Features

ABI Research Cuts RFID Revenue as Market Matures

By Sophia Mayengbam

ABI Research has cut its 2007 market forecast for radio frequency identification (RFID) software and service revenue to USD 3.1 billion, which represents a downward adjustment of about 15 percent from its previous view.

According to RFID practice director Michael Liard, the lowered revenue expectations result from the current direction of RFID's evolution, not from any decline in the industry.

ABI said four interrelated factors, particularly within asset-management and supply-chain-management RFID markets, have led to revision of its forecasts. The reasons 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

With the evolution of RFID solutions, ABI expects to see considerable consolidation across companies as well as within companies. Consolidation among industry vendors and service providers will eliminate significant overlap and will lead to better-managed, more efficient solutions. These issues range from reader-level enhanced efficiency through cross-industry software and applications.

"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."

ABI said that RFID technology is becoming increasingly standardised, which is fostering 'ecosystems of partners', each contributing elements to a common solution. These collaborative efforts mitigate software costs because users do not need to seek multiple sources.

ABI forecast that as the adoption of RFID matures, customized software, which cost more than commercial software will be less prevalent. And many larger developers today are offering off-the-shelf packages that fir lower integration budgets. So this trend will lead to end users enjoying lower costs on RFID software and services. 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.

The launch of IBM pharmaceutical track-and-trace solution is one example.

With time companies have learned how to fit the data collected using RFID into their wider corporate strategies and their project planning also have improved. Lower deployment cost will further enhanced the experiences.

"'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."


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