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

Datalogic Reaffirms Stationary Point-of-Sale Leadership Position with Launch of Magellan 9800i

Vendors and users have long compared and contrasted the speed and performance of laser-based scanning with camera-based imaging solutions. Improved functionality, lower costs and enhanced barcode scanning speeds have all contributed to the widespread installation and integration of imagers to support several applications in varied markets. Successful penetration in high transaction volume environments has been non-existent, particularly given concerns surrounding their relative inability to maintain high throughput without compromising on features including, say, image quality. Until now.

At NRF 2013, VDC witnessed live demonstrations of two multi-plane bioptic scanner-scale products – by Motorola Solutions Inc. (MSI) and Datalogic – featuring a 100% digital, camera-based imaging data capture solution. Seeing these scanners in action highlighted all the attributes and characteristics that make them viable contenders to replace laser-based bioptic scanners in high-volume retail settings. Since we wrote about MSI’s MP6000 here, the focus of this post is going to be the Magellan 9800i, Datalogic’s latest bioptic scanner-scale.

The top-down scanner design of this imager enables attendants and cashiers to scan items at any angle without resorting to manual orientation. Like with MSI’s product, this Magellan version also provides support to a customer-facing mobile reader enabling customers to scan their mobile coupons, loyalty cards and others without disrupting the transaction and/or scanning process. Datalogic is the undisputed leader in the Stationary Point-of-Sale Scanning market with an extensive product line encompassing several different form factors – Bioptic, Presentation and Mini-Slot – while maintaining a sizable lead over the rest of its competitors in the space. The company has, over the years, fostered strong ties with leading retailers and integrator partners (including NCR and Wincor Nixdorf), pushing out its diverse scanning line to support multiple applications on the retail store-front. With the Magellan 9800i, the company is offering a migration path for its installed base to move from laser-based high-speed scanning to imaging solutions.
 
In VDC’s perspective, it will be interesting to see how the company makes use of its unique position in the industry with an extensive in-house expertise deploying imagers in industrial environments – in manufacturing and logistics verticals – to provide it with a distinct competitive advantage in retail. Will Datalogic be among the first vendors to bring “machine vision” from factory automation to retail applications?

NRF 2013: The Big Show Day 2 in Review

The VDC AutoID team’s second day at NRF was just as busy as the first, and was packed with vendor meetings, new product briefings and walking the show floor. Since our previous post focused on broader trends and observations gleaned from NRF 2013, this blog is dedicated to sharing some of the key vendor announcements and product introductions made during the event:

• NCR and PayPal announced a partnership whereby NCR will leverage PayPal’s leading cloud-based payment technology to augment the functionality of its mobile solutions targeted at hospitality enterprises, particularly restaurant/dining operators. Initially, NCR will integrate PayPal with its NCR Mobile Pay and NCR Aloha Online Ordering applications, giving customers an alternative to using credit/debit cards via enabling smartphone-based online (i.e., PayPal) payment. Besides the convenience and security benefits, PayPal will also bring social commerce features to the apps, including online check-in and reviews. Eventually, NCR also plans to integrate PayPal into its Convenience-Go (C-Go) and Endless Aisle applications. The NCR-PayPal partnership demonstrates NCR’s commitment to “making everyday transactions easier” for the consumer and merchant as well as PayPal’s leadership in the digital payment ecosystem.
• Zebra announced a new line of mobile receipt printers targeted at retailers and other B2C merchants that increasingly leverage consumer grade i-Devices (i.e., iPhone, iPad and iPod touch) as mPOS platforms. The new iMZ220 and iMZ320 are designed for easy integration with mPOS devices (including consumer grade offerings, such as those from Apple) and are among the first Link-OS-enabled products the Company plans to launch during 2013. Link-OS is a new operating system designed for use with Zebra devices which includes a SDK and core software applications that the company believes will make its hardware easier to integrate, manage and maintain from any location.
• HP debuted several new retail-focused POS products that address merchants’ increasingly strong interest in sleek, aesthetically-pleasing stationary terminals and rapidly growing demand for tablet-based mPOS solutions. For retailers seeking a more attractive alternative to clunky, traditional stationary POS terminals, HP introduced its RP7 and RP3 Retail Systems, both of which combine a sleek, modern appearance with the robust connectivity and build quality retail and hospitality operators require. HP also showed its new ElitePad along with a line of peripherals designed specifically for use with the tablet.

