08 June 2006 | Paul Snell
Overselling the features of radio frequency identification (RFID) has sent the market into a "trough of disillusionment", according to a leading analyst.
John Davison of research firm Gartner G2 told the RFID global partnering symposium in London last month: "The benefits of RFID have been oversold." He added that the slump in demand for the tags would end in the next 18 months and the market would continue to mature, until reaching a plateau in 2018.
Ivano Ortis, programme manager at research firm IDC, agreed that the RFID industry was now entering the "realist season". He cited more efficient procurement, an increased quality of service and a better regulatory environment as future influences.
The conference also heard how innovation will not be driven by high-profile and large-scale retail projects, such as those of Marks & Spencer or Wal-Mart in the US, as use of the technology has tended to be limited in scope, concentrating on measuring stock levels with tagged items or deliveries.
The financial and security uses of RFID are expected to lead growth in the industry. Dr Peter Harrop, chairman of RFID research company IDTechEx, pointed to the proposed addition of the technology to
4.5 billion credit cards, and a $6 billion deal to provide the tags on Chinese identity cards.
During a panel discussion, delegates also heard how lower costs are becoming less important, as companies that can see the benefit of tagging are willing to pay more for increased functionality.