With a current market of estimated to be worth $1.94 billion (€1.5bn), market research firm IDTechEx believes that massive growth is inevitable in the coming years, but not before some significant teething problems are ironed out.
The company's report, RFID Forecasts, Players & Opportunities 2005-2015, tracks the forecasted growth of the market over the course of the next ten years, where the retail sector, together with other areas such as healthcare, passenger transport and access cards for the financial, security and safety markets.
The report adds that forecasts by territorial region show that by 2010, 48 per cent of RFID tags by numbers will be sold in East Asia, followed by 32 per cent to North America. So far uptake in Europe of the technology has been relatively slow, and whereas retailers in the US have already rolled out the first RFID tag systems, in Europe pilot programmes are only just getting under way.
Deliveries and orders in 2004 were sharply up on the year before, IDTechEx says. However, take-up of the technology is expected to be price-related. The report says that RFID tags will not reach the ten trillion level before 2020 at the very earliest, and to come anywhere near this mark they will need to cost less than one US cent and be entirely printed, like a barcode is today.
The research shows that the highest volume applications of RFID will mimic barcodes where a market for barcode labels grew then declined as barcodes were printed directly onto products and packaging. The value of that label market peaked before the annual numbers sold reached a peak. That was because of strong price erosion.
IDTechEx sees the same occurring with RFID but on long timescales and with one difference. The printed radio barcodes will not use the same ink as the graphic printing in contrast to directly printed barcodes today. There will be a growing and lucrative market for electronic inks used to print RFID tags onto labels and directly onto products and packaging. IDTechEx estimates these timescales and volumes.
The report also doubts that the necessary one cent tags needed for tagging everything in the supermarket - the largest volume potential for RFID - will be profitably achieved with silicon chips within ten years - if ever. The researchers believe that giants such as IBM, Xerox, Dai Nippon Printing and Samsung that are developing "chipless" alternatives such as polymer transistor circuits and Surface Acoustic Wave SAW devices may be on a better tack for the long term.
Chip tags are certain to get down to five cents as orders approaching ten billion tags are placed. Chip tags can also address enormous secondary markets, and are most likely to achieve this goal in the Consumer Packaged Goods market where demand will be highest.
IDTechEx says that it has been approached by several chip manufacturers saying that they have zero interest in producing the required sub one cent chips for five cent RFID tags but they do seek less price sensitive, more sophisticated large niche markets in RFID.
Interestingly the report also points out that another potentially large market for RFID tagging could be fore the labelling of meat and livestock in the face of new legislation and disease, as well as a number of other non-food areas where such tagging has never been used before.