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

RFID Inside of Me?

Have you heard about this?  A Stanford medical researcher recently discovered that, contrary to common belief, HF frequencies actually transmit quite well within the human body. This realization prompted her to develop a micro-sized antenna which she then used to power an RF device capable of ‘swimming’ within a person’s bloodstream.  (See original article here.) On one hand, this discovery borders on being disconcertingly sci-fi, and conjures thoughts of Isaac Asimov’s ‘Fantastic Voyage.’ At the same time, an intravascular RF device is an exciting development that could eventually open a new world of possibilities for medical treatment and research, although such applications are a long way from becoming reality. Still, we believe this concept holds tremendous promise, as it could provide significant, undeniable value to all healthcare stakeholders—including the patient.

Using RFID in the human body and healthcare is not a new concept.  Sub-dermal tracking transponders have been around for a long time, medical device implants monitoring is gaining traction, and there have been a number of R&D projects pertaining to RF-enabled medication administration. Companies such as Versus Technology and Awarepoint offer patient monitoring systems, while Censis Technologies and Clearcount provide surgical tool tracking solutions (because nobody wants to find a forceps or sponge left inside of them post-operation).  However, this particular innovation is different, as it could eventually enable internalized, personal care giving. Not only would an intravascular device be capable of performing all of the aforementioned applications, it would also provide a physician unprecedented visibility into a patient’s body and make a number of medical procedures less invasive.

Several weeks ago we wrote about a recent NFC-in-healthcare event held at MIT. The majority of the solutions presented at that conference, as well as those we’ve heard about in our recent research, are intended for patient (as opposed to doctor/medical professional) use, and generally involve some kind of monitoring and/or tracking functionality. Our main criticism of these solutions is that they offer a weak value proposition to the person responsible for making sure they're used—the patient. Of course health insurance companies and doctors would love to monitor your blood pressure or adherence to a prescribed course of medicine in real-time; however, the key question is, how does using a solution that provides such visibility benefit the patient—the person ultimately determining whether it is used at all? If there is not a clear-cut, undeniable benefit, we think it is unlikely many patients will remember—or be willing—to use these solutions.

In the case of an intravenous RF device, the benefits for all stakeholders are readily apparent. Healthcare providers would have a new, versatile and valuable weapon in the battle against various ailments, while health insurance companies could potentially reduce payouts if this solution reduced the need for more traditional and complex procedures. Patients stand to be the greatest beneficiaries of all, as this technology could enable the precise treatment of ailments that were formerly addressable only by indirect or highly invasive methods.

Could NFC "Tap" into the Popularity of Mobile Barcode?

Could a catalyst for consumer NFC adoption be another type of technology? We believe it’s possible. The rapid emergence of near field communication (NFC) during the past 12 months, particularly in the context of NFC-enabled smartphones, has vendors and developers working furiously to create solutions that they hope will be The Next Big Thing. While these efforts have resulted in numerous application concepts ranging from mobile wallets to e-couponing to social networking, no specific application (or application type) has yet gained widespread acceptance among consumers. What can developers and vendors do to increase awareness for their NFC solutions? VDC believes that integrating NFC with other recognizable, more frequently used solutions already present on a consumer’s mobile device — such as mobile barcoding — can improve awareness and understanding of the technology, facilitate adoption and extend the reach of NFC.

Let’s consider, for example, how mobile barcode and NFC could complement each other in the context of a customer-facing supermarket deployment.  Barcodes exist on virtually all products being sold in a supermarket and are increasingly used throughout these stores for a diversity of applications such as pricing, information retrieval/exchange, comparative shopping, promotions, couponing and customer loyalty—but are very rarely used for payment.  NFC is a rapidly emerging technology that enables and enhances many of these applications–including payment–but is generally not used for actual shopping at the shelf, because tagging every item is too costly.  The two technologies, working in concert, could create an all-encompassing shopping solution that unifies the strengths and capabilities of both technologies into a single application deployed on a consumer-owned device. Alone, neither technology is ideally suited for all shopping applications; however, when converged, the two technologies together enable a robust solution capable of supporting the entire shopping process.

Some developers, to a degree, have recognized the opportunity to marry barcode and NFC in a single solution. MobiLead, for example, combines the two technologies for mobile marketing and information access, while DigiMo created a mobile payment solution that allows users to choose between NFC and barcode enabled payment. However, we are unaware of any offering that leverages both technologies for unique, specific functionalities—for example, barcode for scanning and NFC for payment. In both of the aforementioned examples, barcode and NFC provide redundant capability. Although these applications are a step in the right direction, we think the real opportunity lies in using each technology for the specific purpose (or purposes) to which it is best suited.

