Worldwide radio frequency identification (RFID) revenue is forecast to total $1.2 billion in 2008, a 30.9 percent increase from 2007 revenue of $917.3 million, according to Gartner, Inc. By 2012, worldwide RFID revenue is forecast to total $3.5 billion.

Gartner maintains that the forced adoption of RFID created faster uptake than would have occurred normally within a technology cycle. This uptake was swiftly followed by a delay in sales and in further adoption. Since then, lessons have been learned and new applications and standards have helped to rejuvenate demand as companies have realized that the value of RFID lies in the business process innovation, not the technology.

Key trends currently driving growth in the market include growing interest in asset management projects as companies struggle to manage nonmaintained or disposable assets, and the fact that in-store inventory management — as opposed to supply chain management — is driving many noncompliance retail projects.

The RFID market is beginning its second wave of adoption — which can be characterized as the exploration phase (beyond initial pilots) — in which businesses are relying on RFID to increase their business competitiveness. Globalization is also a primary driver for RFID as businesses seek to accelerate time to market for new products, services and geographies.

RFID adoption is being impacted by the fact that users cannot buy an end-to-end RFID solution from one provider. The RFID market remains diverse and complex with many small startups, provoking a sense of immaturity in the product offerings. Consequently the propensity for further merger and acquisition (M&A) activity is high, and Gartner estimates that 2008 will witness rapid consolidation of providers in both the hardware and software markets. This trend will increase as larger global entrants put a greater emphasis on competing in RFID, making it imperative for smaller providers to win as much market share as possible in the near term.

Gartner found that RFID technologies are being considered irrespective of industry, and Gartner predicts that as businesses seek to maximize technology investments, demand for industry-specific solutions and expertise will continue to grow. The leading industries for global RFID revenue in 2007 were discrete manufacturing (21 percent of market), national and international government (20 percent) and transportation (20 percent). Retail trade ranked fourth with 14 percent of the market.

Additional information is available in the Gartner report “Market Trends: Radio Frequency Identification, Worldwide 2007-2012."