VDC Research: RFID, Barcode, Retail Automation & Self-Service Market Blog

Embedded Sensing & M2M Enable Advanced Efficient Agriculture with RFID

The VDC team received a very interesting briefing from RFMicron (Austin, Texas) on an IC component aimed at solving a problem seen with passive RFID tags. In addition to increasing the performance of the RFID tag, the new chip (called Magnus) actually allows the tag to perform additional functions and, as a result, we believe that this product has many potential M2M applications.

Here is a bit of background. Passive RFID tags do not contain any power source of their own. When stimulated by the correct RF signal, they chirp back data that is stored on or measured by the tag at that moment. Because a passive RFID tag is essentially using the received energy to transmit the return signal the tuning between the tag electronics and antenna have to be near perfect. One thing that can interfere with a passive RFID tag’s performance is moisture. The new Magnus chip enables the passive RFID tag to adjust for moisture to maintain optimal operation. That, by itself, is significant because it allows objects that are in sub-optimal conditions (e.g. wet) to be monitored wirelessly at greater distances. As a result M2M applications could be deployed over extremely long periods of time without needing any power source on the individual assets. What made this new component really interesting is that moisture data from the component could be transmitted by the tag along with the stored ID number. In our opinion, passive RFID tags with this component could be a key piece in an M2M optimized agricultural operation. Here is how it would work:

VDC’s View of M2M Enabled Agriculture using Passive RFID Moisture Detection

1.)    During planting process, the farm equipment inserts the RFID tags at given intervals along with the seeds. The embedded computer on the farm equipment logs and transmits the tag’s ID number and GPS location data to the cloud.

2.)    As farm equipment pass over the fields, the RFID reader scans the sensors and the embedded computer collects the data. This allows for the creation of a economical irrigation plan. VDC pictures this as being similar to ink-jet printers in precision as opposed to pumping water and spraying for fixed intervals.

3.)    Data from the moisture sensors can be retained in the cloud to confirm that optimal irrigation was maintained.

4.)    At harvest time, data on crop yields and quality are collected and sent to the cloud.

5.)    The cloud stored data can be used for many purposes that benefit several agricultural stakeholders including:

• The farmer can optimize future crops from the lessons learned from the current one.
• The aggregated data on crop yields can be sold to the investment community for analysis and pricing of agriculture-based financial instruments.
• In the event of a crop failure, the insurance industry can verify that the farmer had followed reasonable practices before making the payout.

6.)    At the end of the process, the farmer tills over the field without having to worry about recovering sensors or their connectivity infrastructure.

What happens to the RFID tags after that?  We have to assume that most of the tags would survive for several years but they would no longer have precise location or soil depth. Although, it is possible that the tags could be recovered for future use, the cost of doing so would likely exceed their cost of approximately $1 per unit. In future growing seasons, any data received from RFID tags deployed with earlier crops would be ignored.

The connected-farm is only one of many possible M2M applications for passive RFID sensor tags. For example, the moisture detecting RFID tags could be installed inside tanks at regular intervals to detect liquid levels.  Other physical properties such as pressure or temperature could be included to increase functionality. The M2M possibilities are endless.

The AutoID & Data Capture team would like to thank David Laing from VDC's Embedded Hardware team for authoring this blog post.

How does Legislation Impact Barcode Technology Adoption?

The Indian government issued a three-phase barcode labeling mandate back in 2010-11 for manufacturers and exporters from the pharmaceuticals industry. This was a direct result of counterfeit or spurious drugs seized by African regulatory authorities that had “Made in India” labels pasted on them but were found to have originated in another country. The need to enforce regulations to ensure source traceability and prevent unwarranted liability became a critical requirement for the government. While they have already enforced barcodes on tertiary and secondary level packaging, several media outlets reported that the upcoming deadline to affix barcodes on primary level packaging has been extended by a year – deferred from July 1, 2013 to the same date in 2014. This packaging includes the container (tube, jar, bottle or can) which comes in direct contact with the pharmaceutical product. Despite the additional financial and operational burden vendors and their partners have to incur, this is a significant step in curbing and potentially eliminating the spread of counterfeit drugs by increasing visibility into the supply chain. Yes, the cut-off date for doing so has been extended. But, as India’s pharmaceutical exports (currently pegged at over Rs. 80,000 crores or USD 10 Billion) outpace and outgrow domestic sales this will help local manufacturers actively counter allegations of selling inferior products.

