The use of RFID (radio frequency identification) tagging is expected to increase during 2005 as businesses scale up their deployments.
In 2004 most companies using RFID started with small scale operations. The predicted wide scale roll out of the technology did not occur.
Analyst ABI Research said, however, that this year companies would increase their investment in the electronic tagging system by integrating RFID into their normal operations.
"We are seeing companies increase their RFID budgets three to five times this year compared with 2004," said ABI Research analyst Erik Michielsen.
ABI said that while many smaller RFID suppliers were involved in trials during 2004, its feedback from end-users indicates these companies will largely return to their traditional technology partners for bigger and more integrated solutions.
Michielsen said, "In 2004 we saw many end-users working with smaller RFID companies. But the big-name relationships didn't come, because they weren't necessary.
"Now, if companies are going to make a big investment in RFID tags and readers, they'll turn to the partners traditionally able to meet their needs, who can provide a global service. Many RFID companies can't do that."
The analyst expected that global consumer goods manufacturers like Johnson & Johnson, Campbell's Soup, Gillette, Kimberly-Clark, Kellogg's, Kraft, Nestle Purina, Proctor & Gamble and Unilever, would be looking for familiar business partners to work with on their RFID strategies.
ABI expected that suppliers like Avery Dennison, CCL, TI, Philips, LXE, Symbol, and Zebra would get more involved in offering RFID products this year, supported by IT suppliers like Cisco, IBM, Microsoft, Oracle, SAP and Sun Microsystems.