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

RFID Journal Live: Putting RFID to Work in Orlando

Last week Orlando became home for nearly 2,500 representatives from RFID suppliers, integrators and deploying enterprises.  What sets this show apart from other industry events is not only the diversity of technologies, served markets and applications showcased, but the collaborative emphasis placed on using RFID to solve business problems. 

RFID has evolved, and the main event reflects this evolution.  The tone and tenor of conversations taking place in conference rooms and on the exhibit floor continues to migrate from the core technologies and their inherent capabilities (these go to 11) to the real world problems deploying enterprises are solving with the technology, increasingly enabled by open standards and supported by a growing list of complementary technologies.

Support for these trends were found throughout the RFID value chain, from new chip designs that provide increased functionality and flexibility, to new devices designed to address widening data capture requirements, to new software and service offerings designed to harness, aggregate and analyze more data than ever before:

• Chip designers at Impinj and NXP have been hard at work addressing customer requirements that arise as their chip sets are deployed.  Each of these suppliers announced new offerings in Orlando, pushing the technical boundaries that limited the functionality of previous designs.  Impinj took the best in show award for its Monza 4 tag chip family, which delivers unique privacy, performance, and memory benefits to customers with challenging RFID applications, and NXP answered with their new UCODE G2iL chip series delivering extended read ranges, unique anti-tampering and privacy protection features.
• Motorola introduced a new hybrid presentation imager with an integrated RFID reader.  The DS9808-R is the first combination 1D/2D bar code scanner and RFID reader, but also the first combination handheld/hands-free UHF RFID reader. This device will enable retailers to manage existing store operations while exploring the benefits of real-time item-level inventory visibility.  
• Savi announced its partnership with Odin to provide a unified passive and active RFID software platform designed to exploit the full range of RFID and related AIDC technologies, enabling customers to more effectively track and manage items, assets and containers in the Aerospace & Defense, Government, Manufacturing, Healthcare, and IT Services industries. 

Nowhere in these companies’ presentations were there extended discussions about feeds, speeds, bits or bites.  Instead, an emphasis was placed on where to look for data to develop information, how to aggregate this information, and how to use the intelligence derived from this information to more effectively manage risk, reduce operating expenses, retain customers and grow revenues.  These conversations suggest that RFID is turning a corner, becoming a viable platform technology that will prove indispensable for the data, insight and perspective it can provide.

Digital Signage - Big Challenges, Bigger Opportunities

We spent today at The Digital Signage Content Strategies Summit at the Mandalay Bay hotel in Las Vegas.  We’re interested in the digital signage market first because we are covering it in detail as part of our 2010 Retail Automation Planning Service, and second because we think digital signage represents an enormous opportunity for established and emerging technology suppliers.  Below are some highlights – with our commentary – of the days most interesting insights for those participating in the digital signage value chain.

 

The Island That Is – And Should Not Be - Digital Signage – As digital signage begins to capture the imagination of brands and retailers, an expanding list of companies stands ready to offer the software and hardware necessary to deploy digital signage networks.  What many seem to be missing – with the notable exception of a company called LocaModa – is that digital signage is only one of several bricks in a retailer or brand’s digital out-of-home (DOOH) marketing strategy, all of which must be mutually reinforcing and fully integrated.  The fact that most digital signage networks are isolated from each other, as well as from the other networks through which marketing messages are being delivered, creates enormous inefficiencies for brand managers and retailers trying to efficiently reach large audiences with multi-channel marketing campaigns.  We are impressed with LocaModa’s effort to address this problem through a combination of technology and business processes.  The challenge they face in creating a unified platform for purchasing and managing out-of-home advertising (and as importantly, for delivering reporting on its performance) across disparate networks are great, but we believe the benefits and potential rewards are too.

 

We Need Great Content - Now! - Digital signage technology suppliers have done a better-than-necessary job in creating hardware and software that can deliver content and manage networks.  But advertisers and their agencies continue to assert that the challenges associated with developing great content remain.  And we agree with Verne Freedlander of X20 Media that the standard for digital signage content is rising, and is being set by the HD broadcast TV industry (i.e. digital signage content must look as good as what consumers see at home on their HD TVs, or the brand is damaged).  But we believe creative, technology-based solutions to addressing the cost and complexity associated with content development will emerge.  We believe that the next area of intense competition among digital signage technology companies will be around content aggregation and simplified content re-purposing / authoring.  The combination of an explosion in the amount of content needed to support growing signage networks and the increasingly high bar for the quality of the content creates a business opportunity that is simply too large for the industry to ignore.

 

The Future – Many More Signs, Much Better Content, And A Lot More Of It – Several years ago, Starbuck’s promoted a corporate strategy they called “Third Place”, drawing upon the work of sociologist Ray Oldenburg.  At its core was the premise that in addition to your home and your office (or school), Starbucks would be the “third place” you would choose to spend leisure time.  While he mentioned it only in passing, we agree with Bob Martin of RMG Networks that the idea of a third-place is going to extend beyond Starbuck to other restaurants and retailers, that stores are very likely to become a preferred place for individuals to spend considerable leisure time even when they not at any stage of what is currently viewed as the buying process, and that digital content will play a critical role in defining the retail environment.  As an example, the car dealership of the future could very well be a place where car enthusiasts elect to relax on a Saturday afternoon, all the while being exposed to (and interacting with) digital signage content that builds that dealer’s brand.  (Indeed, one of the highlights of the conference today was a presentation on a revolutionary Danish bank called Jyske Bank which has been designed to be an engaging, enjoyable place for consumers to shop and relax.  The design includes strategic use of digital signage to enhance the consumer experience).  The investment of time and money to build the required networks and create the necessary content that results in an engaging third-space will not be small, but we believe that the ROI for retailers and their brands will be real, and that the opportunity for digital signage technology suppliers to support these efforts will be significant.