We have discussed the horsemeat scandal in our blogs and the growing potential for stricter traceability mandates in the food industry. And there is always news about changes to labeling requirements in the heavily regulated pharmaceuticals industry across the globe. How does this impact enterprise investment in and adoption of barcoding solutions? Our conversations with leading printer and scanner vendors indicate that while regulations and legislation – from government bodies, industry groups or even lead users – are critical to establishing awareness and elevating interest levels from enterprises in the capabilities of barcode technologies, impact on vendors’ revenue streams from this opportunity is spread out over time. As industries and their participants work to enhance their visibility into the commercial value chain, VDC expects to witness a heightened market need for track-and-trace enabling solutions.

Cognex watching Microscan’s products like a “Hawk”; files IP infringement claim

Cognex recently filed a lawsuit against Microscan Systems alleging patent infringement by their Mobile Hawk product used to read Direct Part Mark (DPM) codes. With Microscan contesting this claim and calling it “without merit”, we can expect to see a long drawn-out battle. Cognex has been working towards aggressively expanding its lower cost barcode scanning product line to keep up with rising demand and capitalize on the tremendous growth opportunity in relatively under-penetrated regions and verticals. While the company’s intellectual property-related battles have historically been limited to Machine Vision technology, this development suggests an increasing focus on protecting its IP in the high-growth barcode scanner market, especially around camera-based imaging technology. Interestingly, Microscan is also one of Cognex’s leading competitors in the Machine Vision marketplace, particularly in the pharmaceuticals and clinical device manufacturing sector.

Even though the barcode scanner market has become increasingly commoditized, IP is still a relevant and meaningful asset that vendors hold. We firmly believe manufacturers and patent holders have a right to defend it. Will low cost solutions providers now be in the line-of-sight of those with IP?

A Logical RFID Application That Still Carries Some Heavy "Baggage"

Baggage handling is one of those “no-brainer” applications for passive UHF RFID technology. The use
case just makes sense.  Yet, after more than decade, this application market still struggles with historical issues. Although the benefits of the technology are clear, there have only been a small number of deployments worldwide. As adoption is most challenged by cost concerns, implementation challenge considerations and long-standing disagreements over who should pay for the system (airlines or airports).

Airline passengers are some of the most dissatisfied consumers in the world, especially in the United States.  And, the situation is only becoming worse as airlines cut staff, eliminate routes, add fees, and raise ticket prices to compensate for excessive fuel costs and other economic pressures.  The result has been massively lower customer satisfaction ratings. 

One major sore spot for air travellers continues to be lost baggage. And, now the baggage problem
is being compounded as extra fees are being charged for additional checked
bags.  If the airline misplaces or loses a bag that received a surcharge, imagine how upset a passenger would become after paying for checking in that bag. The airline may lose more than the bag – it will likely lose that customer.

• Lost baggage and handling issues are the focus - The impetus for many projects
  is the need reduce the time to transfer luggage. According to sources at the
  Lisbon Airport, the passive UHF RFID-based baggage handling system (BHS) has
  reduced the time to handle a baggage transfer by 66%. Other advantages include
  increased customer satisfaction and reduced labor (time to search for bags).
• McCarran International Airport (Las Vegas, US) expanded its program in 2012 - The
  new Terminal 3 has 130 self-check-in kiosks at which passengers can print their
  own passive UHF RFID-enabled baggage tags. This is innovative as printing has
  primarily been done behind the counter. More airports are expected to come
  online within 2-3 years; however, baggage handling system ownership (airports
  vs. airlines) and tagging costs remain major adoption barriers.
• Other considerations:

            -       More airports are expected to come online within 2-3 years; however, baggage handling                     system ownership (airports vs. airlines) and tagging costs remain major adoption                     barriers.

