Review of RFID in 2007
In the build up to the annual IDTechEx RFID USA event in Boston this February and the latest IDTechEx RFID forecasts, Raghu Das reviews RFID progress in 2007.
In round figures, the value of the RFID market grew strongly to $5 billion in 2007, mainly powered by a peak in deliveries of the Chinese national ID card with about $2 billion of cards and infrastructure being delivered by Chinese suppliers. That made China the biggest RFID market but if we peel that away, we see the USA as the biggest market. Globally, the RFID business remained government driven with the Healthcare sector showing particularly strong growth in projects and the Financial, Security, Safety sector dwarfing all others in both expenditure and number of projects. It accounted for a massive 48% of market value with Passenger Transport, Automotive coming second with 19% value share. We refer to the value of tags, systems and support combined. However, let us look beneath the surface, because there are surprises in store.
Where were the most acorns sown?
It is one thing to look at the money spent but that is necessarily historical. On the other hand, the IDTechEx Knowledgebase of RFID projects – the largest in the world by a big margin – reveals where most of the new projects are cropping up. We added 509 projects in 2007 to reach 3096 projects in 101 countries and involving 4231 organisations, with links to 526 company RFID slideshows and audio. Those newly recorded projects represented 20% growth in the size of the database, reflecting the rapid growth of the market way beyond the Chinese ID card. We could have added over 500 more consumer goods companies mandated by retailers to tag pallets and cases but that would be living a lie because most of these are doing little or nothing in the face of the huge financial cost and lack of payback if (when?) they comply. Their usage averaged less than 300,000 tags each and those were purchased at prices nearer to ten cents than the $5 of passport tags and $50 or more for most active tags. The expenditure on associated infrastructure was also modest, though the potential is huge when new technology reduces costs so RFID suppliers to this sector can put today’s eye watering losses behind them. It also calls for certain retailers learn to practice mutuality of benefit with their consumer goods suppliers.
Number of case studies split by tag location, from the IDTechEx RFID Knowledgebase www.rfidbase.com
Leading countries by number of projects
Through 2007, the USA retained its lead in number of RFID projects but China leapt from number five to number three, overtaking Japan and Germany. This tells us that there are a vast number of new RFID projects in China that will take up the slack now that the glory days of the national ID card are over. They are hugely varied from pigs to mail bags and the prospect of having to tag 150 million pet dogs and 2.4 billion pigs yearly by law. Maybe the 37.5 billion cigarette packets produced every year will be RFID tagged. For a full analysis read the IDTechEx report “RFID in China”.
Number of case studies split by country, from the IDTechEx RFID Knowledgebase www.rfidbase.com
Biggest applicational sector by number of projects
In number of projects, Financial, Security, Safety sector was the biggest at about 19% of the cumulative projects in 2007, in line with our identification of it as the leader in money spent. This bodes well for this sector remaining very important in future, albeit with a different mix of types of large project. In 2007, this pre-eminence in numbers of projects was driven by passports (at least 50 countries now) and RFID financial cards all moving ahead strongly. New adoption of RFID tickets, secure access, RFID enabled phones and other applications also helped this sector. Little wonder that Assa Abloy, specialising in this sector and buying at least one RFID company every year, is probably the biggest company in RFID worldwide. The Chinese ID card scheme may be huge, but it is supplied by a large number of Chinese companies and government system integrators.
After that came the Passenger Transport, Automotive sector with 13% of all projects cumulatively. Those percentages were the same as in 2006. Just one applicational sector took significantly more of the pie by the end of 2007. It was Healthcare. This was predicted in 2006 but it did not happen for the reason given - widespread tagging of drugs for anti-counterfeiting purposes. Many were in favour of the half measure of 2D barcodes for singulation. As a result, frequent automated checking for counterfeits regardless of misorientation and obscuration and with high integrity will be a matter for interminable RFID trials and little more. Even the frequency remains undecided.
Number of case studies split by application type, from the IDTechEx RFID Knowledgebase www.rfidbase.com
Why did Healthcare pull ahead?
