SCDigest Editorial Staff

SCDigest Says:

Tags in corrugate will lower costs and increase adoption over time, but the basic consumer goods value proposition, as demonstrated by the Wal-Mart program, is still iffy. A better answer to tagging won’t impact that much, and while pre-tagged boxes may sound good versus slap and ship, right now it would require CPG companies to maintain separate inventories for Wal-Mart, which is costly. What do you say? Send us your comments here

Investment company Robert W. Baird produces an excellent summary each month of developments in the RFID market. In its latest issue (see RFID Monthly), Baird analysts Reik Read and Robbe Timme take a bullish stance on RFID activity, and predict solid growth for the next couple of years in terms of user adoption and vendor sales.

“Industry contacts suggest meaningful business opportunities are finally emerging in the RFID market,” the authors note. “We are careful not to suggest that the much anticipated "hockey stick" is apparent, but we are optimistic based on the level of sales and ordering activity in the industry. We believe Gen 2 related hardware revenue will double versus 2006 and will increase by 75%-100% in 2008. We believe the 2008 hardware market will increase to $125M-$150M.”

Now, hardware sales of $150 million across all application areas is certainly well below projects of several years ago, but nonetheless, if correct, would represent substantial growth from 2007.

The report cites a number of reasons for this optimism of the RFID market finally getting some critical mass.

Some we don’t agree with – for example, the report cites new RFID support in Microsoft’s BizTalk 2006 R2 product. SCDigest believes this will have almost no impact on adoption in the next couple of years, as it just won’t impact the ROI from projects very much, and BizTalk has a limited role in many enterprises.

And while we like new technologies to place tags directly into corrugated boxes, another driver of adoption cited in the report, this is unlikely to be a near-term catalyst. Tags in corrugate will lower costs and increase adoption over time, but the basic consumer goods value proposition, as demonstrated by the Wal-Mart program, is still iffy. A better answer to tagging won’t impact that much, and while pre-tagged boxes may sound good versus slap and ship, right now it would require CPG companies to maintain separate inventories for Wal-Mart, which is costly.