I International Workshop RFID and IoT - Dia 20 - The Global RFID Market and Future Prospects - Dr. Raghu Das - IDTechEX Ltd

Copyright © 2013 IDTechEx | www.IDTechEx.com
The Global RFID Market and
Future Prospects
Raghu Das / r.das@IDTechEx.com
IDTechEx / www.IDTechEx.com

Agenda
• About IDTechEx Research
• RFID: The Big Picture
• A Brief history of passive HF and UHF RFID
• Market Size analysis
• Value Chain and Tag cost analysis
• Case Study analysis
• New technology trends
• Summary

Overview of IDTechEx
IDTechEx provides market research that guides your critical strategic
business decisions on printed electronics, electric vehicles, emerging
materials, energy harvesting, energy storage and RFID/WSN. We provide:
− Market research reports
− Events
− Consultancy
We are technical, impartial and experienced in our chosen research topics.
•Globally cited analyst team combining technical analysts (most have PhDs)
and successful business leaders.
•Global Research: in Q1 2013 we visited Japan, USA, Germany, Belgium
France, UK, The Netherlands, Canada, etc
•Hundreds of interviews are conducted each year as part of our global
research programmes with organisations across the value chain
•60,000 global contacts in our targeted contact database of the RFID, RTLS
and WSN industry

Leading companies are our research clients

RFID Technologies: The Big Picture
Technology
type
Main Options Highest volume
application
No. of
tags 2013
Custom
“chipless”
Magnetics, printed
conductors, transistors
Promotional vouchers,
access control
10’s of
millions
Passive RFID LF, HF, UHF HF – contactless cards
UHF – apparel
Billions
Battery
assisted
passive RFID
HF, UHF. Improve
performance or add
sensing
Logistics (performance)
Medical (sensing)
100’s of
thousands
Active RFID 1st Gen. Point to point
2nd Gen. Real Time
Location Systems
RTLS
3rd Gen. Mesh WSN
1st Gen. Car clickers
2nd Gen. Medical and
manufacturing
3rd Gen. Smart meters
10’s of
millions
Increasingcost

RFID Choices of Parameter are Astronomic
Magnitude of Choices
Frequency 3 Hz to 30 GHz 10
Order number 1 to 1 billion 9
Range 40 microns to 400m + 7
Tag size 0.1 to 10M Cubic mm 8
Tag price 0.1¢ to $1,000 6
Project cost $0.6k to $6bn 7
One order of magnitude is a 10x difference
RFID is an enabling technology –
not a single product
Adopters need to consider the best
RFID solution for the problem
Huge Opportunity for Vendors:
RFID has widespread application to
almost all forms of human
endeavour
What are the best markets to
prioritize? What is the optimal value
chain positioning?

A Brief History of RFID
Cumulative sales of tags from 1943 to the start of 2013
•DIGITALLY‐ENCODED LOW COST RFID TAGS ABOVE 0.1cm RANGE
•Worldwide sales cumulative numbers for cards, labels, fobs
•Chip 19.9 billion (2012 – 4.8 billion sold)
− Passive: 19 billion
− Active/RTLS: 910 million
•Chipless 230 million

A brief history of passive HF RFID
Manufacture
Cost Today
Application
maturity
Main
applications
Application
profile
Profitability
6.8 to 17.5 +
US cents
Mature with
some
standards
being set
well over a
decade ago
• Contactless
cards (transit,
access, ID,
payments)
• Tickets
• Passports
• Books
• Medical
• Assets/tools
Strongly
government
driven rather
than industry
driven
Usually
strongly
profitable
HF RFID (13.56MHz):
10.4 billion tags (labels, cards, fobs)
sold to 2013

A brief history of passive UHF RFID
Manufacture
Cost Today
Application
maturity
Main
applications
Application
profile
Profitability
4.7 to 14.5 +
US cents
Embryonic • Retail apparel,
shoes
• Medical
• Assets/tools
inventory
• Logistics,
conveyances
• Airline baggage
Industry
driven rather
than
government
driven. Some
gov. now e.g.
road tolling
Shakeout and
consolidation
in recent
years. A few
are profitable
on an
operating
level
UHF RFID (around 900MHz):
6.8 billion tags (labels etc)
sold to 2013

UHF passive RFID in retail – direct fit to
the hype cycle curve
1999 2004 2008 2012
Wild enthusiasm
that tens of billions
of pallets/ cases
could have sub 10
cent tags and
trillions of items a
year in
supermarkets lower
cost tags
Wal‐Mart, Metro
etc mandate some
CPG suppliers to
tag pallets/cases.
CPG co’s and the
RFID industry lose
$100’s millions
trying to comply.
Mandate
withdraws.
Technically
difficult.
Attitude
MIT concept
of low cost
tags on
everything
Marks & Spencer
does it right with
focus on ROI in
manageable
infrastructure,
others do the
same
Period of huge investment Period of consolidation Sustainable
profitable
growth

