RFID a $2.3 Billion Market, Falls Short of Expectations

NATICK, Mass.

Despite exceeding $2.3 billion in revenue, sales expectations fell short for the RFID industry, a high-profile IPO did not materialize and the market continued to be “commoditized before it is commercialized,” according to the Venture Development Corp.’s (VDC) 2005-2006 RFID Year-End Overview. Hardware accounted for almost 59 percent of the market in which VDC anticipates nearly 35-percent compound annual growth rate (CAGR) through 2008, with total global revenues projected to exceed $3 billion by the end of this year.

North America continued to represent the majority of RFID-related activity, while the Asia-Pacific region maintained its position as a “lead adopter” with its continued integration of the technology for public infrastructure applications (i.e. ticketing, access control, etc). China will be a major driver for the growth of RFID in this region as long as it is able to develop a set of interoperable national RFID standards, according to VDC.

Although most of the RFID revenues generated throughout 2006 were derived from the transportation, automotive and government verticals, significant growth is expected from the pharmaceutical, CPG and health-care markets, especially when item-level tracking (ILT) applications become more pervasive in 2008-2009. VDC predicts that the pharmaceutical industry will pave the way for high-volume, item-level tracking applications in regulated industries.

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