As we are discussing in this issue, identity and authentication is the elephant in the room—nay, on the planet—impacting global trade, safety, and personal and business finance.
Key areas for growth are here:
Access Control—a growing area, with increasing concerns for both physical and cyber security. NFC access cards in combo with HF provide multi-purpose access control cards offering a greater level of security.1
Secure Mobile Payment—again, NFC wins here with all the major phone providers (Windows phone, Android, and now Apple) offering mobile payment of sorts. The smaller merchants we talk to, though, continue to embrace Square as a more complete and versatile solution.
Counterfeiting—continues to plague international trade. A multi-layered approach with item serialization all the way to e-seals/active RFID is used.
Theft, diversion, and risk reduction—RFID + Sensors + GPS are being deployed in transportation to track and sense cargo. Beyond ocean, more trucking companies are using these technologies to not only secure/protect shipments, but as feeds into transportation optimization solutions.2
Word is getting out as more retailers are talking about the benefits of RFID. The big story for retailers is the compression of implementation time. Figure 1 shows the typical growth of RFID within the general merchandiser. Firms like Marks and Spencer and Macy’s have been on the RFID journey for many years.
Figure 1: Increasing Processes, Categories and Stores
Last year Kohl’s did a major rollout of RFID for all their jeans, in all their stores, in 6 months. This time compression demonstrates not just ROI but also a powerful internal rate of return. We spoke to several retailers who said that after demonstrating the results of pilots, the executives wanted all-store/all-category rollouts. That means that an RFID investment can compete head-to-head with other investment priorities that the retailer may have. That’s big, very big, since although RFID was interesting to many retailers, it usually did not make the cut due to other priorities.
Item level RFID: The major story in the market for 2014, of course, was Retail Item Level. Retailers are continuing to grow their deployments. In 2015, the market for UHF will grow about 30%. Tags can be purchased in so many ways. There were some large orders for reusable hard tags in 2014 (Macy’s, ZARA, for example). Reusable tags are replaced gradually over a multi-year horizon.
General Merchandise: The vast majority of item-level tagging in retail has been in apparel. Jeans really made the case for many retailers. Marks & Spencer has begun to tag general merchandise and expects to tag everything except groceries by 2016. Bloomingdale’s and Macy’s had a successful shoe rollout and more categories are on the way.
Woven RFID: tags that are woven right into labels is a growing area. We spoke with apparel manufacturers who want brand and quality protection as well as reduction of so many labels on garments. But what I find interesting is the wearable intelligence. We spoke to organizations that have high-value, high-purpose uniforms for firefighters, police, and rescue and defense personnel. These uniforms can cost $1K or more. Tracking high-value items is important and RFID has been used in costumes for several years. But also imagine smart wearables/sensors to protect rescue workers in dangerous environments, and other use cases for smart applications—not just inventory tracking. These are emerging areas for woven tags.3
RFID is being used to synchronize production lines, track work in progress (WIP), track reusable containers, tools, provide recipes, and for mass customization capabilities, as well as to track and improve process control functions. There is steady growth here with on-metal tagging readability improvements and the ability to embed tags. Many of the tags used in manufacturing are also reusable tags.
Visual tagging,4 RFID + sensors5 and battery-assisted6 RFID are smaller sectors, but make important contributions to industrial markets. These are higher priced, but long-life applications, often. However, the value propositions customers are reporting are quite high. Imagination is required, but once projects get going, organizations are excited by the results.
Internet of Things
2014 saw the resurgence of IoT, not just as a marketing message, but real use cases, especially in industrial markets. Software platforms are many7 and the hype is in full swing. Netting out the numbers is mere media sport at this time with absurd statements about the trillions of dollars of IoT markets. However, we are just at the beginning of where getting smart will take us. We are helping host an IoT event—Connected Things 2015 at MIT in February—that may answer some of the questions about IoT and its value.
Netting It All Out
From a use case perspective, Figure 2 shows market share by use cases. Since some of these use cases have competition between HF and UHF, and it is unclear what frequency will ‘win out’ in some areas. In certain areas each has obvious advantages which are generally well understood.8
Figure 2: Use Case for Passive RFID
Passive RFID has received greater and greater interest, as the value proposition is understood and more software solutions utilize RFID. Therefore, the market growth of 25% should hold steady for several years to come, ultimately growing in the year 2020 to 35 billion units per year (Figure 3). Large application areas are often discussed that can spike the numbers. We keep hearing about applications in other locales such as ID cards in China (a billion), car registration/highway tags in Brazil (millions), and so on. But precise data on the actual numbers has not been revealed.
Figure 3: RFID Passive Forecast
Readers—the Real Story
We all know that it is the pairing of the tag to reader that counts. The progress in readers may be more interesting than the tag story. Innovations are providing more applications, at more price points, with more accuracy in reading. For a few years it was slow going, with reader manufacturers sitting on releasing innovations they had developed. But now, finally, they are on the market.9
Illumination: Overhead, in walls, a new generation of fixed readers allows for the reduction or elimination of handheld readers. This provides better locating and improved inventory accuracy. Though more expensive than hand-helds, the value proposition is higher. More accurate reading and a read-anytime capability allows for monitoring of operations.10
Purpose-driven RFID: a variety of devices designed specifically for the applications that require them. Though these may have limitations in use, they tend to be smaller, lighter, and cheaper.11
Smart shelves: an old idea with new economics. Smart shelves provide real precision and can monitor items as they are placed and moved. Smart secure cabinets are already in use in healthcare for a combination of security as well as inventory management. In retail, display applications as well as jewelry counters are deploying smart-shelf technology.12
Smart dressing rooms: This idea has been around for a while, but except for Prada has not seen much action. Last year Bloomingdale’s began a pilot. We will have to wait (something Bloomingdale’s does not want their customer in the dressing room to do) to see if this is a success.
Smartphone: Using the smartphone is also not a new idea. Last year saw an explosion of RFID applications on Android for all sorts of applications in areas such as field service, building security, and yes, consumer applications.
Re-use and Its Impact on Market Growth
More steady, but modest growth should not lead people to believe that RFID is not important to many sectors. Many of the purpose-driven tags—on-metal, visual tags, hard apparel tags—are designed for a long life. The use of reusable tags reduces chip sales unit growth counts. However, the providers do get to charge more for these tags, though price-per-use for the customer remains steady.
There is a lot more detail about the market. ChainLink is finishing collecting the data on RFID market growth for our RFID 2015 - 2021 Forecast Report, which will be released in Q1 2015.13 In addition, we are currently surveying end-users regarding their technology and business priorities. If you are an end-user and would like to participate, click here.