RFID in the Supply Chain: The Wal-Mart Factor Part Two: Impact on Near-Term Market Growth

Natick, MA March 10, 2004 -- Given the recent bevy of RFID implementation announcements by Wal-Mart, Metro AG, the US Department of Defense and, most recently, Target, VDC has adjusted the market size and compound annual growth rate (CAGR) originally published in "The Global Markets and Applications for RFID Equipment and Systems, 4th Edition" (2002).

Originally estimated to rise by 21% between the years 2003 and 2005, the near-term compound annual growth rate for RFID software and systems is now expected to surpass 37%.

Global Shipments of RFID Systems Segmented by Product Category (Millions of Dollars)

Base Year, 2003
Transponders: $554
Readers: $272
Software: $301
Total: $1128

Original Forecast, 2005
Transponders: $848 (24% CAGR)
Readers: $371 (17% CAGR)
Software: $431 (20% CAGR)
Total: $1651 (21% CAGR)

Adjusted Forecast, 2005
Transponders: $853 (24% CAGR)
Readers: $683 (59% CAGR)
Software: $594 (40% CAGR)
Total: $2130 (37% CAGR)

Factors impacting forecasts:
- Recurring Transponder Costs - Although price points are declining (they will remain far above five-cent per transponder level), manufacturers are faced with the ongoing cost of buying RFID transponders.

- System Infrastructure Requirements Driving Near-Term Growth - Forget the cost of transponders, it is the cost of RFID system infrastructure that causes sticker shock among C-level executives and IT managers.

- What exactly does RFID compliance mean? - The language found in major RFID mandate announcements has been vague.

- Technology performance challenges loom - Unresolved physical infrastructure issues are expected to impede near-term market growth.

- Too much too soon? - The benefits of RFID technology are not in question; however, the timing of these RFID mandates is in doubt.

A white paper is available on this subject at: http://www.vdc-corp.com/autoid/white/04/walfactor2.pdf

To view the press release, including graph, go to:
http://www.vdc-corp.com/autoid/press/04/pr04-11.html

Report Availability:
http://www.vdc-corp.com/autoid/reports/02/br02-26.html

Founded in 1971, VDC is a technology market research and consulting firm that specializes in industrial and commercial electronics, computing, communications, software and power systems markets.

For more information, please contact:
Michael J. Liard, Senior Analyst, 508-653-9000 extension 130, mikel@vdc-corp.com

Marc Regberg, Vice President, 508-653-9000, extension 111, msr@vdc-corp.com

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