Frost & Sullivan: APAC RFID Market to Surpass $2 Billion by 2016

Governments of several countries in the Asia Pacific region have played key roles in supporting various industries in adopting RFID. Though the technology is expensive due to heavy investment in hardware, the RFID market continues to grow every year.

New analysis from Frost & Sullivan entitled “Asia Pacific Radio Frequency Identification (RFID) Markets” finds that the total RFID market earned revenues of US$600 to$800 million in 2009 and estimates this to be more than $2.0 billion by 2016, growing at a compound annual growth rate (CAGR) of 17.7 percent.

“The emergence of source tagging and growing supply chain applications are also key growth drivers in the industry,” said Parul Oswal, Industry Analyst, Frost & Sullivan. “Source tagging is increasingly becoming popular, especially in Asia Pacific countries that are suppliers to big retailers in the U.S.”

With goods being tagged at the manufacturing or packaging stage rather than the store, store associates are left free to focus on customer service. Source tagging thus helps enhance sales and reduces shrinkage in the supply chain.

However, the cost of RFID hardware is still considered high and many companies are hesitant to invest in the technology fearing poor ROI. Implementing a full-fledged system can cost $10 million to $25 million for a large manufacturer.

The cost of tags depends on the quantity ordered, the type of IC and antenna used along with the manufacturing method, the amount of testing and the type of inlay packaging used. The cost of readers varies based on the read range required, the intelligence of readers required to read the information on the tags and the ability to read multiple tags at one go.

Besides the cost of tags and readers, other expenditures include middleware, application software and system integration costs, as well as other hidden costs.

“Ensuring compliance and understanding the broader strategic role of the technology is essential since companies will likely need to upgrade their networks and storage to cope with the volume of data captured by the RFID system,” Oswal said. “The complete cost of RFID implementation can be high for several organizations, especially small and medium size enterprises.”

This issue can only be managed once the volumes become bigger and technological developments help reduce the cost of RFID. In the mean time, RFID vendors must concentrate their efforts and investments in applications that are increasingly becoming popular with a quick ROI for clients.

The technology, being environmentally friendly, is likely to be well received as enterprises focus on green supply chain and reduction of carbon emission. With the economy starting to show signs of recovery, RFID technology is expected to play a more vital role within enterprises.
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