A new in-depth study into the RFID market shows a remarkable shift of industry focus from European RFID vendors. Until 12 months ago, most vendors were targeting the open supply chain applications in the retail industry, hoping to capitalise on the potential high volume of RFID tags and readers in these applications. Since then, many vendors have broadened their focus and begun targeting opportunities in other market segments.
Despite a converging set of standards for North America and Europe, the focus for RFID implementations is very different on the opposite sides of the Atlantic. North America continues to view the technology as key for the retail and defence sectors, a perception driven by companies such as Wal-Mart and the US Government. But Europe is starting to recognise the wider applications for the technology in areas such as logistics, aviation, healthcare and the pharmaceutical industry.
The study, undertaken by LogicaCMG’s RFID centre of excellence, shows that the uptake of RFID in Europe has been boosted since the European regulations were changed in 2004 to allow tags in the Ultra-High Frequency (UHF) range to operate with similar performance as in North America**. The new regulations, in combination with the new EPC Gen2 standard, have led to more than two-thirds of hardware vendors saying they now create RFID technology that works in both regions. A significant range of products has been developed this year and as a result through 2006 UHF technology will be implemented in an increasing number of business applications.
Paul Stam de Jonge, group director RFID solutions at LogicaCMG, said: “The current UHF RFID marketplace is still at a very early stage, but over the next 12 months we will see a growing number of large-scale implementations as the technology continues to mature. Currently, application specific solutions are not generally available, but over the next 12 to 24 months, as the experience of the current RFID pilots and implementations are translated into integrated solutions, we expect this situation to change. While there are still improvements to be made and prices need to drop, with the new European regulations and the creation of the Gen2 standard, the market has clearly found an environment that is ready for a wide range of business scenarios.”
The study shows that there is no dominant hardware vendor for UHF technology and that this landscape is complex for end-users. Since the market is relatively immature, it consists of a great number of companies that focus on specific hardware components, none of these currently provide end-to-end solutions that combine the required hardware and software components. Hardware vendors agree that system integrators are the natural choice to take ownership of the integrated solution for the customer.
LogicaCMG’s RFID centre of excellence conducted the study over a six-month period, combining a survey of RFID hardware vendors, thorough analysis of current literature on the European market and in-depth interviews with end-users, hardware vendors and industry bodies. This study follows the comprehensive research LogicaCMG conducted into RFID usage in returnable transport items, published in April 2004.
Until recently, UHF RFID technology in Europe hardly existed. The European regulations restricted the power used by UHF RFID readers to such an extent that many useful applications were prohibited. Instead, the market for RFID in Europe has been focused on low-frequency (LF) and high-frequency (HF) technology. With a read range of less than one meter, these technologies are widely used in public transport systems and access control, but are not suitable for larger scale implementations.
This analysis combines three elements:
- a literature study (overview of sources available upon request)
- a survey questionnaire for RFID hardware vendors
- qualitative in-depth interviews with end-users, hardware vendors and industry bodies.
A total of twenty manufacturers responded to the questionnaire in February and March 2005. These manufacturers were selected based upon their ability to provide UHF-related RFID hardware for use in Europe, and included vendors of RFID chips, tags, readers and printers. These manufacturers represent the majority of the European market for UHF RFID technology, and together provide a good picture of the expected availability and trends in Europe. The follow-up interviews with end-users, hardware vendors and industry bodies were conducted in the summer of 2005.