Most of today's RFID business is booming. Many countries are eagerly adopting RFID—the US being the biggest example, with the largest number of RFID case studies in action, and orders that are often the world's largest by value, according to new research by IDTechEx. It has even pulled ahead in the last year, with over 840 recorded projects. More surprising is the UK holding second place by number of cases, though not the money spent, where China has more claim to fame and Korea and Japan are strong rivals.

The boom in RFID is a global phenomenon, increasingly focused on labels and packaging, not the least in government applications. “The aerospace and defense industries are on a rapid RFID adoption path with substantial benefits anticipated in the next several years,” explains Steve Georgevitch, Total Asset Visibility program manager of Boeing Integrated Defense Systems. One interest here is sophisticated labels for aircraft parts and equipment where individual labels can cost as much as $8.

The airline trade association, IATA, has replaced two incompatible standards for RFID baggage tags with one, and this has led to orders for more than 250 million such tags in 2006. They look just like the conventional paper label and still use the barcode and overprint as backup. “In the next few years, the air industry will be tagging an ever higher proportion of its two billion bags yearly, and it will use RFID in other new applications as well,” says Andrew Price, RFID manager at IATA.

The only disappointment has been the mandates from major Western retailers that their consumer-goods suppliers fit RFID tags to all pallets and cases. The vast majority of CGCs get no payback on this—all the benefits going to the retailer instead. In that respect, it's similar to the history of anti-theft labels. With these tags, it costs as much to fit them as to buy them, and there's the added cost of electronic equipment and testing. There are also technical problems.

Little wonder then that the consumer-goods makers are dragging their feet. Only 150 million to 300 million such labels will be applied this year, and then at the heavily loss-making price of about 10 cents apiece, causing the label-converting industry to lose money as well. Potential remains at about 30 billion pallets and cases worldwide, but some mutual benefits need to be established.

The RFID labeling industry prospers in many sectors with profits of up to multi-millions of dollars. However, in some sectors—retail and consumer goods, for instance—losses of up to tens of millions of dollars have been reported. The moral of the story is to sell to eager customers that can afford your product. But that is true of everything in industry.

All the experts quoted in this article will offer presentations at the “RFID Smart Labels USA” conference, set for Feb. 21-22 in Boston. More info and to register: www.smartlabelsusa.com