RFID in 06 and 07: Years of Ups and Downs

It turns out 2006 wasnt quite the banner year for RFID adoption that some analysts had predicted–particularly in the retail and consumer packaged goods sectors where fast growth was expected. And it looks like the coming year wont be much different.

Analysts are predicting some pockets of growth–asset tracking and contactless smart cards, for example–while others will still struggle to find a business case for radio-frequency identification.

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The coming year is going to be increasingly about effectively finding ways to leverage RFID data–an area where software and services are going to be critical, according to ABI Research analyst Michael Liard.

"Companies are stuck in compliance modes with manual slap and ship [RFID implementations], but as people look to RFID in the enterprise, youre going to need software to handle that."

Liard predicts increasing activity around asset tracking that spans industry sectors such as health care, corporate IT asset tracking, retail and returnable asset tracking.

"The returnable asset space is a hot market to watch in 2007," said Liard. "[Companies] can use Gen 2 in that area, with returnable plastic pallets or totes and bins that are used outside the supply chain. Its about assets that leave your building and come back–a pooling concept."

The challenge in 2007, according to Liard, will be in getting more validation from users around RFID. "No users are talking about it," he said. "We need more customer use cases and validation."

While there will be healthy spending on RFID in the coming year, 2007 is not going to be noted for major steps forward with RFID, according to ChainLink analyst Bill McBeath, who tracks manufacturers use of RFID.

"There is going to be no year of RFID; there is a decade of RFID. Thats the one were in right now," said McBeath. "[We anticipate] gradual but healthy growth for RFID. Ten years from now people will look around and be surprised how much RFID has proliferated."

Next page: And what kind of growth is expected?