Retail Automation Industry Expert Opinions Needed

VDC is conducting its semi-annual survey of companies deploying retail automation systems.  If you are involved in the selection of the retail automation systems deployed by your company, this is your chance to have your voice heard by the supplier community. 
 
Our research covers traditional retail automation solutions (POS terminals and peripheral technologies) self-service technologies (kiosks, SCO and more) and multi-channel marketing platforms (including digital signage and m-marketing and commerce platforms). Your perspective will improve the insights we deliver to the supplier community and help to influence next generation solutions.
 
Every respondent who completes the survey will receive:

• Instant access to a summary of the 2009 Customer Interaction Management (CIM) survey findings;
• Entry into a drawing for one of five (5) $100 Amazon.com gift certificates (drawing to be held August 30th, 2010); and
• An executive summary of our 2010 survey findings once the results have been tabulated

 
To begin the survey, go to: http://vdcresearch.com/survey/10raps_user.html
 
Thank you very much for your assistance.
 
 
Best Regards,
 
The VDC AutoID and Transaction Automation Research Team

The Doctor Will RFID You Now

Remember a few years back when Pharmaceuticals were the RFID topic dujour? 

Suppliers were salivating over its near-term potential.  Resellers were lining up to position themselves for the high margin RFID health care opportunities.  Evangelists were gushing over the potential for RFID to revolutionize quality in life sciences. 

And then, do you remember when this market went flat after a series of delays in standards development, FDA approval, and piloting? 

Well, it looks like the Pharmaceutical opportunity is resurfacing again on the roadmaps of more than a few suppliers.  But this time, it is for real.  This time, RFID is also on the roadmaps of the customer. 

Several factors are driving the Pharmaceutical industry’s reemergence, including:

• Improved performance– this is not the same offering that was available when the RFID revolution began.  Most issues pertaining to read rates and accuracy, the ability to function on or around metals/liquids and in dense tag environments, range limitations, security, compatibility and durability have been addressed.  RFID is now capable of satisfying most (if not all) solution requirements and can be configured to be compatible with most legacy infrastructure.
• Real-world proven – the technology has been established and proven to meet and/or exceed specifications in relevant real-world applications, such as tracking products at all echelons (i.e.: container, pallet, case/carton, item) in each environment (shop-floor, warehouse/DC/Yard, retail floor) throughout the value chain, enhancing security and anti-counterfeiting measures, etc.
• Economies of scale – the price point for RFID has decreased dramatically and the hardware has become increasingly commoditized.

Additionally, continued momentum is noted:

• The Korean government recently stated that 50% of all its drugs will be RFID tagged by 2015.
• The recent theft of $75 million worth of pharmaceutical product from an Eli Lilly warehouse has created additional awareness for the need for a more secure value chain – including one that incorporates RFID.
• Rumor on the street is that there will be more than 35 million RFID tagged pharmaceutical items in circulation by the end of 2010, a number expected to scale rapidly over the next 3 years.
• Added functionality (i.e.: temperature sensing) is creating new opportunity within the cold-chain by extending RFID’s value propositions (i.e.: CAEN/Medlog).
• The FDA recently published its final guidance on serialization, not only creating a platform for a more global solution (i.e.: leverages GTIN developed by GS1), but also paving the way for RFID to be used as an alternative to 2D bar codes.

Although it looks like all the ducks are lining up, don’t forget how burdened the adoption rate can be in this industry and keep your expectations in check.
 
Our conservative market models, driven by input from dozens of pharmaceutical developers, wholesalers and retailers, reveal an opportunity that might be around $125 million in 2010, and grow nearly 22% (CAGR) through 2014.  The projects will be highly competitive, schedule and budget challenged, and of varying profitability, but, they will be funded. 

Well positioned suppliers will win deals.  The best positioned suppliers will make money.

If you have not already taken our 2010 RFID user survey, or if you would like your customers’ voices to be heard, please go to, or send others to http://vdcresearch.com/survey/10_rfid_eu.html

Industry Expert Opinions Needed

VDC is conducting its semi-annual survey of companies using, deploying, or evaluating the following systems:

• Retail Automation (i.e.: POS terminals & workstations, Kiosks, Self-Check Out, Digital Signage, ESL, Imaging, Payment Terminals, etc.)
• Bar Code (i.e.: All bar code scanning and printing solutions)
• RFID (i.e.: All RFID related hardware, software, and services)

If you are involved in the evaluation, purchasing, use or maintenance of any of the above solutions at your company, this is your chance to have your voice heard.  Your perspective will improve the insights we deliver to the supplier community and help influence next generation solutions.

Every respondent who completes a survey will receive:

• Instant access to a summary of the 2009 survey findings;
• Entry into a drawing for one of five (5) $100 Amazon.com gift certificates (drawing to be held August 30th, 2010) ; and
• An executive summary of our 2010 survey findings once the results have been tabulated

To begin the Retail Automation survey, go to: http://vdcresearch.com/survey/10raps_user.html
To begin the Bar Code survey, go to:http://vdcresearch.com/survey/10_aidc_eu.html
To begin the RFID survey, go to: http://vdcresearch.com/survey/10_rfid_eu.html