New Accounts on the Rise for the RFID Industry

Approximately 80% of the total global RFID revenues in 2009 were from accounts that have been using or evaluating the technology for at least 1 ½ years, and that figure didn’t change much in 2010 (~75%).  There are several reasons behind this.  New accounts are typically pilots or evaluations that, depending upon the application, can last from days to years and use limited infrastructure (and contribute less revenue) as they design and tweak their systems.  It takes a bit of time for these accounts to evolve, expand and scale.  In addition, many established accounts were significantly expanding and scaling their deployments in 2010, so the revenue contribution from these accounts increased sharply and overshadowed the gains made in new accounts.

But this trend is changing: the revenue contribution of new accounts to the global RFID market is expected to begin to increase sharply in 2011/2012, and by 2015, new accounts will account for a majority of global revenues.  Why?

Reasons include:

• A tipping point is being reached.  A tipping point that is a function of more favorable pricing, increased packaging/bundling and availability of off-the-shelf solutions, more benchmark and performance metrics, enhanced standards and improved business models.
• Evaluation times are decreasing.  Account development lifecycles for these next generation green-field opportunities are not expected to take as long to develop as the current/latest generation of large account/program/project opportunities.
• The competitive advantage.  More early adopters are citing “competitive advantage” as a benefit of their RFID solution – a direct result of increased visibility and more actionable business intelligence.  Expect their competition to follow … and quickly.
• RFID’s penetration level is low.  There is significant opportunity out there in virtually all regions, verticals and account types.  There’s even more opportunity in many established accounts.

RFID is rapidly becoming a more sound investment and is moving from a “nice-to-have” to a “need-to-have”.  Expect the trends of scaling and expansion of established accounts we saw in 2010 to continue in 2011, and get ready for broad and facilitated adoption in ‘green-field’ accounts.  RFID is moving into greener pastures.