            -       Travelers are paying more than ever for checked baggage; however, lost baggage rates                     remain high and lead to customer frustration.  RFID technology can solve this industry                     challenge and make customers feel they are charged for a premium service as opposed                     to a bag fee.

            -       Delivered inlays and tags must be Gen2 compliant to ensure interoperability and IATA-                    approved.

            -       Only when more airlines and airports adopt passive UHF solutions will the commercial                     airline industry realize the full benefits of RFID.

While adoption has been limited to date, successful installations have occurred throughout the world. Some of the more prominent deployments include Schiphol Airport in Amsterdam, McCarran Airport in Las Vegas, Milan’s Malpensa Airport, Hong Kong International Airport, Portugal-Lisbon Airport and Aalborg Airport in Denmark.

While it may take some time, VDC Research does expect more airports and airlines to strongly consider RFID baggage handling systems and begin pilots and deployments. Like with most things RFID, time and actions will tell.  

What makes a smart city smart? It must be AutoID.

What makes a smart city smart?  That is a key question as our team researches smart cities and how AutoID technologies are enabling them. Although the term smart city means different things to different people and is used inconsistently to define various projects, I believe RFID, RTLS, contactless and NFC are critical elements of the smart city of tomorrow. The formal definition of a smart city generally includes variations of the following elements: a smart economy; smart mobility; smart environment; smart living; smart governance and smart technology. Enter RFID, RTLS, contactless and NFC technologies. In small towns and major cities throughout the world, these AutoID solutions are already being used to support a host of applications, including:

• Internet of Things
• Bike rentals
• Citizen ID
• Customer loyalty
• Electronic Vehicle Registration (EVR)
• Energy (e.g., smart meters)
• Library management
• Public transport (e.g., contactless ticketing, mobile payment)
• Risk prevention (e.g., public works, nuclear energy)
• Urban planning (e.g., smart building, intelligent traffic)
• Vehicle fleet
• Waste management

The concept of the smart city is increasingly being adopted by both cities (municipalities/localities) and enterprises,reflecting the growing importance of information and communication technologies
(in addition to social and environmental factors) in defining the competitiveness of cities and improving the quality of life of individual citizens through the management of natural resources and responsible participatory governments.

Not surprisingly, smart cities are notbuilt in day. They take time, money, awareness and most often government involvement (e.g., funding, mandates, recommendations, program development) to
build the foundation and then scale. As a result, municipalities/localities must think big (a vision for a smart city) but start small (one project/deployment/application at a time). Albeit slowly, smart cities are emerging with RFID, NFC, RTLS, and contactless payment, ticketing and ID technologies often part of the “construction.” According to one local official with whom I recently spoke under NDA, “The value propositions and benefits of RFID [and increasingly NFC] will be found around every corner – literally – and the application possibilities are limitless.”

Major RFID and contactless industry conferences are also recognizing the importance of RFID, NFC and related technologies to the development of a smart city. For example, in October, The 4^th Annual International RFID Congress event will be dedicated to applications RFID/NFC for a smart city and habitat. 

Smart cities will leverage many technologies, but most of them can be grouped into
five main categories:

• Authentication (RFID, NFC, mobile payment, etc.)
• Cloud Computing (remote back-up, wireless communication, etc.)
• Control (monitored data analyzed in real time to drive actions, alerts, controls)
• Monitoring (sensors, RTLS, RFID, etc.)
• Sensing (RFID, wireless sensor networks, video, biometrics, etc.)

As part of our 2013 research programs, the AutoID & Data Capture team will study the use of RFID, NFC and related technologies by municipalities/localities and determine how these solutions fit into the concept and vision of a smart city. Stay tuned for more on this topic and the impact of AutoID in creating these cities of the future.

Barcode Technology Innovations Coming to the Forefront Early in 2013 – Part 2

In Part 1, I highlighted some new product announcements from the barcode scanner vendor community and what these mean for the competitive landscape in general. Here in this post, I will focus on innovations in the barcode printer marketplace and how vendors are positioning their portfolio for success in today’s challenging global macroeconomic environment. Vendors’ research and development efforts are not limited to any one form factor, as evidenced by these product introductions.

