ABI Research announed Thursday it has reduced its 2007 market forecast for RFID software and services revenue to $3.1 billion, a downward adjustment of about 15 perecnt from its previous estimates.
The lowered revenue expectations are a result of the current direction of RFID's evolution, according to RFID practice director Michael Liard, not from any decline in the industry.
Liard attributes four interrelated factors, particularly within asset management and supply chain management RFID markets, as the reasons for the revised forecasts.
"They are market consolidation, collaborative solutions, the growing availability of off-the-shelf commercial RFID software packages, and the improving level of skills in RFID project planning," said Laird.
As RFID solutions evolve, ABI Research expects to see considerable consolidation across companies as well as within companies. Consolidation among industry vendors and service providers will eliminate overlap and lead to better-managed, more efficient solutions.
"The goal is seamless integration," notes Liard. "Companies wishing to integrate RFID into the enterprise will naturally turn to their established software and service providers. If those vendors don't have a solution, they will frequently either build or buy one."
RFID technology is becoming increasingly standardized, with vendors and service providers collaborating on a common solutio. These collaborative efforts lessen software costs because users do not need to seek multiple sources.
Custom software costs more than commercial software, and currently, many larger developers are offering off-the-shelf packages that fit lower RFID integration budgets. Over time, ABI Research expects many parts of RFID logic, event, and business process oriented challenges to be met with software that requires limited change.
As companies gain experience in how to integrate RFID-collected data into their wider corporate strategies, their project planning skills improve.
"‘Install in haste, repent at leisure' used to be a common pattern in growing RFID deployments," says Liard, "but with today's better planning, there's less waste, and less software needing premature replacement. End users are taking a more managed approach to budgeting and integrating RFID solutions internally."
These trends, and the past quarter's RFID industry developments, are discussed in ABI's latest RFID update, "Focus on RFID Software: Investigating New Solutions and Approaches."