Cumulative sales in millions of tags from
1943 to the start of 2012
Application
Number
(millions)
Biggest markets by
number
Drugs and healthcare 227
Retail apparel and CPG Pallet/case 2360 2 – mostly UHF
Consumer goods 75
Tires 0.1
Postal 45
Books 640
Manufacturing parts, tools 606
Archiving (documents/samples) 44
Military 293
Smart cards/payment key fobs 4940 1 – mostly HF
Smart tickets 1715 3 – mostly HF
Air baggage 345
Conveyances/Rollcages/ULD/Totes 252
Animals (Livestock and Pets) 886 4 – mostly LF
Vehicles 60
People (excludes other sectors) 112
Car clickers 780 5 – LF and active RFID
Passport page/secure documents 335
Other tag applications 1382
Total 15097.1
• Very diverse,
unrelated
applications,
addressing
different problems
• Room for different
technologies

In 2012, passive UHF overtook HF for the
first time by numbers of tags
Application 2012 2013
Contactless
cards/fobs 1100 1250
Smart tickets 500 600
Books 85 90
Medical 20 22
Assets/tools 100 105
Passports 70 75
People 4 5
NFC apps (not
payment) 1 3
Other 20 25
Total 1900 2175
Passive UHF (millions) Passive HF (millions)
[ LF 527million 2012, 646 million
2013 ]
CAGR based on IDTechEx research 2012-2018: UHF 33% HF 14%
Retail apparel, shoes 1675 2200
Retail items other 20 25
Logistics, roll cages
conveyances 100 125
Asset management/
inventory 400 500
Medical/health care 15 18
Air baggage and
cargo 70 72
Access
Control/ticketing 1.2 1.5
Embedded 10 15
People 20 22
Other 50 65
Total 2361.2 3043.5

… but lags considerably by value
Contactless
cards/fobs 1650 1812.5
Smart tickets 55 63
Books 15.3 15.3
Medical 3.6 3.74
Assets/tools 18 17.85
Passports 224 232.5
People 4 5
NFC
applications 0.18 0.51
Other 3.6 4.25
Total 1974 2154
Passive UHF ($ millions) Passive HF ($ millions)
[ LF $619million 2012, $713
million 2013 ]
2012 2013
Retail apparel and
footwear 127.3 162.8
Retail-other 1.52 1.85
Logistics 14.0 16.9
Asset management/
inventory 56 67.5
Medical/health care 1.1 1.3
Air baggage 5.32 5.328
Access Control
/ticketing 0.0912 0.111
Embedded 0.25 0.375
People 2.8 2.97
Other 3.8 4.8
Total 212 263

Passive RFID Interrogator Outlook 2013
Type
Number
(millions)
Market size ($
millions)
UHF Fixed portal 0.035 47
UHF Embedded and handheld 0.24 90
HF and LF Hand held, fixed,
embedded 5.5 770
LF Vehicle 26 78
NFC Cellphone 250 525
Total 282 1510
• HF readers are simpler devices – can cost $10’s of dollars. UHF are more
complex devices.
• NFC: the world’s biggest RFID reader infrastructure is barely used today!
Driven by product differentiation. Hope for build it and they will come?

Total RFID Market Size and Outlook
$Billions2013 - $8.27 Billion
• Cards $3.2bn; Labels/tickets/fobs $5.07bn
• Passive $7.29bn; Active $0.98bn

Passive RFID Value Chain
Licensors of inventions and consultants
BIGGEST ORDERS so far
$50M $50M >$111M $6000M
Chips
Chip +
antenna
modules
Label rolls
and
dispensers
System
Operators
and Facilities
Management
System
Sellers,
VARs,
channel
partners
and
IntegratorsInterrogation
Electronics
Software
Horizontal (selling to anyone) Vertical (specialising)
Antennas

Manufacturing Labels, tickets and cards
Source: IDTechEx
Components and other raw materials
Equipment
Substrate, inks,
other raw
materials
RFID chips
Label stock raw
materials
Manufacture
RFID
antenna
Finish (and
apply)
label, ticket
or card
Populate
RFID
circuit
Produce
RFID
label, ticket
or card
RFID
antenna
RFID
tags
RFID Enabled
labels etc
products of
commerce
RFID chip
manufacturing
equipment
RFID antenna
manufacturing
equipment
RFID enabled labels
etc manufacturing
equipment
label applicators and
printer applicators
For highest volume markets, there is insufficient tag price to give profit to all
the companies doing little bits of this value chain. Oversupply in 2005-2010,
now consolidated