1. Zebra Technologies: As the undisputed market leader in the barcode printer landscape, Zebra has successfully leveraged its extensive resources to build out a formidable product line that addresses current and emerging market requirements across a wide range of vertical markets and installation environments. The Company is working to expand its presence in emerging country markets with ongoing investments toward expanding its product portfolio. Zebra launched two MFi (Made For iPhone) certified printers to its already extensive mobile printer offerings – iMZ220™ and iMZ320™ – designed to support printing applications including receipts, tickets, proof of delivery and invoices. Aside from iOS, these solutions are fully capable of also supporting other leading mobile device platforms including Android™, Windows® Mobile and Blackberry OS. In VDC’s opinion, this move will help the organization maintain and also strengthen its leadership position in the portable thermal printer market while also enabling printing support for increasingly popular consumer handhelds.

2. SATO: The market leader in Asia-Pacific, SATO has a much smaller presence in other regions. With its acquisition of Argox in 2011, the Company aims to successfully penetrate the existing low-cost market opportunity in Latin America and Asia-Pacific, with a product line that effectively challenges emerging competitors such as TSC Printers. SATO America recently announced the launch of their Value Line of printers designed to fulfill application requirements of emerging and industrial markets. This includes CP-2140Z, the OS Series and the X Series of printers, capable of supporting applications in industries ranging from retail and transportation to health care and hospitality. The Value Line products are particularly aimed at price-sensitive users looking for cost-effective investment options.

3. Printronix: With a strong focus on the stationary industrial thermal barcode printer market, Printronix continues to work on building out its channel and vertical market reach with strategic alliances and new product introductions. The company’s printers support high-volume, mission critical barcode labeling applications in the industrial market. Printronix rolled out the entry-level T2N series of thermal barcode printers in the first quarter of 2013, pricing it aggressively at below $1,000 for the 203 dpi model. These printers are targeted at application environments including distribution, logistics, manufacturing, retail and health care.

2013 has got off to a very impressive start in terms of product innovation for the barcode technology market. While vendors strive to stay ahead of their competition with these new product introductions, the true winners here are the enterprise end users who are being afforded more choice and options.

Barcode Technology Innovations Coming to the Forefront Early in 2013 – Part 1

Q1 2013 has seen several new product announcements from leading barcode technology vendors. This covers a wide spectrum of product offerings ranging from desktop barcode printers to handheld barcode imagers and camera-based stationary point-of-sale solutions. In part 1 of this blog, we will touch upon some of the newly-released imaging solutions and what they mean for the overall barcode scanning technology landscape. In Part 2, we will highlight product innovations in the barcode printing market.

1. Datalogic: This Company is the largest European manufacturer of CCD and laser-based bar code readers and mobile computers, including both manual readers and fixed industrial scanners for applications such as retail, warehouse management systems, sorting, work-in-progress and OEM. We talked about their 100% digital, camera-based bioptic scanning solution – Magellan 9800i – here. Since that announcement, Datalogic has revealed the PowerScan™ 9500 family of imagers targeted specifically for challenging operations in Manufacturing, Transportation and Logistics industries – featuring high-speed 2D imaging optics, high depth of field and an exclusive aiming and read confirmation system. The company aims to continue investing toward continued product and process innovation – with their annual R&D investment in the coming months especially geared towards Imaging and Vision technologies.

2. Cognex: While one of the leading machine vision solution vendors, Cognex’s ID Products division has turned into a strategic cash cow in recent months, prompting them to expand their presence in the AutoID marketplace with the industrial imaging product line. In order to capitalize on the explosive revenue-generating potential offered by these relatively less complex imaging solutions (when compared to machine vision technology), Cognex has made some strategic announcements over the past few months, including the DataMan® 503. This product features some of the highest read rates in the industry designed for the most challenging barcode scanning applications. With a particular focus on the Transportation & Logistics vertical, Cognex is expanding its portfolio to include image-based solutions that can potentially replace their laser counterparts in these environments.

