Spending on RFID will grow only modestly during the next few years, according to a survey of 500 companies conducted by AMR Research.

RFID Insights reports:

"The 500-company survey suggests modest growth in spending for RFID during the next few years. The survey suggests modest growth in spending: a 16% increase from 2005 to 2006, jumping 20% from 2006 to 2007. Market acceleration, however, for mainstream adoption will not occur until at least 2008. Although these are good growth rates for an emerging technology in a mature supply chain management market of 3% to 4%, AMR suggests they do not support the market hype or over-inflated expectations of many investors.

Perhaps it's because RFID deployment budgets will remain small and uncertain. Large companies with more than 5,000 employees this year have budgets just under $1 million, up to approximately $1.2 million in 2007. On a promising note, 42% of respondents say they have given RFID its own budget line item. On average, RFID represents 9.1% of the overall IT budget for 2005, AMR says."

The thing I want to point out about a study like this, is that it's limited primarily to supply chain applications of RFID. It doesn't appear to have any direct bearing on plans to use RFID in other ways, such as livestock tracking, contactless payment systems, security applications, and the like. So, don't confuse this report with other reports talking about different RFID markets.

Read the AMR Research abstract of the study here.