According to the consultancy firm, a lot of firms have set aside much lower budgets to comply with RFID than the $2 to 3 million that many analysts had predicted. However these companies are set to increase their investment in 2005 in order to scale up and integrate RFID into their normal operations.
"We are seeing companies increase their RFID budgets three to five times this year compared to 2004," said Erik Michielsen, ABI Research's director of RFID research.
While many smaller RFID vendors were involved in these 2004 trials, feedback from end-users tells ABI Research that in this phase of RFID implementation, these companies will more often return to their traditional technology partners for larger and more integrated solutions.
"In 2004 we saw many end-users working with smaller RFID companies," said Michielsen. "But the big-name relationships didn't come, because they weren't necessary. Now if companies are going to make a big investment in RFID tags and readers, they'll turn to the partners traditionally able to meet their needs, who can provide a global service. Many RFID companies can't do that."
That will be the case even if RFID is not central to these old partners' businesses, as in the cases of vendors like Avery Dennison, CCL, TI, Philips, LXE, Symbol, Zebra, and technology solution providers such as Cisco, IBM, Microsoft, Oracle, SAP and Sun.
Any lack of cutting-edge knowledge will be more than offset - in the minds of executives at companies like Campbell's Soup, Kellogg's, Kraft and Unilever - by the comfort factor that large, familiar partners can provide.
RFID tags are tiny computer chips connected to miniature antennae that can be affixed to physical objects. The most commonly application of RFID contains an Electronic Product Code (EPC) with sufficient capacity to provide unique identifiers for all items produced worldwide.
When an RFID reader emits a radio signal, tags in the vicinity respond by transmitting their stored data to the reader. Passive (battery-less) RFID tags, read-range can vary from less than an inch to 20-30 feet, while active (self-powered) tags can have a much longer read range. The data is then sent to a distributed computing system involved in supply chain management or inventory control.
ABI Research's RFID Service provides qualitative insight and five year forecasting based on movement in key RFID vertical markets and their related application markets.
Founded in 1990 and headquartered in New York, ABI Research maintains global operations that support annual research programmes, intelligence services and market reports in a number of sectors.