As usual, NRF delivered again in 2013 with many great exhibitors, vendor briefings and new product announcements. We look forward to attending next year’s edition, but until then, stay tuned to this blog for more AutoID-related news and opinions. Also be sure to listen to our upcoming NRF Quickcast, in which we will further discuss key takeaways from this year’s Big Show.

NRF 2013: The Big Show Day 1 Recap

The VDC AutoID team attended this year’s NRF in full force. With vendors representing all of the core AutoID markets, including MCET, RFID and Barcode, there were many new and innovative retail-targeted products to see relevant to each of the practice’s coverage areas. The following are a few broader observations from day 1 in the Big Apple:

• Hardware is becoming increasingly less important, and more vendors realize it. Conversely, software, and, more importantly, the functionality it enables, is the critical issue for retailers. Some hardware and solution vendors have been aware of this dynamic for some time now. Others, we think, have only recently awakened to this reality. This is more often (but not always) true in the case of large-scale, enterprise-focused vendors of retail automation and customer engagement solutions that have historically pursued differentiation via hardware ruggedness, lifecycle, and so forth rather than ease-of-use, intuitive functionality and application innovation. During conversations throughout the show, it was evident that several large-scale, traditionally hardware-focused vendors have pivoted to a broader focused strategy—one that seeks to differentiate on innovative software and functionality in addition to hardware.
• Traditional POS terminal refreshes contribute to mPOS growth. The common strategic drivers behind the recent explosion in retailers’ mPOS investment are well documented, and include improved labor utilization and efficiency, better customer service and employee empowerment. However, during our time at NRF 2013, we validated another, more pragmatic factor playing a role in mPOS’ rapid growth: stationary POS terminal refreshes. As merchants update traditional POS systems, vendors indicated that mobile terminals are usually included in their next-generation solution evaluation process. The stationary vs. mobile conversation is different for every retailer, and depends on variables including store format, sub-vertical and strategic/operational objectives, but increasingly the final solution is comprised at least in part by mPOS. While we expect this trend to continue throughout 2013 and well into the future, at the same time we believe stationary POS will remain relevant for many types of retailers as well. 
• The m.Wallet war rages on with no end in sight: The struggle to establish broader adoption in the m.Wallet and contactless payment ecosystem is as highly contested as ever, both in the context of which stakeholder(s) own the m.Wallet (a single retailer, a multi-retailer consortium, the MNOs, etc.) and in regards to enabling technology (mobile barcode, NFC, cloud-based). At this point in time, there is no certainty as to which of these entities and enabling technologies will be successful in the long term. Valid arguments exist both for and against these prospective m.Wallet owners as well as each enabling technology, and all were represented on the NRF show floor. Ultimately, consumers have the final say as to which stakeholders and enabling technologies win. Without consumers’ approval—i.e., their adoption and ongoing use—no m.Wallet or contactless payment technology will be successful in the long term. 

That concludes our recap from the first day at NRF. Stay tuned to this blog for another post highlighting some of the key vendor announcements and observations from day two.

Would You Pay Extra to Pay with NFC? Neither Would We.

Here’s a hypothetical decision: Would you pay $60 for an NFC-enabled iPhone case that enables you to pay via your smartphone—but only at ISIS partner merchants in Salt Lake City and Austin? Or, would you prefer to pay anywhere (at no additional cost) with old-fashioned cash or credit/debit cards? The choice seems absurdly clear—the vast majority (we would estimate 99%) of consumers will choose cash or card payment.

