We ran a short story today about RFID market sizing, and whether the numbers in those studies are relevant to RFID users or just technology providers. (See Do RFID Market Size Estimates Mean Anything to End Users?)

That got me thinking about market sizing type numbers of any kind, whether they are for RFID, supply chain software, etc.

When a research company announces these numbers, the trade media tends to simply report the numbers almost verbatim from the press release: "Supply Chain software market to reach $7.8 billion in 2010" or whatever. I suspect we've done that ourselves here at SCDigest a time or two.

The problem is, even if the number is accurate (which is a sometimes dubious assumption), it is kind of meaningless unless you know what is really going into that number and how the market is defined.

The more focused the study is, the more likely in my opinion it is that the numbers are accurate and clear. So, for example, when a research company estimates the number of cell phone shipments or something, we're pretty certain what that number means, and because it is focused, it is easier for the researchers to develop a trustworthy number. In the supply chain world, I think the material handling numbers for conveyors, fork trucks and such coming out of MHIA are pretty clear and accurate, for example.

But what is the "RFID market," exactly? Or the supply chain software market, for that matter? What gets included in the number can have a huge impact on the total projections. "Services" is often an important variable that is often vague, even if it is some large percent of the total market size estimate.

If you actually buy a research report, which is mostly done by technology providers and investment firms, you should hopefully get some better clarity into those definitions and the methodologies used to collect the data, but the "headline" numbers in the press releases and subsequent news stories really tell us very little.

I suppose the "growth" numbers - by what percentage a market has or is expected to grow - has some value apart regardless of the lack of clarity of what is really being measured. That just means maybe the market for X is growing at about 15% (or whatever) sort of regardless of the exact definition of that market.

I'll just say this: some supply chain-related market studies are much more rigorous and have a much higher level of accuracy (based on methodology) than others. The headline numbers are of little value without understanding the methodology and the definitions. And its hard to sell studies on anything that don't forecast strong growth.

Just keep those points in mind when you see the press releases and news stories.

I’d love your thoughts on this.