RFID News: Baird Report Finds Encouraging Market Signs in Terms of RFID Growth

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- May 6, 2008 -

RFID News: Baird Report Finds Encouraging Market Signs in Terms of RFID Growth – Outside of CPG to Retail

Hong Kong Airport Orders 10 Million Tags; Optimistic RFID Vendors Once Again Investing in People

SCDigest Editorial Staff

SCDigest Says:

IBM and Oat Systems are more likely to announced new systems outside of the consumer goods to retail market, such as the substantial RFID plans across the supply chain being pursued by European aerospace giant Airbus.

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It’s ironic, of course, but the consumer goods to retail supply chain that was the prime driver of the MIT Auto ID Lab efforts and, ultimately, what became EPCGlobal has obviously not met expectations for RFID adoption – but may have, nonetheless, been the catalyst for the rising level of activity and RFID-based applications being pursued outside of that sector.

That’s one of the conclusions that can be drawn from the latest issue of the always informative monthly RFID Report from investment company RW Baird.

The Baird researchers say they see two important trends: “The first is that several vendors, including hardware, software and services, are investing in people. We see additional hires and incremental talent entering into the industry. Second, [at a recent trade show] we generally heard from vendors a positive tone with respect to lead generation, with quantity exceeding expectations; quality was regarded as good. We view the increased headcounts suggesting project rollouts, and the greater number of leads as an indicator of increased pilot activity.”

So, that’s the good news. The report also said its earlier projection that the market would soon see several RFID tag orders that exceeded 10 million tags has started to come true, with the Hong Kong Airport ordering as much as 25-40 million tags for baggage tracking annually, using tags technology from Alien and label company George Schmitt & Co. Baird says it believes a few other large airport-based RFID orders may be placed in 2008.

Baird says it is seeing strengthening RFID activity in many other markets and applications as well. “We continue to hear discussion of large end-user RFID engagements, and we are particularly encouraged to hear the number of discussions increase,” the report notes. “Key applications include IT asset management, returnables, file tracking and yard management. Many of these projects are advanced, and in some cases, we are again hearing about passive tag orders exceeding 10M units. As discussed in the past, most of these players prefer not to be named, as they view the investment as “strategic” in nature.”

The noteworthy element of this overall positive view is the lack of consumer goods to retail activity.

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“We don’t hear much new with respect to retail/consumer products (CPG). It seems like volumes are flat to up slightly. Many CPG companies report challenges in finding sufficient value to move forward in a meaningful way,” the report states. “Despite this, we are encouraged to hear many consumer product companies continue to investigate the technology aggressively.”

The signs can be seen in many ways. For example, earlier on, RFID solution providers IBM and Oat Systems spent a lot of effort developing what they hoped would be a burgeoning RFID market in the consumer goods industry, driven by the Wal-Mart mandate that most expected would be soon mimicked by other retailers.

Instead, IBM and Oat Systems are more likely to announce new systems outside of the consumer goods to retail market, such as the substantial RFID plans across the supply chain being pursued by European aerospace giant Airbus (see Airbus Plans Transformational RFID Roll-Out Across End-to-End Supply Chain.)

The Baird report did note that at a recent conference, “Procter & Gamble COO Bob McDonald also indicated the long-term importance of RFID, citing out-of-stock statistics and improvement in display accountability. While this is not new, it is important to hear ongoing commitment from executive leadership” relative to RFID potential in the consumer goods industry.

SCDigest agrees. It’s just going to take a lot longer there than anyone thought back in 2003.

Are you surprised RFID seems to be taking off in markets outside of CPG to retail, but languishing there? When will it finally gain traction in retail applications? Let us know your thoughts at the Feedback button below.