Tag Price Comparisons
Component Typical cost today for UHF Typical cost today for HF
Chip 1.8 - 6 US cents or more e.g.
UHF EPC Gen2
2 - 20 US cents or more,
depending on chip.
Chip attach (e.g. flip chip) 1.1 – 2.5 US cents 1.5 – 2.5 US cents
Adhesive – chip to substrate 0.4 US cents (e.g. from
Delo)
0.4 US cents
Antenna and substrate 1 - 2 US cent from various
vendors
2.5 US cent from various
vendors
Antenna manufacture
equipment depreciation,
processing cost
0.1 to 1 US cents depending
on equipment cost, energy
required etc
0.1 to 1 US cents (usually
slightly more than UHF
where HF tags are larger)
Cost of non working tags i.e.
yield due to defects.
Automated machines may
achieve 96 to 99% yield
0.3 to 0.6 US cents 0.3 to 0.6 US cents
Total typical cost range per
tag (volume dependent)
4.7 to 14.5 cents or more 6.8 to 17.5 cents or more

Passive UHF RFID – after the shakeout
Main passive UHF inlay manufacturers in 2012
Company Market
share*
IDTechEx Comment
Avery Dennison 1 Took a big loss but withstood the shakeout,
profitable operation but may not have recouped
investment yet. Belatedly moved into HF
Smartrac 1 Highly profitable. LF and HF for access, passports
etc. Acquired UPM’s UHF business
Alien
Technology
2 Took a big loss but withstood shakeout. May have
profitable operation but not recouped investment.
Moved downstream, offering readers.
Others e.g.
Invengo, etc
3 Chinese and others enter. Many smaller operations
with custom antennas for different applications
* IDTechEx estimate

About
1,000 RFID
companies
globally
$100+ million
Allflex Australia
Assa Abloy Europe
Avery Dennison US
Nedap Europe
NXP Europe
Smartrac Europe
3M US
$20-$100 million
AeroScout/Stanley US/ Israel
Alien Technology US
ASK France
Datamars, Europe
Feig, Germany
HP USA
Identive Group Europe/US
Impinj US
Motorola US
Ubisense UK
Zebra US
Under $20 million
Majority
IDTechEx
estimates

2013 RFID value chain positioning
• 2008-2012 saw a much needed consolidation in tag manufacture
(UHF RFID)
• Successful companies on the left engaged with end users for pull
through demand
• Biggest orders are on the right of the value chain – systems
supply/management
• Systems integration tends to be localized to a geography or by
application.
• Ultimately, it is all about the value the technology provides, one
vendor told IDTechEx “When we called ourselves a RFID company
it was a disaster. When we called ourselves a solutions company we
had success” - Euro180million company

Case Study Analysis: What are the “hot”
applications and why?
Rapidly growing applications for passive RFID are:
1.Apparel item level RFID (UHF)
− Marks & Spencer apparel, Wal-Mart…
2.Asset Tracking/Inventory (UHF) – closed loop
− Equipment, tools, inventory, medical …
3.Transit Ticketing (HF) - government
− transit ticketing
4.Animals (LF) – government
− Sheep, cows, pigs…

1. Apparel Item Level RFID
2005: Passive UHF RFID needed
to find a problem it could fix.
− Retail pallet/cases was not
the answer. Payback was
uncertain and probably not
that much vs huge
investment needed.
− It only promised cost
reduction. Retailers and
CPG companies, however,
want more sales (and have
larger budget here)
− Technically too difficult at
the time
Perhaps ironically, item level
tagging happened first…

The problem
“” Stockouts at clothing retailers can
cost six percent of sales. A quarter of
these items are typically in the retailer’s
store.””
“” Some specialty retailers will only have
one or two items of a particular color or
size on the floor.””

Why tagging apparel with RFID is successful:
•Minimal infrastructure cost per store – initially 2 hand
helds, and one portal on average – approx $5K
investment
•Suits technical capability of passive UHF
•Payback does not break down if some tags are not
read - something good is better than nothing
•Typically high value or high replenishment items
•Relatively easy process change – non RFID labels
were previously applied to clothing

Results:
•Retailers interviewed by IDTechEx report sales uplift
from 4 to 20% without increasing stock levels.
Plus
•Reduction in manual stock counts
•Better knowledge of where stock is throughout the
company
•Soon: RTLS and EAS
Many stores are in roll out or full adoption
e.g. Walmart, American Apparel, Macy’s, Zara, JCP,
Marks & Spencer, Memove…
Others are in pilot and evaluation.
Total Addressable Market approx. >40 Billion per year
(2013 will be approx. 2.2 Billion).

