Despite tough economic conditions, the market for radio frequency identification (RFID) equipment has grown by 8 percent annually since 2000. That's the assessment from market research firm Venture Development Corp. (VDC) of Natick, Mass. According to VDC's research, the global market for RFID systems totaled some $964.5 million in 2002. Transponders accounted for nearly half (48 percent) of those sales, followed by readers with about 25 percent of total sales. (See chart.)

Transportation, security-access control, and toll collection remained the key applications for the RFID market. VDC forecasts that in the future, companies will use this technology for supply chain management and real-time location systems along with baggage handling and point-of-sale data collection. The so-called "ePC" initiative, which seeks to use RFID technology for marking and tracking items moving through the supply chain, could play a factor in equipment sales, the market research firm says.

Security concerns clearly impacted sales last year, according to the report. Companies employ RFID technology for such security-related applications as employee identification and access control.

Despite the growing interest in this technology, VDC said, the market was a "waiting game" as companies hold back on major purchases until standards are adopted and hardware prices drop. "The end users are coming out, but not their wallets," said VDC analyst Michael Liard. "The excitement surrounding RFID has not translated into explosive sales."