The establishment of the electronic product code (EPC) global Gen 2 standard weakened the passive ultra high frequency (UHF) RFID market segment, particularly within supply chain applications.
New analysis from Frost & Sullivan (autoID.frost.com), North American Passive RFID Tag Market reveals that the market earned revenues of $124.6 million in 2006 and estimates this to reach $486.6 million in 2013.
If you are interested in a virtual brochure, which provides manufacturers, end users, and other industry participants with an overview of the North American Passive RFID Tag Market, then send an email to Sara Villarruel, Corporate Communications, at sara.villarruel[.]frost.com, with your full name, company name, title, telephone number, fax number, and email address. Upon receipt of the above information, an overview will be sent to you by email.
“The Gen 2 protocol for passive UHF RFID witnessed the convergence of EPCglobal and International Organization for Standardization (ISO) standards for the first time,” says Frost & Sullivan Industry Analyst Priyanka Gouthaman. “Therefore, global acceptance of the Gen 2 standard will encourage end-user confidence and investments in the passive UHF tags market.”
Gradually, the technology gains acceptance among customers as a realistic and viable technology option for automated data capture systems. The adoption of this technology by retail and military sectors has given it tremendous validation. Also, track and trace applications in unexplored end-user segments present additional opportunities for the technology.
The possibility of high-volume sales for passive UHF RFID tags made most tag manufacturers expand their businesses by increasing investments in R&D and production capabilities. They expected mandate compliance pressures from retailers and the Department of Defense to inflate the tagging volumes in 2005 and 2006.
However, such expectations proved unrealistic since most suppliers had an inadequate understanding of the return-on-investment (ROI) within their own operations. Motivations driven by compliance issues rather than the need to achieve a business advantage, led to the slow investment into RFID. In particular, smaller suppliers that do not posses the infrastructure for automated data capture systems face difficulties in accommodating the technology.
“Designing consumer support initiatives that enable end users to envision the potential ROI in specific time lines will help increase adoption and the resulting investments,” notes Gouthaman. “Enabling consumers with a clear understanding of what the technology can do within their own processes and value chains will ensure more successful pilots and deployments.”
However, supply chain participants – the main application focus of the current RFID mandates – within markets such as retail have to cope with low-trading margins. This has made them reluctant to invest any further in RFID systems.
Vendors will likely opt for low price penetration strategies for consumer groups compelled by immediate mandate requirements. Meanwhile, RFID vendors adopting a higher pricing strategy should market their products’ enhanced quality and performance.
The North American Passive RFID Tag Market is part of the Automatic Identification & Security Growth Partnership Service, which also includes research services in the following markets: World RFID in retail and supply chain applications – a supplier perspective, World retail RFID markets – a retailer perspective, North American RFID markets for automotive, aerospace & industrial manufacturing, World RFID in healthcare and pharmaceutical applications, analysis of the migration from 1D to 2D barcode scanners in North America, and World RFID printing solutions market. All research services included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants. Interviews with the press are available.
Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership service, and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community by providing comprehensive industry coverage that reflects a unique global perspective, and combines ongoing analysis of markets, technologies, econometrics, and demographics.