Still, despite a market opportunity that we believe is accurately summarized by the above choice, vendors with aspirations to cash in on mobile payment and NFC hype continue to introduce NFC retrofit solutions for smartphones lacking embedded NFC. Incipio is the latest entrant, having debuted its “Cashwrap” NFC-enabled iPhone 4/4S case earlier this week at CES. Incipio joins a market that seems crowded considering the nascent state of the NFC ecosystem in most regions. For example, companies such as DeviceFidelity, Flomio and Wireless Dynamics already offer (or are developing) similar accessories for both the iPhone and older Android devices. Frankly, given NFC’s weak support within enterprises and low awareness among consumers (not to mention that cash and cards are a free and highly effective alternative), we wonder: who is buying these products?

Among consumers, NFC contactless payment faces a daunting uphill battle to mainstream acceptance for at least two key reasons:

• Cash and cards’ familiarity with consumers across all demographics
• Security concerns, especially for solutions storing payment credentials on the device (as opposed to the cloud)

Keeping in mind the above factors, it is unlikely that the average consumer will spend additional money, time and effort to pay via NFC. If NFC-enabled contactless payment is to gain broader adoption, it must be absolutely frictionless to use (meaning no special cases, SIM or MicroSD card required) and offer incentives for ongoing use (for example, rewards or exclusive deals) to ensure consumers do not revert to cash or cards. Remember, cash and cards are accepted everywhere and cost the consumer nothing—in terms of money, time or effort—to use. We believe an NFC payment solution that cannot say the same has a highly challenging path to success.

Motorola Solutions Looks to Capture Retail POS Share with New Bioptic Imager

By all accounts, 2013 seems very eager to live up to its promise of being an interesting year for the barcode technology market. To start off, Motorola Solutions Inc. (MSI) made a new product announcement today – the multi-plane 100% camera-based bioptic imager/scale MP6000 – the company’s first foray into the high-volume stationary POS scanning market. What makes this particularly interesting is that up until today, Motorola was the only player from among the BIG THREE in the overall barcode scanner market (the others being Datalogic and Honeywell) with no stationary POS offering for high-throughput retail environments. We expect MSI to sell this product into grocery stores, supermarkets, hypermarkets, mass merchandisers and other such big box retailers. MSI credits its customer-side scanner to be one of its biggest competitive differentiators in an “almost exclusive” bioptic scanner market essentially governed by 3 players – Datalogic, Honeywell and NCR. Motorola’s scanner enables customers to simultaneously scan their own coupons, gift cards and loyalty cards, including those displayed on smartphone screens, with the attendant/cashier facilitating the POS checkout process.

Motorola has established a strong presence for itself in the camera-based, 2D imaging solutions market, particularly with the handheld form factor. VDC’s research covering the space indicates that the company has made significant strides in capitalizing on the explosive growth opportunities that this 2D solution configuration has to offer, especially given end users’ critical requirement to future-proof their technology investments. With continued advancements in 2D performance, Motorola considers the high transaction volume retail market to be primed for a switch from a laser- to a fully camera-based bioptic scanning solution - one that can lower operational costs and enhance data capture efficiencies.

While this is all great news for retailers and the barcode industry doing away with triopoly in this specific technology segment, it will be interesting to see how Motorola prices its newly introduced product. Although the performance of camera-based imaging solutions has improved drastically versus laser technology, pricing is not an apples-to-apples comparison given the increased complexity and high cost of underlying solution components. Will the company’s success with imaging on the handheld side translate to an equivalent achievement with the stationary form factor? This remains to be seen. In our opinion, Motorola will initially target large, Tier-1 retail chains with this product; small-and-medium sized businesses still have to wait their turn, particularly with the (anticipated) pricing structure. My expectation is that Motorola’s success mantra in this market just might be an increased focus on profitability over sales volume – due to the higher associated margins for this brand new product in its portfolio – positioning the company as a one-stop shop to fulfill their retail customers’ barcode scanning as well as future EAS and/or RFID requirements.