RFID Budgets Growing in 2010

Jan. 5, 2010
Report sees strengthened economy leading to consolidation within vendor value chain.

The good news is that RFID budgets aren't falling in 2010. The bad news is that while some should see significant boosts in dollars, there are quite a few who will have to do more business with the same budgets as a year ago.

According to ABI Research's annual report on trends in emerging technology sectors, nearly half of respondents said they will increase their RFID annual spending in 2010. Roughly one-third of those using, deploying, evaluating, or piloting RFID technology reported flat spending, while 11% anticipated a budget decrease and less than 8% had no planned budget for RFID.

ABI cited strong deployments and pilot activity in supply chain logistics and asset management among the forces that will drive spending. "The data offer an early indication that 2010 end-user spending and overall market growth rates could be significantly higher than in 2009," ABI reported, adding that if the economy continues to improve, 2010 may also mark the start of a sharply higher-than-expected growth rate over the next few years.

The report says 2010 will not see "rampant consolidation activity," though ABI foresees a strengthened economy leading to consolidation within specific segments of the RFID vendor value chain. If, on the other hand, the economy sees a setback, the report says, a "then consolidation activity may take on a different tone as vulnerable vendors are faced with difficult decisions."

As in past years, the overwhelming majority of respondents rated "business process improvement" as the top driver for their adoption of RFID. The second-most important driver was considered to be the need to reduce non-labor costs, ABI Research said.

ROI timeframe is also a critical consideration for most companies considering RFID deployment, and comparing the ROI assumptions reported in 2009 with those from 2008, the survey found that considerably more companies (48% as opposed to 37% in 2008) expect their investment to be recouped within 12 months.

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