Date: 18/01/2011

High hardware cost slowing RFID growth in Asia Pacific says Frost & Sullivan

As per Frost & Sullivan's latest study of RFID market in the Asia Pacific (AP) region, due to the high cost of RFID hardware many companies are hesitant to invest in the technology fearing poor return on investment (ROI). Implementing a full-fledged system can cost $10 million to $25 million for a large manufacturer.

However Frost & Sullivan reports RFID market continues to grow every year in AP region and finds that the total Asia Pacific RFID market earned revenues of $600-$800 million in 2009 and estimates this to be over $2.0 billion by 2016, growing at a compound annual growth rate (CAGR) of 17.7 percent.

"The emergence of source tagging and growing supply chain applications are also key growth drivers in the industry," observes Frost & Sullivan Industry Analyst Parul Oswal. "Source tagging is increasingly becoming popular, especially in Asia Pacific countries that are suppliers to big retailers in the United States."

Frost & Sullivan says with goods being tagged at the manufacturing or packaging stage rather than the store, store associates are left free to focus on customer service. Source tagging thus helps enhance sales and reduces shrinkage in the supply chain.

Besides the cost of tags and readers, other expenditures include middleware, application software, and system integration costs, as well as other hidden costs, adds Frost & Sullivan.

"Ensuring compliance and understanding the broader strategic role of the technology is essential since companies will likely need to upgrade their networks and storage to cope with the volume of data captured by the RFID system," adds Oswal. "Hence, the complete cost of RFID implementation can be high for several organizations, especially small and medium size enterprises."

Another market researcher RNCOS estimates global RFID market is expected to grow at a CAGR of around 17% in the period 2011-2013 to a value of approximately US$ 9.7 Billion and it says Asia-Pacific will witness the highest growth in terms of revenue. The region is anticipated to account for 27% of the entire RFID market by 2013