RFID Tags a Booming Biz

RFID tags will take off the way cell phones did, becoming almost a
$3 billion market by 2009, research firm In-Stat said on Wednesday.

The technology market research firm said worldwide revenue from the RFID tags,
which automatically transmit data when they come into proximity with a reader,
will jump from $300 million in 2004 to $2.8 billion in 2009.

The $2.8 billion figure represents revenue paid directly to tag manufacturers,
said In-Stat analyst Allen Nogee.

Adoption will ramp up as tag prices fall, Nogee’s report said. But the
price drops will be relative, depending on the application. Today, tags range
from a low of around $0.15 to a high of more than $100.

“By far the biggest RFID segment in coming years will be in the supply
chain,” Nogee said. In 2006, such implementations will use some $2.2 billion
worth of tags.

“Even in 2006, that’s a big number,” he said, adding that
Wal-Mart Stores , which jumpstarted the RFID industry by
mandating
that its top suppliers begin tagging cases and pallets by Jan. 1 2005, handles
about 10 percent of all packages shipped in the United States.

Nogee forecasts $2.55 billion in total worldwide expenditures on tags in
2006. Below is a table of his forecasts for spending on tags for specific RFID applications.

In-Stat Forecasts RFID Spending
Security, banking, purchase, access control $149 million
Consumer products $72 million
Large freight, including homeland security initiatives $780,000
Pharmaceuticals $6 million
Humans, including implanted ID chips $40,000
Animals, including pets and livestock $85 million
Other $37.7 million

While manufacturers have experimented with tagging expensive consumer goods,
backlash
from consumers and privacy organizations have backed off, Nogee said.

“There has
been a big pushback, and manufacturers are very hesitant to put these tags on products,”
Nogee said. “I don’t think that will always be the case. Over time, especially in high-priced
items where the cost of the tag is fairly insignificant compared to the cost of the item,
I think you’ll see them come back slowly.”

According to Nogee, RFID will change business and society as much as cell
phones and the Internet have. While the technology will transform business processes,
it also will ease some of life’s daily annoyances.

For example, a pilot project at Arizona
State University, which suffers the worst theft rate of any U.S. university, is testing a
system to tag bicycles so that only the bike’s owner can walk away with it.

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