Frost: Rising Data Volumes Create Need for Euro RFID

August 10, 2007 // Published as a news service by IHS

While this market has not demonstrated growth to the same extent as the RFID market in the U.S., it is nevertheless poised for growth.

Recent analysis from Frost & Sullivan of the European RFID middleware markets found earned revenues of $41.0 million in 2006, with estimates to reach $181.8 million in 2013.

Analysts said there is a strong case for RFID in places where the unit cost is high and where inventory loss is widespread. Likely growth segments for RFID middleware will be in the areas of drug manufacturing and tracking, the tracking of medical equipment in hospitals and asset tracking.

"The RFID technology has enormous potential and will exhibit strong growth in the European region," said Frost & Sullivan research analyst Rengarajan Srinivasan.

"The increased use of the technology at the case- and item-tagging level is expected to generate increased quantities of data, creating an increased need for middleware to reduce data congestion."

The majority of end-users today are implementing RFID solutions at the case, pallet or carton level. Analysts said as this technology is gradually deployed across various levels in vertical segments, such as pharmaceuticals, the volume of data to be handled will rise. As a result, enterprise applications will require a middleware capable of handling the enormous level of data throughput.

Increased adoption of RFID will depend on the sophistication provided by the middleware, which can be embedded in the readers or form part of an enterprise solution. Analysts said the success of RFID in open loop systems will also depend on the data-handling capabilities provided by the middleware.

Several issues that will present significant challenges for the European RFID middleware market remain. Analysts said some of the immediate challenges include meeting regulatory requirements, such as Listen Before Talk (LBT), which are unique to Europe. In addition to the European issues, certain countries, including France, have dedicated frequencies in the ultra-high frequency (UHF) band for military and defense, which clash with RFID frequencies.

Creating a networked environment covering all participants and forming multiple business process flows operating simultaneously at every level will require meticulous detailing during integration.

"The success of the RFID technology depends on the effective integration of all data, creating meaningful business intelligence for the enterprise systems," said Srinivasan. "The move toward a demand-oriented supply chain and lean manufacturing necessitates stringent and accurate data control techniques."

As the technology matures, collaboration between vendors is likely to increase, since end-users expect a uniform, seamless solution between the devices and the enterprise application software. Analysts said this means partnerships between device management solution providers and enterprise application software providers will prove beneficial to both parties.

Source: Frost & Sullivan.