We recommend NFC providers leverage other technologies and solutions currently used by consumers on their mobile devices (e.g., barcode, GPS). Not only will blending NFC with other technologies enhance a solution in regards to its functionality and value, but it also will facilitate NFC education and adoption. 

Nintendo Makes NFC Technology Vendors Say "Wiiiiii!!"

Nintendo’s Wii platform revolutionized the home videogame console with its motion-sensing controller, thereby enabling a more interactive gaming experience.  With its latest version of this platform, the Wii U, Nintendo is looking to push the envelope once again…and this time, NFC (Near Field Communication) is positioned as the big differentiator.  The Wii U features a NFC-enabled touch-screen controller, and will initially leverage its NFC capability for payment, player profile creation, game card management, and/or avatar/character creation and storage.  For example, a player can use NFC to pay for access to new game levels/features and save their progress. Provided the NFC concept is intelligently designed and executed, and well-supported from the developer community perspective, we view this as a very positive development for the overall NFC market for four reasons:

• The integration of NFC into the Wii U will introduce more consumers to the technology—resulting in increased awareness and market growth. The opportunities for growth and exposure are significant—Nintendo sold approximately 20 million Wii consoles in 2010 (4 years after its introduction). For many customers, the Wii U console will be their first exposure to NFC applications.  Furthermore, based on our end user research, the demographics of videogamers are well-aligned with those of early adopters of NFC. We think a positive experience with NFC gaming will pique consumer interest in other NFC devices and applications, thereby driving growth in the broader market.

• Nintendo offers application developers an entirely new platform for innovation and experimentation. We believe one of the keys to NFC market growth is a robust and engaged developer community that creates the applications that bring NFC technology to life. The emergence of NFC in videogames brings a large and experienced group of developers into the broader NFC ecosystem.

• If the Wii U follows the successful path of its predecessor, we expect competing platforms (namely, Playstation and Xbox) to follow suit with NFC integration. The video game market is highly competitive, and success is defined by innovation and technology advancement. If Nintendo’s integration of NFC is well-received, we think its competitors will be quick to embrace the technology as well—thus driving further awareness and demand for NFC hardware.

• A positive reception for NFC in videogames will pave the way for the technology to be integrated into other consumer electronics. Time and again, an innovation that takes root in one type of device soon spreads to others—consider gesture recognition and touchscreen technology, for example.

Unless something goes very wrong with Nintendo’s NFC implementation, we see it as a big step forward in NFC adoption, sowing the seeds for future NFC market growth.

NFC at NRF

NFC was a pervasive theme at the 2012 NRF show held this week in New York City. Technology vendors of all types were talking about their plans for integrating NFC into their product portfolios and, in many cases, displaying their latest NFC-enabled solutions. Whereas NFC is a nascent, still-developing technology, its presence remains somewhat confined to a few key product categories, but as consumer adoption of NFC smartphones scales in 2012 and beyond, we expect to see an increasingly broad range of customer engagement/retail automation solutions incorporate NFC into their design. What follows is an overview of some of the notable NFC activity at this year’s NRF.

• ViVOtech introduced its ViVOtouch NFC solution, which is mobile marketing software platform that allows merchants to deliver targeted/personalized content, offers and loyalty programs to customers via their NFC-enabled mobile devices. This solution also allows for interactive shopping and NFC-enabled information retrieval on the store floor, further enhancing the shopping experience. Contactless payment is certainly a hot topic, but as a standalone application its ROI potential probably is not strong enough for most enterprises to justify investment. We believe solutions such as this will drive the adoption of contactless payment NFC solutions in retail.

• NFC payment terminal leader VeriFone introduced its PAYware Mobile Enterprise for Tablets, a secure payment acceptance solution that is compatible with the company’s GlobalBay Mobile POS solution. The solution is designed to run on Apple’s iPad 2, and provides the same functionality offered by the original iPod-touch based PAYware solution. PAYware for Tablets has the same fully secure encryption as previous versions of the solution, and enables the acceptance of traditional payment cards, PIN/EMV smartcards and NFC contactless payments. The solution adds further utility for merchants via a built-in 2D barcode scanner for item scanning, coupon acceptance and inventory management.

• INSIDE Secure demonstrated its NFC-based solutions for consumer and product authentication in retail. The solution enables shoppers to verify the authenticity of high-end/luxury goods and allows merchants to confirm the identity of customers. Whereas mobile devices, particularly smartphones, are becoming an increasingly prevalent element of retail marketing strategies and consumer shopping behavior, we expect that solutions leveraging NFC for brand and user authentication will become increasingly popular among retailers of luxury and other high-end goods.

