The RFID market is set for further robust growth despite many a challenge. While turnover is likely to increase by an average of 19% p.a. in Germany between 2006 and 2016, the pace may reach as high as 25% p.a. worldwide. With the shift in the market shares of individual RFID components and the exodus of production of less sophisticated products from the high-wage countries, Asia is likely to contribute an ever increasing share and become the continent with the strongest turnover by 2016.

RFID links the physical good with the corresponding information. In fact, the RFID principle has been used in a broad spectrum of military and civilian applications for decades. However, it was not until the introduction of the electronic passport and the use of RFID tags on some consumer goods in the retail sector that public interest in the technology surged.

Political and technological challenges will shape RFID's commercial outlook. In the technology area, the issues seem to focus primarily on energy consumption, production costs, manufacturing speed and reading errors, while politically the focus will be on frequency harmonisation, standardisation, and environmental and data protection.

Not every RFID project driven by a technological vision will necessarily become a commercial success. Before they start using RFID, companies must take a critical look at the cost and income aspects.

RFID promotes innovativeness in the economy as a whole. RFID-based process automation not only boosts the efficiency of innovative companies, it is also instrumental in expanding the overall supply of goods and services.

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About the Author:

The author is working as Senior Economist at Deutsche Bank Research since 2000. His main responsibilities are the economic analysis of structural changes caused by innovative information and communications technologies. Before moving to Deutsche Bank, Dr. Heng worked in a Research Group of Deutsche Forschungsgemeinschaft (German Research Foundation). He was awarded a doctorate by the University of Mannheim in 2000 for his thesis about the economic impacts of road traffic in Germany. Dr. Heng is the author of several studies and essays. Amongst others he is affiliated as referee to the International Telecommunications Society (ITS), and as Young Leader to the Atlantic Bridge association.