Standardization, Retail And Government Mandates Will Drive Growth Of North American Passive RFID Readers Market

As more companies and the government require items to be tagged for inventory tracking, the passive RFID industry is projected to increase to $241.6 million by 2013, according to Frost & Sullivan analysis.

PALO ALTO, Calif. – Increasing standardization and the introduction of smaller-sized and less expensive readers will be significant contributing factors in the growth of the North American passive radio frequency identification (RFID) readers market, according to new analysis released Monday by Frost & Sullivan.

Other factors that will spur the growth of passive RFID readers include mandates from retail chains and the U.S. Department of Defense (DoD) requiring their suppliers to use RFID to track inventories.

The North American Passive RFID Readers Market had revenues of $23.1 million in 2006 and is forecasted to be at $241.6 million by 2013, the report indicates.

"The continuing mandates from Wal-Mart and other retail stores as well as the U.S. Department of Defense to all their suppliers to tag their items is a major driver for the U.S. RFID readers market and the RFID industry in general," notes Frost & Sullivan Industry Analyst Priyanka Gouthaman. "This has put a lot of pressure on the suppliers to adopt RFID readers across their systems and processes and hence will drive the sales of RFID readers over the next couple of years."

The efforts of RFID companies and industry organizations to establish standards for the technology, such as the recent Gen 2 standards for ultra high frequency (UHF) which made it possible for readers manufactured by one company to read tags produced by any company, will also help to make RFID hardware more of a commodity.

Other challenges that need to be met by the industry include read-accuracy, which can vary widely due to the properties of electromagnetic fields. With more RFID systems projected to enter the market over the next few years, data overloading of RFID systems can become a problem, the report notes.

"As the tag-read accuracy of many readers is still less than the ideal one-hundred percent, some tags may not be read in certain circumstances which might prove to be crucial," says Gouthaman. "Likewise, information overload might result in a lot of unnecessary data being stored in the RFID system which might affect the bandwidth and the overall functioning of the RFID system."

The report suggests that companies should make investments in RFID R&D to improve tag-read accuracy. As for data overload, a system which focuses on data exception rather than data collection could ultimately be a better approach to a successful implementation of RFID in a system, the report concludes.