Mobility and customer engagement have been pervasive themes with retail for some time now. NFC offers retailers a way to achieve both of these strategic objectives in a manner that is reliable, fast and easily-scalable. As consumer adoption of NFC gains momentum, we expect to see an increasingly diverse range of retail technology solutions support this technology.

Intel gets Involved with NFC

Intel has joined the ranks of companies looking to profit from the rapid growth expected in the NFC market during 2012. In Q4 2011, the company announced a partnership with INSIDE Secure, whereby it will license several of INSIDE’s NFC offerings for use in its own products. Today, Intel revealed at CES 2012 that its new Ivy Bridge chipset supports NFC, particularly for payment and e-commerce applications. The company further disclosed that Ivy Bridge will be featured in up to 75 ultrabook devices that are expected to reach the market during 2012.

While ultrabooks may seem an unlikely form factor to support payment and e-commerce applications, these devices could support some potential use cases beyond the typical “tap-to-pay” functionality, such as auto-form population during online shopping as well as authentication of payment credentials in online transactions. Of course, these devices can also support other non-payment applications like pairing, peer-to-peer, info-tainment and access control, which will broaden their appeal to both consumers and enterprises.

Intel’s entry further boosts NFC’s near-term growth prospects. While exponential gains in NFC smartphone sales have been broadly expected in 2012 for some time now, opportunity for growth in other consumer electronics categories has been limited in comparison. Intel’s entry into NFC (and the numerous ultrabook initiatives using Ivy Bridge chips) rapidly expands the potential market for NFC devices in the immediate term. We expect that as Intel further integrates NFC into its offerings, the range of NFC device types and form factors available to end users will continue to expand.

Verifone on Point with Recent Acquisition

Payment terminal solution supplier Verifone continues to pursue accretive growth. On January 3rd, the company completed its acquisition of Point, a leading provider of payment solutions in northern Europe. Point, headquartered in Stockholm, will continue operations under the same name, but as a wholly owned subsidiary of Verifone. Point represents the latest addition to the list of Verifone’s acquisitions over the recent past, which also includes WAY Systems, Gemalto’s payment terminal operations, Hypercom’s non-US operations and Global Bay.

The acquisition of Point has significant strategic importance for Verifone. The transaction rapidly increases Verifone’s presence in EMEA, particularly in Northern Europe, where the company has historically lagged behind the regional share leader, Ingenico. Combined with Verifone’s previous acquisition of Hypercom’s EMEA operations and Gemalto’s payment terminal business, Point further solidifies the company’s status as a serious threat to Ingenico’s market-leading position.

Furthermore, the addition of Point further extends Verifone’s portfolio of alternative payment solutions, including those for supporting NFC contactless payments and mobile commerce. EMEA is a particularly important regional market in the context of NFC payments, as historically stronger availability of NFC-enabled devices and a more robust installed base of contactless infrastructure could drive faster adoption of more advanced NFC solutions in this region.

The Truly Interactive Digital Signage Solution

Earlier this year, there was considerable interest generated around supermarket giant Tesco’s deployment of large screen billboards in a South Korean subway station. These featured displays designed to look like supermarket shelves, allowing consumers to purchase products online with their smartphones by scanning corresponding QR codes. This further exemplified how the balance-of-power has been shifting from the retailer to the consumer, as businesses increasingly look to take the shopping experience to wherever the consumer may be, as opposed to drawing them toward distinct ‘choke points’ – both online and in the traditional ‘brick-and-mortar’ stores.

What has prompted us to write about this technology deployment in December then? Well, Toys'R'Us is in the news this week for having enabled a virtual QR code store, quite like Tesco in S. Korea, in subway transit stations and airports in the New York metro area – in time for the holiday season. We think it is highly refreshing to see early adoption of this nascent solution here in the US. And it definitely makes more sense to have successful online retailers choose to go this route. The primary question with such a deployment, however, is how organizations expect to continually use and update the content on such displays. Do these warrant ‘permanent’ as opposed to seasonal installations? 

VDC has been extensively covering the global markets for Interactive Displays and Digital Signage, and we have consistently emphasized the need for converging mobile device solutions with digital signage displays in order to extend the reach and value offered by these installations. Interactivity, such as that afforded by these Toys’R’Us displays, is expected to elevate the levels of customer engagement & experience, leading to a favorable ROI. As end-users experience returns that justify investment in this next-generation solution, leading vendors expect to derive significant revenues from sales of digital signage solutions into the Retail vertical – growing at a robust CAGR of 17.6% from 2010-2015, as evidenced in VDC’s recently published report on the Digital Signage space.

