RFID. Opportunities Expected in the

Europe Frost & Sullivan: Although by no means a new technology, Radio Frequency Identification (RFID) is generating increasing interest in Europe due to its many advantages over the currently used trace-and-track technologies. RFID projects are proliferating in a variety of markets such as retail, transportation, pharmaceuticals and livestock, propelling companies and suppliers to adopt the technology in a bid to cut down costs in the supply chain while enhancing productivity.Spending on RFID-related hardware, software and services in Europe will exceed EUR5 billion in 2007. While the retail and government vertical markets are likely to lead this spending, transport and logistics as well as manufacturing are also likely to contribute significant shares.

Currently, the high prices of transponders or tags are a major obstacle to the mass adoption of RFID. Manufacturers need to price these components more realistically for RFID to enter the mainstream and realise its true potential in the supply chain. Although this could take time, tag costs are already dropping. Further price decreases are likely to positively impact manufacturers’ unit shipments and encourage them to attempt more large-scale projects.

As far as the opportunities for mobile operators are concerned,RFID holds great potential for operators seeking to increase average revenue per user (ARPU), especially revenue from the low-margin data services. European operators have a key role to play in the transport of RFID data from field locations to the back office for at least either one of these two reasons. First, it is the best technology to allow remote access on a large scale, and second, through the process of fixed-mobile substitution, it replaces fixed telecommunications lines where these have been the preferred data transport method in the past. While Frost & Sullivan does not expect significant opportunities in RFID projects to materialise until 2007, it recommends that mobile operators start developing and putting strategies in place to take advantage of these opportunities. It believes that the market will start gaining traction around 2007 due to the ongoing fixed-mobile substitution.

Currently, the extent of the operator’srole in a RFID implementation seems to be confined to acting as a conduit for mobile and data traffic. However, many larger European operators are beginning to realise that their contribution to the market could be significantly higher. As the market develops, mobile network operators and wireless local area network WLAN) providers are likely to gain over fixed telecom networks in terms of carrying increased RFID data. The volume of data generated to increase tremendously - to the point where mobile operators could well be transporting volumes of RFID generated data that could be measured in terabytes through their networks in 2009. Frost & Sullivan Publ 20050516