RFID market segment growth expected to vary

Prognosticating the fortune of RFID hardware vendors in the manufacturing sector remains murky despite anticipated double-digit growth in unit shipments, according to Dedham, Mass.-based ARC Advisory Group.

"Growth within a given segment of the RFID market will come partly at the expense of existing options," says Chantal Polsonetti, a VP of manufacturing services for ARC. "For example, Wi-Fi-based tracking solutions frequently are marketed as overcoming the limitations of existing active RFID solutions, while the price of active RFID solutions is declining to the point where they are competitive with high-end passive solutions."

And while many users and analysts cite mandates as the current key driver for implementation, companies clearly want more from the technology in the future, based on survey findings by Natick, Mass.-based Venture Development Corp. (VDC); and Framingham, Mass.-based IDC Manufacturing Insights.

Claiming the market continues to be "commoditized before becoming fully commercialized," VDC Practice Director Andrew Nathanson believes 2006 was a disappointment on many fronts, including the push to make the technology more mainstream. "It just didn't happen," he says. "The hockey stick jump in sales won't come before late 2008 or early 2009."

Kim Knickle, program director at IDC, sees two parallel adoption tracks: "One for asset management, and the other for mandate compliance," she says. "Those doing it for mandates, however, say it isn't what they want out of the technology long term."

Currently, compliance with supplier mandates is ranked as the top driver—at 41.7 percent—but inventory cost reduction is tops—at 62 percent—for the future, followed by improved customer service, at 58 percent.