3. Code: While Datalogic, Honeywell and Motorola account for a significant majority of the overall handheld scanner revenues, there are several vendors looking to take advantage of existing and emerging growth opportunities. Code, with its camera-based imaging products, has made significant inroads, particularly within the Health Care vertical in North America. The Company recently announced plans to integrate Wi-Fi into its existing CR2600 imager – giving enterprises a long-range, cordless scanner option with increased coverage range, unlike traditional Bluetooth-enabled models. Organizations can also utilize existing Wi-Fi network data security protocols to ensure secure real-time communication and that data integrity is not compromised.

How much of an impact these new product introductions and continued R&D investments have on enterprise adoption and vendor performance remains to be seen. We look forward to uncovering answers to such questions in our annual research reports on the Barcode Scanning markets.

Can Laser Scanning Technology Stay Strong at the Retail POS?

There is an interesting bit of news for the barcode technology industry that came in from the Mobile World Congress in Barcelona last week. Mobeam, a technology company focused on enabling laser scanners to capture data from mobile devices at the point-of-sale checkout, announced a partnership with ams, one of the leading providers of proximity sensors to smartphone manufacturers, with an aim to revolutionize the mobile coupon redemption landscape. This strategic alliance combines ams’ light sensors with Mobeam’s patented light-based communications technology. It is designed to enable smartphones to relay barcodes – on gift cards, loyalty cards, tickets, coupons – that can be read by all laser scanners currently installed at the retail POS. The first Mobeam-enabled phones will be available for consumers in 2013.

Mobeam’s technology is incorporated into ams’ digital light sensor optical module to transmit any barcode content without failure. This module is expected to be integrated into smartphones with no additional space requirements. Mobeam, with its OS platform-agnostic solution, is positioning this as an opportunity for handset makers to capitalize on the explosive growth of the mobile coupons and mobile commerce market segment – enabling consumers worldwide to lower paper consumption as they opt for digitized coupon replacements. Our research shows that the stationary, fixed position scanner landscape within the retail environment is currently dominated by laser scanning solutions. For retailers, this partnership potentially means that they do not have to refresh their existing POS scanners or complement it with handheld imaging solutions to read barcodes from customers’ mobile phones.

The past 18-24 months has seen a significant uptick in 2D imager (camera-based solutions) adoption at the Retail POS, particularly on the handheld side, with VDC’s estimates indicating a double-digit growth rate. What does this announcement mean for the adoption of these solutions? What will be the impact on next-generation camera-based bioptic scanners launched by Motorola and Datalogic? Will retailers consider holding off on technology upgrade investments to see how their existing laser scanning infrastructure handles data capture from mobile devices? The most critical resources- and time-consuming task at hand, for Mobeam in particular, will be to educate the global retailer community about the benefits of their solution over paper coupons while also extending the life of their POS laser scanners. In VDC’s opinion, retailers will still need to invest in 2D imagers to support “legacy” smartphones since this will only work with new models starting in 2013. We will definitely have an ear out for how this solution catches on and also evaluate its impact on the global barcode scanning market.

What, did you say, is in my burger? – Averting a PR Nightmare Using Barcodes

Track-and-trace is well-regarded as the most important capability afforded by barcode labeling. Enterprises across economic sectors and installation environments have, over the years, extensively leveraged this feature to enhance visibility into their supply chains and keep a close watch on the movement of goods. I came across this post on the Enterprise Labeling site run by Loftware, one of the leading barcode label generation software solutions vendors, a few days ago.

While it was pretty shocking to read about the presence of horsemeat in what was sold as ground beef, I didn’t think too much about it until I read Burger King’s official press release stating that their burger meat was most definitely tainted as well – and that their customers in the UK and Ireland were unwittingly feasting on non-beef burgers. And then brands including Tesco (one of the world’s biggest retailers, based out of the UK) and Findus (a large prepared foods producer and retailer, headquartered in Sweden) confirmed meat contamination in the products that they sell. French retailers including Carrefour and Auchan have also recalled food supplied to them via Comigel, one of Findus’ leading distribution partners in the region. This whole controversy has spiraled into a PR nightmare for retailers and food manufacturers, one with far-reaching consequences especially as it directly impacts the health and well-being of consumers.