The vibrant growth of RFID in the Healthcare sector was mainly due to Real Time Location Systems (RTLS) on staff and assets, particularly those using existing WiFi systems in hospitals. There were also many other RFID technologies applied to Healthcare and they provided excellent paybacks and improvements to safety and security. As a result, Healthcare - and no other applicational sector - saw a one percentage point gain in market share. This only took it to 9.2% of all projects, cumulatively, but it is clearly becoming increasingly important. For this appraisal, we ignore our Leisure category because those projects are usually one off races and not ongoing or leading to something bigger. The Military sector increased its percentage of all projects a little.
Tagging of people increases rapidly
By the end of 2007, the RFID tagging of people had jumped from 8% to 11% of all projects cumulatively. It may not please the privacy advocates but it allowed nurses to radio their precise location when they were being assaulted, mother-baby mismatches and baby theft to be reduced, paedophiles to be controlled, prisoner escapes prevented and severe diabetics getting correct treatment before they died in the street. The disoriented elderly no longer needed a “jailer” because any dangerous wandering was detected electronically and children could be traced by their parents in theme parks. Should we be ashamed of that?
Active RFID comes to the fore
Those RTLS and Military schemes involved active tags of course. Let us look more closely at active RFID because all is not what it seems to be. Active RFID accounted for about 13% of all RFID expenditure in 2007, but this figure was depressed by the huge Chinese national ID card scheme, which involves passive RFID. Look at the IDTechEx Knowledgebase and you see a more meaningful picture for the future, given that the Chinese ID card scheme has now peaked in deliveries of both cards and infrastructure. A remarkable 32% of projects added in 2007 involved active RFID, taking the cumulative figure to 22%. Little wonder that over 20% of both RFID fund raisings and RFID acquisitions in 2007 involved companies somewhere in the active RFID value chain. The IDTechEx conference Active RFID and RTLS, the only one of its type in the world, also grew strongly in attendance and number of exhibitors in 2007. RTLS is mainly driving this burgeoning active RFID activity. For instance, Ubisense, founded as recently as 2003, already has over 200 clients.
Active RFID will now be powered by two waves. RTLS is the first wave, with 2007 seeing the first major deliveries, including about 100 healthcare facilities adopting RTLS. Ubiquitous Sensor Networks will be the second wave but it has yet to begin in any serious manner. Indeed, some applications will merge both capabilities.
Follow governments
Those seeking to prosper in RFID should, on the evidence of 2007, follow the applications where governments either make it a legal requirement as with some national ID cards and livestock schemes or where government foots the bill. For example, Military and much Healthcare expenditure on RFID is really government money and even the strongly progressing tagging of air baggage is usually backed by huge government grants to airports and airlines, the airports in North America and East Asia being frequently owned by government anyway. In number of projects, airlines and airports held their 3.6% share of all projects through 2007.
The leading frequency
The leading frequency in 2007 remained HF (13.56MHz) because so many of these projects were huge from 25 million library books and 16 million travel cards in Beijing to the $6 billion Chinese ID card. In fact, HF RFID just to the ISO14443 specification was responsible for about ten times the expenditure on RFID to any other specification, with large new applications added such as passports and RFID enabled phones. Add supply chain, library and secure access RFID to the ISO15693 specification at HF and we see huge and expanding use of this frequency. In 2007, many step function improvements in HF RFID parameters were announced– from 50% to a factor of ten – though mainly not yet commercialised. That promises well for expanding the adoption of HF RFID in future. Indeed, IDTechEx ended the year by announcing a new report analysing all this under the title “HF RFID – the Great Leap Forward”.
Number of case studies split by frequency, from the IDTechEx RFID Knowledgebase www.rfidbase.com
The leading shape of tag – déjà vu
Labels are the preferred RFID format in numbers sold – and that by a big margin. However, that increase in market share by active RFID and the increased use of ruggedised passive RFID and passive RFID in the form of wristbands and casino chips has meant that the old plastic moulding format is back with a vengeance. In the case of active RFID that almost invariably means having a lithium button battery inside. The penetration of the new laminar batteries was negligible in 2007. Plastic mouldings and wristbands leapt from 4.9% to 10.4% of all recorded RFID projects by year end.
Examples of the resurgence of RFID in plastic mouldings – new products from Connexion2 of the UK, SafeTzone, RadarFind and EmbedTech of the USA and Syris of Taiwan.