We have closed out our 2011 coverage of the markets for Customer Engagement Technologies. Click here to download complimentary research and insights from the same.

Hot Topic Webinar with GS1: Scanning Ahead - AutoID in 2012

Despite current economic conditions and the continued volatility expected in many global economies in 2012, next year is shaping up to be another year of growth for the Auto Identification (AutoID) industry. 

During this GS1 US Hot Topic webinar, VDC will present information, insights and trends to watch for in the Barcode and Radio Frequency Identification (RFID) markets in 2012, including leading & emerging Electronic Product Code (EPC)-enabled RFID applications.  Near Field Communication (NFC) and Real-Time Location Systems (RTLS) markets will also be covered.  Specifically, this webinar will highlight four primary trends that VDC anticipates will be important in 2012:

• The impact of technology convergence (AutoID technologies integrating with and complimenting each other)
• The increasingly important role of GS1 and EPCglobal Standards
• The affect consumer devices will have on the AIDC Markets
• The changing role of the software & service provider

Join us for this informative webinar to learn more about the exciting and dynamic changes occurring in AutoID!

    WHEN:   Date: Thursday, December 15, 2011
                 Time: 2:00 PM to 3:00 PM ET

Click here to register.

Personal Shopping Systems-There's an app for that, too...

Stop & Shop is scaling its Scan-It Mobile initiative, an Android/iPhone-based version of its original handheld Personal Shopping System (PSS). At the end of October, the supermarket extended the app to 42 more stores throughout Massachusetts, Rhode Island and Connecticut. Leveraging a smartphone’s embedded camera as a scanner, the Scan-It app allows customers to scan & bag their groceries as they shop, thereby expediting the checkout process. As a regular Stop & Shop customer and iPhone user (not to mention analyst covering PSS), I was interested to test the Scan-It app first hand. I got that opportunity this past weekend while doing my weekly grocery shopping.

Overall, the performance of the Scan-It app on my “old” iPhone 3GS is impressive. In most cases, the camera scanned with approximately 90-95% of the efficiency as compared to the dedicated Scan-It solution, which I have been using on a weekly basis since it was introduced several years ago.

The app is not flawless, however. On several occasions I noticed the camera struggling to focus, delaying the scan. That said, I also experienced scans that occurred with the same speed as the purpose-built Scan-It solution. The only other shortcomings I noticed were the ergonomics of using the iPhone as a scanner and the hassle (relative to the dedicated Scan-It solution) of repeatedly scanning multiple purchases of the same item. I suspect this latter issue could be addressed through the addition of some kind of quantity-input feature in an updated version.

Considering the solid performance of the Scan-It Mobile solution, PSS apps such as Scan-It could represent a threat to the business of dedicated, purpose-built PSS hardware suppliers. By offering PSS via a smartphone app, retailers essentially eliminate the hardware investment required to deploy PSS, thereby enabling PSS to be deployed across a store chain with relatively little added expense. While ensuring data security—both for the customer and the enterprise—remains a critical issue, we expect more retailers seeking PSS will evaluate smartphone apps in addition to dedicated solutions.

Intermec’s First Foray into the Value-Priced Scanning Category

Intermec, a global market leader for AIDC solutions including barcode printers and scanners, recently released a general purpose handheld linear imager, SG10T, targeting the small- and medium-sized business segment across multiple vertical markets and installation environments. The solution has been designed for non-industrial use, which marks a shift from the company’s traditional stronghold. While classifying it as a low cost, easy-to-use barcode imager, Intermec is also offering a 3-year warranty with the product that has a list price of $140 (€108).

At VDC, we expect to see the global market for handheld linear imagers (both industrial and non-ruggedized) to grow at a robust 7.9% CAGR from 2010-2015. This growth is, however, expected to plateau as 2D imagers become largely disruptive to laser scanners and linear imagers over time, as enterprises increasingly develop and execute their migration paths to the same. By featuring an “out-of-the-box ready” experience at an attractive price point, however, Intermec has an advantage of being highly appealing to lower revenue tier organizations who largely invest in 1D barcode scanning technologies while waiting on the continued price erosion of 2D imagers.

The biggest challenge for Intermec with this product launch, marking the company’s first foray into the value-priced scanning category, might just be communicating the value propositions to its distribution channel partners. With such a broad portfolio of AIDC offerings across product categories, however, this industry behemoth can expect to cater to an extremely wide spectrum of end-user enterprises.

The press release for this product is available here.