Demand for RFID tags and technologies to remain soft until picking up by the end of 2009

NATICK, Mass., 12 May 2009. Demand for radio frequency identification (RFID) technology should stabilize and return to growth by the end of this year, after the RFID market softened in late 2008, with a market downturn that should continue at least until this summer, say analysts at VDC Research Group in Natick, Mass.

Experts in the RFID tags and technologies supplier community say they believe the negative segments of the market will stabilize during the next six months, and return to growth as early as the fourth quarter of this year. Market growth should accelerate by mid-2010, VDC analysts say.

Overall, however, demand for RFID solutions should grow about 11 percent this year, after reaching nearly $4 billion in 2008, VDC researchers say.

Demand for RFID solutions softened in the fourth quarter of 2008, and continued to contract in the first quarter of 2009. Based on current opportunity pipelines and sales cycles, the next two quarters will continue to present challenges to suppliers and their channel partners.

The slow, uneven growth is influencing most RFID market segments -- even those that have demonstrated continued growth, attractive return on investment, and tangible operational improvement are experiencing funding challenges. Applications supported by suppliers with established business models such as security/access control, asset tracking, and supply chain management, are slowing in the expansion of existing installations and the development of accounts.

Enterprises are reducing their RFID budgets significantly and delaying their current RFID strategies due to the recession. "more than 80 percent of the adopters in 2008 and 2009 anticipate using less than 50,000 transponders and expect to attain their ROI in less than nine months," says – both of these values are down more than 30 percent as compared to last year." says Drew Nathanson, RFID practice director at VDC. "Both of these values are down more than 30 percent as compared to last year."

RFID solution spending will dampen in 2009, deployments will be delayed or scaled back, and investment in technologies/solutions and research and development will slow as companies try to conserve capital, VDC analysts say.

For more information contact VDC online at www.vdcresearch.com.