Some things did not change
By the end of 2007, most RFID projects were still full rollouts, showing that the industry is more mature than it is often portrayed. Despite the dream of Massachusetts Institute of Technology in 1999 that most RFID tags could contain nothing more than simple read only numbers, the computer system coping with the rest, this cost effective approach remains impracticable for most applications. At least, that was the opinion of those that signed the cheques. At the start of the year 27% of projects involved read only tags and at the end of the year, the figure was 26%.
From air baggage tags to tagging items of consumer goods, it seems that the clunky approach of writing to the tag at various times during its life had to be retained by most. That means inherent lack of data synchronisation and inherently expensive tags and readers, with read write, password protected chips and so on. Even in large closed systems this is at best questionable given that read only tags perform well at world leader Marks & Spencer in the UK with what will soon be 350 million tags yearly on apparel. Read only tags also perform well in road tolling and many other applications.
Overdesign
Given that a basic ISO 14443 tag needs only 3000 transistors, the 70,000 or more designed into UHF and soon HF EPC tags looks more and more like a Pyrrhic victory for the chipmakers and electronics wizards, given the extreme price sensitivity of the envisaged applications. Watch the allegedly lower cost alternative to EPC called the U-code being trialled by seven East Asian governments. After all, the 5-10 trillion barcodes printed every year are read only.
Some superlatives
Among the largest RFID suppliers, Huahong in China exhibited one of the fastest organic growth rates in 2007. IDTechEx believes that Kovio made the most significant advance in RFID technology in 2007, with the capability of printing thousands of silicon HF transistors to meet specifications designed for silicon chips but at 80% and later 90% cost reduction. Production is planned for the end of 2008. We believe that the biggest impending project for RFID is the UK national ID card which is planned at a cost of $10 billion and slated to escalate to triple that figure.
Who were the strong marketers?
The RFID industry remains far more fragmented than customers and prospective customers would wish. The number of new players greatly exceeds the number being mopped up by Assa Abloy and – newly active in 2007 – Zebra Technologies and a few other acquirors. Curiously, most of the players continue to make little attempt to become famous and many hide what successes they have. By contrast, we continued to see those promoting UHF passive tag systems, shouting even their smallest successes from the rooftops and, in 2007 we could newly add those promoting WiFi RTLS. In general, this is to be commended and those promoting products at HF and other frequencies could learn from this. Indeed, by sheer effort, the UHF lobby has got several specifications written around their products, despite having to quietly shelve earlier promises that all obscured cases in any pallet load could be read with near 100% success, air baggage could be moved through much faster and UHF could even eliminate use of other frequencies in most RFID applications. Indeed, the more strident WiFi RTLS players have had to go quiet on their original assertion that no new infrastructure is needed. Nevertheless, the passive UHF and WiFi RTLS people publicise even the smallest orders, drive standards (tires, pallets, cases, baggage etc) and constantly penetrate even the most obscure applications in far away places. This is a lesson for the whole industry, much of which is engineering led if it is led at all.
An exit poll
Politicians like to do exit polls so let us try one too. The last 50 projects entered into the IDTechEx Knowledgebase in 2007 came from a remarkable 25 countries. Active RFID was used in 40% of these projects and passive UHF and HF were responsible for 28% each. Make of that what you will.
How to learn more
Learn more market insight by hearing from the biggest adopters, most impressive technology developments, and the big picture at the seventh annual RFID Smart Labels USA 2008 event in Boston on February 20-21. Register early for the best savings and over $3,500 of free IDTechEx research, including free access to the IDTechEx RFID Knowledgebase! See www.IDTechEx.com/USA for details.
IDTECHEX 2008 DATES:
· RFID Smart Labels USA 2008, February 20-21, Boston, USA www.IDTechEx.com/USA
· Printed Electronics Europe 2008, April 8-9, Dresden, Germany www.IDTechEx.com/peEUROPE
· RFID Europe 2008, Sept 30–Oct 1, UK
For more RFID articles from IDTechEx, please see www.IDTechEx.com.
Please feel free to publish this article in its entirety, or edited as appropriate. We would be grateful if you could let us know if you plan to publish the article. For further information and quotes, please do not hesitate to contact the author Raghu Das, +44 (0) 1223 813703, r.das@idtechex.com. |