2. Asset tracking/inventory
2013: passive UHF 400 million tags
Leveraging the high performance now
available from UHF G2 at low price points.
Applications are very diverse, usually 10,000
to a million tags per location, but offer rapid
ROI (typically 12 months) by increasing
efficiency, reducing cost, increasing safety,
convenience etc

3. Transit Ticketing
The Problem: Growing cities need an efficient
transportation system.
Contactless card systems deployed in major
cities for frequent users. One-time use
“magnetic stripe” tickets cost US $0.04 but need
extensive mechanical reader maintenance –
costing >$0.1 per ticket.
Single use RFID tickets can leverage solid state
infrastructure and improve passenger
throughput.
2013: passive HF 600 million tags
(Moscow transit use 25-30 million a month)

4. Animal Tagging
The Problem: Food traceability, identifying disease, stopping disease,
yielding maximum return on best cattle
Widespread diseased meat or unknown food sources can cripple major
economies, or terrify consumers!

4. Animal Tagging
Government mandates force RFID adoption.
Tags can also help farmers monitor cattle
and find best livestock for breeding, wool etc.
2013: passive LF (some use HF and UHF)
375 million tags
New laws may only be satisfied by RFID: e.g.
EU directive in 2013 calls for animals being
able to roam for a certain amount of time.
RTLS providers believe they are the only
viable solution to monitor cattle health –
indeed – they can even detect if a cow is
pregnant by how it moves.

4. Animal Tagging
RFID vendor case study:
Allflex, animal tagging solutions company.
Bought by Electra in 1998, investing $45
million as the EU tightened beef regulations
after the mad cow disease crisis
Became a leader in animal identification
using electronic reader technology, implants
and tissue sampling.
In May 2013, Electra Partners sold Allflex to
private equity company BC Partners for about
$1.3 billion

Government has so far driven RFID
adoption more than industry
Largest orders are placed by the Government
•China National ID Card $6 billion HF
•ACS for New York/ New Jersey EZ Pass $500 million UHF Active
•US DoD $ 1 Billion in orders 433 MHz Active
•E-passport infrastructure in 70 countries HF
•Animal tagging demanding 375 million tags in 2013 LF
•Transportation Systems e.g. London Transport $1.6 Billion HF
•US Gov Accountability Office gives $543 million contract to HP RTLS
Governments do not always need ROI like industry – they seek security,
safety, efficiency, world-class prominence
Usually, suppliers are highly profitable on these projects

Case Study
Assessment
from the RFID
Knowledgebase
IDTechEx has tracked 4,603
case studies in 124
countries. Here are the
trends.
US and Europe about equal,
Asia rising. South America
growing quickly

Project Status

Frequency Band

Application

1 2 3
WSN
RTLS
Conventional
Generation 1 = Conventional active RFID
433MHz, 2.45GHz etc. ISO standards exist
E.g. car clicker $2bn so far, non-stop road toll $0.5 billion
order recently, military supplies $0.5 billion
Generation 2 = Real Time Locating Systems
433MHz, 2.45GHz, UHF, WiFi, UWB,
Ultrasound…
Some large orders emerging but most are small orders
of a few million dollars as yet. Acquisition frenzy and
many newcomers
Generation 3 = Mesh and WSN
Tags are readers. Form adhoc networks. Monitor
condition.
time

Envisaged applications for WSN
Energy Saving
Predictive
Maintenance
Improve Productivity
Smart Home
Healthcare
Improve Food & H20
Remote Controls Gaming
Price Display
Transport and Assets
Tracking
Source: Jennic

Energy Harvesting to overcome battery lifetime
limitations?
Deployed in 300,000 buildings, mainly
as switches and sensors
Evaluated by car companies
Used in trains, aircraft etc

*Software, infrastructure, installation, commissioning etc
ACTIVE PASSIVE
Small project Large project Small project Large project
Tag cost 10% 30% 20% 50%
Other cost* 90% 70% 80% 50%
Cost structure of active vs passive RFID
projects

Active RFID / RTLS / WSN
• End users have a large choice of different protocols – some may
become obsolete. So-called interoperable systems are sometimes not.
Standards may not be optimal. It is confusing!
• The successes are typically in small, closed loop installations with
proven ROI rolled out in a “cookie cutter” approach
• Start-ups that became successful tend to have a strong software and
hardware offering, provide a complete solution, and do some
integration.
• As with passive, big orders are government driven e.g. $543 million
contract to HP, US DoD orders totalling over $1 billion, smart meter
mandate

