Sure, RFID Shows Promise, But Economy Has Put It on Hold

Ann All

Earlier this week I wrote about how the recession will likely contract spending on RFID -- and more broadly, on any technologies deemed discretionary. Reader Patrick Sweeney left a comment in which he shared his opinion that my post "is missing the mark by quite a bit." I Googled Sweeney to find out he is the president and CEO of RFID solutions provider ODIN Technologies and author of "RFID for Dummies." Sweeney obviously knows far more than I do about RFID. Yet, with all due respect, I don't think my post misses the mark at all.

 

I wrote that the original use case for RFID, providing visibility and enhancing efficiency throughout the supply chain, has thus far proved less than promising. At least one market observer, IDTechEx, appears to agree. According to Raghu Das, primary author of IDTechEx's report "RFID Forecasts, Players & Opportunities 2009-2019:"

The tagging of pallets and cases remains to be a failure, with only 225 million passive UHF tags used for this application in 2009 - a far cry from the 35 billion tags that one consumer goods company alone predicted that it would be buying in 2009, when they presented at an event in 2003. The main reasons for this have been technical failures (poor read rates with high moisture content and metal products), lack of infrastructure and lack of mutuality of benefit between retailers and the rest of the supply chain. Work is still preserving however.

That isn't to say there aren't interesting and emerging new use cases for RFID. Sweeney rightly takes me to task for not pointing out some of them in my post. I tracked down a Wall Street Journal article he mentions that offers three examples of companies using RFID to track valuable assets: restaurant chain Blue C. Sushi for plates of seafood, intellectual-property law firm Sughrue Mion PLLC for paper documents and Wells Fargo for IT assets in its data centers. In a post from August 2008, I mentioned the idea of using RFID to track IT assets, as well as some other successful closed-loop deployments in environments like hospitals.

 

So do I think RFID has potential? Yes. But do I think many companies will forgo RFID projects until the economy improves? Yes.

 

According to VDC Research Group, demand for RFID solutions softened in 2008's Q4 and didn't improve in the first quarter of this year. Drew Nathanson, the company's RFID practice director, said three-quarters of respondents to a VDC survey plan to trim RFID spending by at least 60 percent in 2009. While the global RFID market grew nearly 35 percent from 2007 to 2008, to reach nearly $4 billion, VDC expects growth to fall to 11 percent this year.

 


Offering somewhat different numbers, IDTechEx projects the global market will reach $5.56 billion this year, up from $5.25 billion in 2008. (Again, not a very aggressive forecast.) The market will largely be led by government-led RFID projects, which IDTechEx's Das notes "do not need a fast return on investment." Private-sector spending, in contrast, is all about the ROI these days.



Add Comment      Leave a comment on this blog post
Jun 5, 2009 5:11 AM Thomas Seeley Thomas Seeley  says:

I think rfid is okay for tracking things but not people and implanted them into people would turn us in to slaves

Reply
Jun 7, 2009 9:18 AM Carter Robinson Carter Robinson  says:

In response to the article, Patrick Sweeny is a RFID and technology visionary and entrepreneur. He saw many years ago the potential that RFID can have in our lives. Yes, the economy and discretionary spending is down; however it is down with all industries.

What we need are more leaders who see the future. We can all find reasons for not succeeding; however I am one who believes what we need are more leaders like Patrick who see the possibilities and can lead us even while the economy is improving.

Might I suggest Ann that you arrange a visit to ODIN Technologies in Ashburn, VA and see what is happening in the RFID arena.

Reply
Jun 10, 2009 10:53 AM Philip Calderbank Philip Calderbank  says:

I agree with Patrick. What's the point to writing negative articles which seem to focus on a specific technology.

RFID business continues to grow in 2009, although much slower than the 20%+ levels in past years. Any industry showing growth in this tough economy should be applauded.

Philip Calderbank

Reply
Jul 10, 2009 5:28 AM Jim Caudill Jim Caudill  says:

Ann

Here is a video case study example of a retailer, American Apparel, who has reaped tremendous ROI from their RFID investments in what is arguably the hardest hit industry by the current economic downturn.

http://www.ibmd.averydennison.com/solutions/american-apparel-rfid.asp

Jim

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