Oyster Bay, NY-based consulting firm ABI Research believes radio frequency identification (RFID) systems aren’t matching up with customer needs as well as previously expected, so it’s downgrading its 2007 market forecast for RFID software and services revenue 15% to $3.1 billion.
“The lower revenue expectations result from the current direction of RFID’s evolution, not from any decline in the industry,” said Michael Laird, director of RFID research at ABI.
“Four interrelated factors, particularly within asset-management and supply-chain-management RFID markets, have led us to revise our forecasts,” he said. “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.”
Laird also expects to see some consolidation across companies as well as within companies as RFID technology continues to evolve, with consolidation eliminating significant overlap and hopefully leading to better-managed, more efficient systems.
“Technological issues today range from reader-level enhanced efficiency through cross-industry software and applications,” Laird said. “The goal is seamless integration. RFID technology is becoming increasingly standardized, which is fostering—in a variation on the market consolidation just mentioned—‘ecosystems of partners’ with each contributing elements to a common solution. These collaborative efforts mitigate software costs because users do not need to seek multiple providers.”
Custom software cost more than commercial software, he noted, so many larger developers are offering off-the-shelf packages that fit lower RFID integration budgets. “With today’s better planning, there’s less waste, and less software needing premature replacement,” Laird added. “End users are taking a more managed approach to budgeting and integrating RFID solutions internally.”