NFC/RFID enabled cellphones
• NFC – a standard of standards: ISO 14443 A;
ISO 14443 B; Sony “type C”
• Enabled by Samsung, Nokia etc seeking
product differentiation in smart phones
• Can enable a huge RFID infrastructure at no
cost to retailers, consumers etc – far bigger
than any other RFID network, with 250 million
RFID phones to be sold in 2013
• Beyond payments and data sharing, use cases
are small scale, pilots. Business models not
mature.
• Many retailers we interview say that they are
waiting for Apple to adopt NFC
A ubiquitous RFID
reader network…

Options for ultra low cost “tags”?
Printed electronics will not impact Si RFID IC, may be used for the antenna, but it will
enable smart packaging/ products etc and use the interface as RF power.

The Internet of Things (again)
Term developed by MIT Auto ID
Center in 2000. UHF RFID industry
is much more pragmatic today.
Different services, technologies,
meanings.
Now often used by those in wireless
sensors, smart devices, M2M etc.
>> the challenge will be linking up
these disparate systems that do no
communicate with each other today.
>> potential to confuse end users.
IoT is a vision but users want to see
real added value. IoT is a system but
users want solutions: we need to
define what the solution (and before
that, the problem!) is.
>> scope to be driven by consumers
– e.g. LBS, Google, Apple, Samsung
etc

Trends by Territory
North America
32%
Europe
32%
East Asia
33%
South America
1%?
Strong Gov.
Backing
Strong UHF, HF
Many in roll-out
Strong supplier
base
Strong Gov.
Backing
Strong HF, LF
and UHF
Many in roll- out
Strong supplier
base (but more
localised by
country/
fragmented)
Strong Gov.
Backing
Strong HF, LF
Many in trials,
some roll-out
Rapidly growing
supplier base,
country specific
Strong Gov.
Backing now
coming in place
More and more in
trials, a few roll-
outs
Emerging
supplier base
- Fabs coming
online in Brazil
etc

Summary and Conclusions
• Great time to get involved in RFID
− End users can see the benefits from competitors/other industries;
− Good reference case studies exist;
− Technology performance vs cost is very good thanks to others investing
huge amounts over the past decade which you can leverage
• Huge opportunities exist: still a very embryonic industry which has barely
touched most application segments
• Governments have driven many RFID projects. Industry now waking up.
• Be careful of hype – that is not where the profit may be. Know what the
problem/driver is.

For more read:
www.IDTechEx/research

www.IDTechEx.com / r.das@IDTechEx.com
IDTechEx provides ongoing support to your business and carries out special
projects: market and technology appraisal, competitive assessment,
masterclasses, technology forecasting, acquisition and investment targets,
opportunity evaluation …
Offices:
USA Tel: + 1 617 577 7890
UK Tel: + 44 1223 813703
Germany Tel: + 49 3020659 455
IDTechEx supports
your strategic business decisions
on emerging technologies

Presenter – Raghu Das
Raghu Das, CEO of IDTechEx, studied physics at the University
of Cambridge. He has been closely involved with the
development of RFID and printed electronics for fourteen years,
carrying out consultancy in Europe, USA, Asia and the Middle
East. Examples of recent work includes:
•Mr Das has completed a study for a $73 billion public organization in
the US, benchmarking its internal processes and new identification
system against RFID.
•A major systems integrator wanted to buy an RFID company. Mr Das
provided due diligence and based on our advice they decided not to
invest.
•Providing consulting for a $40 billion company who was looking to
participate in the printed electronics market and leverage their expertise
as a global materials company…
Contact r.das@IDTechEx.com Tel: +44 (0) 1223 813703

Varied company positioning
Licensors of inventions and consultants
BIGGEST ORDERS so far
$50M $50M >$111M $6000M
Chips
Chip +
antenna
modules
Label rolls
and
dispensers
System
Operators
and Facilities
Management
System
Sellers,
VARs,
channel
partners
and
IntegratorsInterrogation
Electronics
Software
Horizontal (selling to anyone) Vertical (specialising)
Antennas

I International Workshop RFID and IoT - Dia 20 - The Global RFID Market and Future Prospects - Dr. Raghu Das - IDTechEX Ltd

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I International Workshop RFID and IoT - Dia 20 - The Global RFID Market and Future Prospects - Dr. Raghu Das - IDTechEX Ltd