Frost: RFID Middleware Market Shows Strong Growth Potential
October 31, 2007 // Published as a news service by IHS
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The change from mandate-driven to return on investment (ROI)-driven customer purchase decisions has influenced the dynamic radio frequency identification (RFID) market.
According to Frost & Sullivan, the focus on ROI will ensure steady, sustainable growth in the RFID middleware market, with RFID middleware products having the ability to facilitate strong returns in emerging market verticals by ensuring the relevance and usability of data.
Recent analysis from Frost & Sullivan of the North American RFID middleware and software markets found earned revenues of $21.7 million in 2006, with estimates to reach $113 million in 2013.
"The RFID market is poised for stronger growth during 2007 and 2008 due to end-users' increased acceptance of RFID as a valuable tool to increase efficiency in a number of applications," said Frost & Sullivan research analyst Brendon Ouimette.
"Asset management, inventory management and work in process visibility applications will require the type of data management capabilities that RFID middleware provides."
By creating valuable knowledge from terabytes of raw data, analysts said RFID middleware helped garner positive returns in many applications. By focusing on ROI-based adoption and addressing software and protocol interoperability, RFID middleware vendors can help broaden the number of end-users and their investments.
Unlike closed-loop applications, such as asset tracking, open-loop applications have not presented a clear ROI case due to the high tag and process costs. Analysts said since open-loop applications represent the largest potential for RFID market growth, and RFID middleware is now an essential infrastructure component, middleware market growth will remain linear unless these applications show fast ROI.
Market end-users seeking to increase the probability of attaining higher returns without waiting for a 5-cent tag solution can increase their chances by maximizing the value of every data capture point through RFID middleware. Analysts said higher read rates, however, are only a part of gaining the process visibility that leads to ROI. Those vendors who offer effective enterprise software integration have a strong competitive advantage.
"By offering full infrastructure solutions, backed up by seamless enterprise software integration, middleware companies can help recognize often-elusive ROI in RFID," said Ouimette. "Incorporating that data into enterprise-wide systems gives companies the ability to draw meaningful conclusions about their business processes and where they can improve."
Source: Frost & Sullivan.