MAY 16,2007-The North American market for passive radio frequency identification (RFID) tags should be worth nearly half a billion dollars by 2013, up from $124.6 million in 2006, according to a recent report by consultancy Frost & Sullivan Inc.

However, the report also noted that demand hasn't been as great the RFID vendors had anticipated. The study, issued last week, indicates that the standardization of RFID technologies is helping the market along. In particular, the creation of the electronic product code (EPC) global Gen 2 standard (download PDF) is encouraging user confidence and making customers more willing to invest in the technology, according to a statement from Frost & Sullivan.

Another factor contributing to market growth is compliance requirements. Major retailers such as Wal-Mart Stores Inc. and government agencies such as the U.S. Department of Defense have mandated that their suppliers add RFID tags to their goods to make them easier to trace in the supply chain. In turn, over the past couple of years, the potential for passive RFID tag sales prompted the vendors to beef up their research and development and production efforts to provide the gear for suppliers.

However, early sales expectations have proven "unrealistic," according to Frost & Sullivan. The consulting firm spelled out several reasons for the slower-than-expected growth: Suppliers have focused more on meeting mandates than finding ways to use RFID for their own business advantage, smaller suppliers lack the technical infrastructure for RFID-based data-capture systems, and, because suppliers already are usually making slim profit margins, they are reluctant to expand RFID usage.

SOURCE: www.computerworld.com