7th April 2006 - 2 Million RTLS Tags to Ship in 2010

2 Million RTLS Tags to Ship in 2010

Market research firm In-Stat of Scottsdale, Arizona, this week released a report covering the Wi-Fi segment of the overall realtime location systems (RTLS) market. The firm predicts shipments of Wi-Fi tags will reach almost 2 million in 2010. RFID Update spoke with Gemma Tedesco, author of Wi-Fi Finds Itself in the Real Time Location Systems Market, about the findings.

"It's a very small market yet," said Tedesco referring to the Wi-Fi segment of RTLS. But it's growing, as Wi-Fi infrastructure becomes more common worldwide and RTLS itself finds new applications. Last year, only about 20,000 Wi-Fi tags were sold collectively. At roughly $50 per tag, that amounts to $1 million in tag revenue.

While this sum is small indeed, it is expected to grow dramatically. In-Stat estimates that at the projected 2 million tags for 2010, tag revenues could reach $28 million. This estimate assumes $14 tag cost, which seems likely given technology innovations, recent and future.

Tedesco cited the new RTLS chipset technology from G2 Microsystems, officially released last week. The chipset is expected to dramatically decrease the cost and form factor of RTLS tags. By some estimations, the current tag price of roughly $50-60 could fall to $30-40 in the near term. "It's just going to get cheaper and cheaper and cheaper," said Tedesco.

Regardless of the tag pricing trends, Tedesco emphasized that the Wi-Fi RTLS providers are not staking their futures on tag revenues. They recognize that tags will eventually become a low-margin commodity and are instead looking to software solutions and applications as their profit center. "The tags will be commodities, and [the Wi-Fi RTLS providers] really won't be making much money on them. So they're really focusing on their software solutions," said Tedesco.

Another point noted by Tedesco was how big a customer the healthcare industry is for the Wi-Fi RTLS providers. Wi-Fi RTLS is "a perfect application for healthcare," she said, because the high value of commonly lost or misplaced assets like wheelchairs and medical equipment justifies attaching expensive tags. But healthcare alone cannot provide long-term high-growth opportunities, so a challenge for the Wi-Fi RTLS providers will be penetrating other verticals. "It remains to be seen if Wi-Fi can prove itself as a technology suitable for environments beyond just healthcare," commented Tedesco. She cited other markets where employee safety is an issue, like mining, but said that those markets have yet to yield big sales. Again, the anticipated drop in tag prices will help.

Note that Wi-Fi represents just one segment within the overall RTLS market. Those RTLS providers that do not use Wi-Fi technology in their solutions (like Radianse, RF Code, and WhereNet) were excluded from the In-Stat report. For more on the technology differences among RTLS solutions, as well as projections for the entire market, see the following four-part series from RFID Update, contributed by Yankee Group analyst Marcus Torchia