RFID tags the most prevalent wireless technology since the cell phone, said Allen Nogee, lead analyst on the study entitled, "RFID Tags and Chips: Changing the World for Less Than the Price of a Cup of Coffee."

The report predicts the growth curve for RFID adoption will take a few years to sharply accelerate, given the relatively high cost of the technology, currently ranging from $0.15 to over $100 per tag.

The key drivers of the projected growth will be shipping cartons and other supply chain elements, expected to account for 35.1 percent of the RFID market by 2009, up from the 4.9 percent of the market it comprised in 2004.

"By far the biggest RFID segment in coming years will be cartons or supply chain," Nogee said. "This segment alone is forecasted to account for the largest number of tabs or labels from 2005 through 2009."

One early example is Wal-Mart, which on January 1 began an initiative to have its top carriers feature RFID tags on shipping cartons for its leading products, Nogee said. "Perhaps only 60 percent of them initially are able to comply. But when you consider that Wal-Mart ships 10 percent of all packages nationwide, that's quite a large number," he added.

The second largest market for RFID in the forecast's later years will be consumer products, currently one of the most privacy-sensitive verticals. The sector is expected to account for 11.9 percent of the RFID sector in 2009, up from a miniscule 0.78 percent in 2004.

RFID Market Sectors by Percent of Total Revenues, 2004
Sector Revenues %
Security/access control/purchasing 62.6 (includes RFID in automotive keys)
Animals (pigs, dogs, cows, etc.) 28.2
Cartons/supply chain 4.9
Consumer products 0.78
Large freight 0.64
Humans 0.34
Other 2.5
Note: Table does not total to 100% due to rounding.
Source: In-Stat
Last year, the leading sector was security-related RFID tags, fueled by the surge in national security investments since September 11, 2001, Nogee said.

"National security has driven the use of RFID thus far and to some extent made the public more tolerant of its use than prior to 9/11," he observed. "But what's really going to be the key driver going forward will be low cost driven by high volume."

Addressing security-related use of RFID technology, a recent Pew Internet & American Life Project study found the majority of a panel of leading experts believe the threat of additional terrorist attacks in the U.S. will continue to drive government and corporate adoption of such surveillance tools, sparking concerns over the loss of privacy.


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