Organizations in the retail, hospitality (dining), and food processing and manufacturing industries need to impose strict adherence to their safety and quality standards regulations. Such comprehensive mandates will serve to ensure that every “touchpoint” in the commercial value chain feels equally responsible and is deemed liable to any misappropriations that may occur. Where do barcodes fit into this scenario? Like with their use in the pharmaceuticals supply chain to prevent counterfeiting, for example, barcodes are increasingly being leveraged by food companies to ensure the quality, authenticity and safety of their products as they move from source to consumption. Barcoding supports chain-of-custody tracking and helps manufacturers and their distribution partners “document” product trail from source to consumption. Their penetration, unfortunately, is not nearly adequate, as evidenced by this most recent horsemeat scandal.

As this scandal is exposed and a large-scale investigation gets underway, I also fully expect a rise in the use of QR codes on food packaging (particularly for meat and seafood) that will possibly serve to inform consumers using smartphones and other handheld devices about the source of their food, helping them make an intelligent purchasing decision. VDC will be following this story as it unravels and keep you updated on any developments that have the potential to directly impact the barcode technology market.

Dissecting Honeywell’s Intermec Acquisition: The Potential Road Ahead

Yes, it has been a few weeks since Honeywell announced that it had signed a definitive agreement to acquire Intermec. While this continues to be subject to regulatory approvals, in this blog post I share some thoughts on how this deal may shape up and impact the barcode vendor landscape. Intermec is an active participant in two barcode technology hardware markets – Barcode Printers and Handheld Barcode Scanners. The company has a relatively small presence in the barcode scanning market, with a recent entry into the general purpose scanner space. However, in this category Intermec is up against industry behemoths including Motorola Solutions, Datalogic and Honeywell. I expect Honeywell to fully integrate this part of Intermec’s business into their own; especially given how closely aligned it is with one of Honeywell’s core AIDC competencies. Barcode printing is, however, a whole other conversation.

Intermec is one of the leading barcode printer vendors, according to our research. They rank 5th in our global vendor share chart and are considered to be among the most innovative and resilient brands in the space. Intermec has, over the past 12-18 months, introduced several new barcode printers to the market across all form factors – desktop, industrial and portable. Backed by its strong IP in the space, the organization is well-respected and has a strong presence in each of the regional markets. Is this a business that Honeywell has experience in and is entirely comfortable with? Now this is pure speculation, but I would think not. In my opinion, Intermec’s real value for Honeywell lies in its following areas of expertise – rugged mobile devices, voice technology, barcode scanners and RFID. The barcode printing and media/consumables business is quite possibly one that Honeywell would look to sell to a suitable candidate with an inherent knowledge of this fragmented market and its competitive dynamics, particularly as this doesn’t necessarily fit in with Honeywell’s growth strategy.

To determine the likely contenders vying for Intermec’s barcode printer and consumables business is challenging, but here are my two top picks:

1. ZEBRA TECHNOLOGIES – the undisputed global leader in the barcode printing market. Zebra has a long history of innovation, credibility and dominance in this space. By acquiring this part of Intermec’s broad product portfolio, the company would gain considerable share in each of the regional markets while also successfully leveraging Intermec’s significant presence in the Manufacturing and Transportation & Logistics verticals. Intermec’s strong printer consumables sales would only work to sweeten the pot.
2. SATO CORPORATION – barcode printer market leader in Asia-Pacific, with a much smaller presence in other regions. SATO is a billion-dollar AIDC organization with a business model that is a little different from that of its competitors – a much heavier contribution of consumables sales to overall revenues as opposed to hardware. SATO could significantly benefit from Intermec’s strong barcode printer sales into the Americas and Europe, growing its market presence and share in these regions via a single acquisition.

While it is all pure speculation at this time, I will certainly be keeping an ear out for any such market developments. Stay tuned.

(You can read my other post on this acquisition here)