Emerald Group Publishing Limited
Copyright © 2008, Emerald Group Publishing Limited
It is RFID but not as we know it
Article Type: Industry news From: Microelectronics International, Volume 25, Issue 3
Dr Peter Harrop
With RFID, the devil is in the detail. Several analysts correctly foresaw the tripling of the RFID business by value in recent years. However, those that saw it driven by the power of Wal-Mart and other major retailers had to revise their position, and extrapolation planning that used past trends certainly gave a very false prediction of what would happen. The truth is that RFID is largely driven by government through laws for some sectors such as livestock and passports and through massive purchases in others such as defence and libraries.
In the face of huge projects coming and going and frequent change of mind by legislators such as the Food and Drug Administration blowing hot then cold on RFID on drugs for anti-counterfeiting, the best approach for an analyst is to constantly update forecasts in the light of intensive investigations across the world. That is the method used by IDTechEx and it is true that some clients see the frequent reassessment as a sign of incompetence. However, Dr Peter Harrop, Chairman of IDTechEx uses the rejoinder of the famous economist John Maynard Keynes who, when similarly criticised, said “If the facts change, I change my mind. What do you do?” For example, in April 2008, it was very significant that IBM landed the first large order for RFID in aircraft manufacture. It has been a long wait for that one and, on the day, it was in Europe not America.
For example, the UK national card scheme promises to be the world’s largest RFID project at $10 billion but it is a political football and it may never begin. The only way to respond to that is to rewrite forecasts to reflect what emerges.
History is easier to get right. Certainly, all would agree that last year the Chinese market was the largest by value for RFID as the huge national ID card and city card schemes peaked and a huge amount of RFID was installed for secure access. However, with most of these deliveries in decline in 2008, China will drop from being the largest RFID market at 40 percent of the whole to sharing number one position with the USA at 26 percent share each ($1.4 billion). Japan will follow with 11 percent ($0.6 billion), Korea and the UK next, both having 7.6 percent ($0.4 billion). The reasons are very different in each case so a close look is vital. The USA spends huge sums on RFID for military uses, healthcare and non-stop road tolling, for example, with just two of the orders being serviced in 2008 amounting to nearly $1 billion (ACS and Savi). Those sub markets are tiny elsewhere but, in 2008, China is starting huge schemes tagging library books, air baggage and railway tickets while Japan is world leader in using RFID-enabled mobile phones (over 90 percent of the global usage) and stored value cards. Consequently, although, globally, contactless smart cards and associated infrastructure will be the highest value sector until 2010, that will not be the case in all countries and even the types of card use will vary hugely.
In 2008, 57.3 percent of the total market value for RFID will be spent on cards and associated infrastructure, with $2.26 billion of the total $5.29 billion being spent on all other forms of RFID – from RFID labels to active tags. By volume, the tag part of the RFID market is dominated by labels or label like tags (such as tickets) which is 62.4 percent of the tag type shipped in 2008 rising to 99.1 percent in 2018.
So, where are the acorns being sown – the trials and planned projects? Only IDTechEx can give comprehensive figures for this as it has the unique RFID knowledgebase of 3,260 projects in 105 countries updated daily on: www.idtechex.com/knowledgebase
This shows that the largest number of projects is always in the USA but the UK was second in projects recorded during 2006 dropping to third in projects recorded in 2007 due to China taking the number two position. In other words, countries such as Japan and Korea have a number of huge projects but relatively few trials and other projects overall but China has now shed that characteristic and is now advancing on a very broad front and all that must be monitored to reveal the true situation. The breadth of work in China is part of the reason why IDTechEx sees East Asia so important as a consumer of RFID in the years to come as shown below by one measure – billions of tags.
Of course, many involved in the RFID business steer clear of the mature card business and concentrate on the other formats and here the situation is rather different as shown below for the $23 billion value of the non-card business in 2018.
The widely acclaimed and painstakingly detailed IDTechEx report “RFID Forecasts, Players, Opportunities 2008-2018” gives all the information. Talk to IDTechEx staff at Booth 256 at RFID Journal Live in Las Vegas April 16-18. For more details, please contact: www.idtechex.com/forecasts