Cumulative sales of RFID tags for sixty years until the beginning of 2006 totaled 2.4 billion, with 600 million tags being sold in 2005 alone. The spend on RFID tags in 2005 was $1.2 billion and the total spend on RFID (including tags, readers, services, etc) was $1.85 billion. In 2006, we expect 1.3 billion tags to be sold. About 500 million of these RFID smart labels will be used for pallet and case level tagging, but the majority will be used for a range of diverse markets from baggage and passports to contactless payment cards and drugs.
In the short-term, large “closed loop” markets requiring high-value RFID will remain profitable and companies will seek to position themselves as the leader in hardware and integration in different vertical market segments. Challenges with tag yield versus cost, frequency acceptance, specification creep and required performance levels are some of the key issues that are being resolved to grow the RFID market to be almost ten times the size in 2016 that it will be in 2006 by value. The number of tags delivered in 2016 will be over 450 times the number delivered in 2006.
In 2016, IDTechEx see the value of the total market including systems and services to rocket to $26.23Bn from $2.71Bn in 2006. This figure includes many new markets that are being created, such as the market for Real Time Location Systems (RTLS) using active RFID, which will itself be more than $6Bn in 2016. Our figures include hardware, systems and services.
Growth in passive RFID will be driven by the tagging of high volume items – notably consumer goods, drugs and postal packages – at the request of retailers, military forces and postal authorities, and for legal reasons. In these cases, the primary benefits sought will be broader and include cost, increased sales (by reducing stock outs, for example), improved safety, reduced crime and improved customer service.
2006 RFID trends
Many companies are increasingly focusing on profitable value-added ‘niche’ markets, many of which will ultimately be ‘billion dollar, billion tag’ opportunities, such as the tagging of books, drugs, tires, ticketing, secure documents (passports and visas), livestock, baggage and much more. We also see more acknowledgement of different frequencies and increased interest and more development on HF (13.56MHz) tags and systems (welcome back HF – all is forgiven?!).
