Since I began studying the market, I’ve been saying that RFID will evolve similarly to barcode and will undergo broad adoption throughout global value chains. I’ve also been saying that in order to attain broad adoption for many RFID solutions, a consumable tag would be required – a tag that would need to meet user performance and price expectations, as well as supplier community gross margin requirements. The market has been moving in this direction for a while …
A consumable is defined as a required product or component that is depleted or disposed of after use and has recurring demand. An example of a consumable is a printer cartridge or label. An industry that uses a consumables model is typically highly price sensitive, more mature, commoditized and competitive.
Translation: If you are going to make money in this market, you better have extraordinary volume or another source of profit.
This idea of transponder as consumable has been a dominant industry and market development theme since we first observed it over a decade ago, and recent information from our 2010 RFID Business Planning Service end user survey reinforces the notion.
There are many data points that support our statement, but what I’d like to talk about in this blog is how the transponder market is showing signs of shifting toward a consumables-based model.
So … is the RFID transponder market shifting toward a consumables model?
According to our latest research, nearly 50% of end users who responded to our survey (N=342) cited use of transponders that are disposed of after use. In addition, respondents citing an installed base of transponders in excess of 250,000 stated that at least half of their transponder volumes were considered to be a recurring consumable.
For larger users of RFID transponders, the answer would be yes.
Ok … so what does this mean to the RFID community?
When will this shift occur?
Gradually, unevenly, and over an extended period of time - not unlike the bar code label market.