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The competitive landscape of the RFID middleware market is changing as mergers and acquisitions (M&A) continue, larger players seek to increase their total available markets and new competition emerges. The global market for RFID middleware exceeded USD 24 million in 2005. Venture Development Corporation (VDC) anticipates a Compound Annual Growth Rate (CAGR) of approximately 50% through 2010, with revenue shipments projected to exceed USD 190 million within five years.

Global Revenues of RFID Middleware (Millions of Dollars)

The middleware landscape includes:

• Pure-Play Architecture Competitors: RFID middleware and applications focused solely on RFID. While RFID middleware acts as a 'traffic cop' for the large amounts of data being collected, new middleware applications are required for users to benefit from the near-real-time and real-time data generated by an RFID system. The architecture has many devices on the edge that generate data. Key features are a computing architecture that is more distributed and on a smaller footprint to enable scalability, speed, accessibility, and flexibility. Given their narrow focus, pure-play vendors are expected to feel the most competitive pressure, as well as the most interest as M&A targets over the near term. Example vendors of specialised RFID middleware products include, RF Code, GlobeRanger, OATSystems, Vizional, etc.
• Opportunistic Architecture Competitors: adapters for existing enterprise applications and platforms are created to support RFID. Long-term corporate strategies that include the use of RFID across business processes will require such an approach (in contrast to a stand-alone RFID middleware platform). In theory, this approach involves the least disruption and lowest cost alternative by handling RFID information as an additional data input. Examples of major players from related software markets such as database management, application server platforms, supply chain management, and messaging infrastructure include, IBM, Microsoft, Oracle, SAP, Sun Microsystems, etc.
• Network Architecture Competitors: embrace the idea that readers are 'edge devices' on new, vastly distributed networks. The flow of information and management of readers should be handled by new switches, routers, and appliances designed to work with RFID technology. Example vendors include, Cisco Systems, Omnitrol, Blue Vector, REVASystems.
• Academic Competitors: a new class of competitor is emerging from the educational sector. Universities are increasingly embarking on the development and promotion of RFID courses and training by designing and building their own middleware and educational curriculum. Low barriers to entry are drawing universities such as UCLA and the University of Arkansas to the market. The result is that they are working with end users on consulting, testing, and middleware development engagements.

Looking Forward: Pressure on Pure-Play Vendors

Mergers and acquisitions will continue over the next three to five years. Major M&As from 2005 includes NCR's purchase of IC Velocity and BEA Systems purchase of Connecterra. In addition, leading firms such as IBM and webMethods are expected to either push out their solutions to the 'edge' by acquiring, merging, or partnering with smaller, pure-play middleware vendors such as OATSystems and GlobeRanger. Although the larger players are not as 'flexible' and 'mobile' as their smaller counterparts, their desire to increase the total available market is expected to increase M&A and partnering activities, eventually leading to a smaller, less fragmented, and more standardised industry.