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

Preview of our Stationary Barcode Scanner Market Analysis Report

Vendors competing in the stationary scanner market face a number of seemingly insurmountable obstacles. These include, but are not limited to, growing demand for and adoption of mobility-enabling devices and enterprise reluctance to make significant investments in technology solutions that are incapable of offering multi-application support. Vendor revenues for stationary scanners (POS and industrial combined) dipped slightly from 2011 to 2012, with industrial laser scanners declining more. Improving global economic conditions coupled with new product introductions will lead to projected revenue growth of more than 4% through 2017. Challenges including price sensitivity and the availability of multi-purpose, multi-application enabling mobile options will escalate in the future. While laser scanners continue to be deployed for applications such as long-range scanning and in environments with high-throughput requirements, their dominance is drawing to a close. Camera-based imaging solutions offer attractive price-performance ratios, and read/decode a broad range of barcode symbologies and applications. Increased focus on enabling multi-application support on these devices will push adoption of scanners that organizations can use to address unique requirements and use cases. These are just a sample of the market size and growth insights we provide in the report.

VDC believes those vendors that focus on application development in collaboration with their solution partners will be most successful in ramping up stationary scanner investment and implementation. Barcode scanners have historically helped users identify products as they move through the supply chain. Enterprises have begun to successfully determine the exact location of these products, especially in conjunction with other data capture technologies such as RF-based solutions. Now with imagers, organizations also have the ability to capture the state the product is in. This isn’t yet an extensively leveraged capability, but VDC expects to see more of it in the near future.

To learn more about this forthcoming research report, click here.

 

New Research: Disruption Ahead in the Handheld Barcode Scanner Market

VDC is pleased to announce the publication of its annual study of the handheld barcode scanner market.  This research is an invaluable strategic and tactical planning tool for barcode scanner vendors and their channel partners.  Highlights of the research include:

• Forecasted revenue CAGR of 5.2% for the global market through 2017 disguises significant turmoil below the surface, for vendors, the channel and end-users.

• As 2013 nears its end, vendors are reporting slowing refresh cycles and a challenging climate outside of new, non-traditional growth markets – such as healthcare – where large investments in sales and marketing are required to win new accounts.
• The decline of laser-based scanning will accelerate over time, with a corresponding acceleration of the imager-based scanning market.
• Low cost Asian vendors will continue to steal share from the large established American and European vendors such as Motorola Solutions, Honeywell and Datalogic.
• End-user interest in the use of consumer devices for scanning is widespread, intense, and growing, posing a real opportunity for mobile device vendors and a real threat to scanner vendors focused on retail and hospitality.

To learn more, download the Executive Brief now.
(Above links to landing page with similar content. Registration required to get to e-brief.)

Revisiting Our Annual Barcode Predictions with One Quarter Remaining in 2013

With three quarters of 2013 already behind us, the VDC AutoID team thought it would be interesting to revisit the 2013 predictions we made at the start of the year. In this blog post we examine our barcode predictions and offer an update as we head into the final stretch of 2013.    

Prediction #1:

More barcode market aggregation ahead – Expect continued consolidation of the barcode hardware landscape, particularly to achieve growth across product categories, verticals and regions.

Update:  It may not even be over but 2013 will be remembered as another year in which we witnessed a large amount of vendor consolidation. The major acquisition of Intermec by Honeywell will likely be the big story of 2013. That transaction's impact and significance dwarfs all other M&A activities announced to date and more than likely any others that may be completed before year’s end.  Somewhat surprising, however, is that our prediction proved true before the Honeywell/Intermec deal closed as at least five acquisitions were announced by the end of May.

M&A announcements of note during the first three quarters in the barcode market include:

• Honeywell completed the acquisition of Intermec after receiving final FTC approval, adding new or augmenting existing solutions in voice, barcode printing, RFID and mobile computing (September).
• OCR Canada acquired Aurora Bar Code Technologies Ltd. in order to increase its presence in Western Canada and expand its enterprise mobile computers, barcode scanner, RFID and wireless network capabilities (May).
• Barcoding Inc bought Miles Technologies Inc. for an undisclosed amount in a move to increase its presence in the central US (May).
• General Data Company, a leading manufacturer and provider of barcode identification, tracking and data management products and solutions sought to expand its healthcare solutions offerings and acquired Triangle Biomedical Sciences Inc. (TBS), a leading manufacturer and supplier of instrumentation, reagents and consumables for the clinical and research pathology market (May).
• Datamax-O’Neil acquired the thermal printer assets of Source Technologies, a leading provider in specialized printing solutions (May).
• Telenor acquired Liquid Barcodes, the largest provider of mobile coupons in Norway, to strengthen its focus on coupons, value codes and loyalty solutions. Along with the company Valuecodes, in which Telenor has a controlling 51% stake, Telenor will become the leading mobile coupon player in Norway and have a strong foundation for further expansion (March).

Prediction #2:

Barcode vendors will learn to “accessorize” – More barcode hardware players will actively look to enter [or further entrench themselves in] the “accessories” market – developing sleds and/or sleeves with barcode scanner,  payment acceptance or other features that support consumer-grade device usage in retail, healthcare and enterprise environments.

Update: Starting with a large number of vendor products announced and on display at NRF, it was clear in January that “accessorizing with AutoID” was central to many product development strategies. Buoyed by the expanding BYOD trend and focus on lowering total cost of ownership (TCO), several vendors such as Griffin Technology and Honeywell have released new sleeves and sleds suited for enterprise, retail and/or healthcare environments.  

Prediction #3

Future with mobility, not without in [barcode label generation software] market – An increasing number of barcode printing software providers will extend label printing support to portable devices (both purpose-built and consumer-grade) – facilitating mobile applications such as field sales, field service and direct store delivery (DSD).

Update: We give ourselves partial credit on this prediction as the products and capabilities to support mobile printing are available, however, end-user usage of mobile print commands managed and sent from consumer devices remains in the nascent stage. At this point in the year, most barcode label generation software and barcode printer vendors have announced support (i.e., drivers, firmware) for leading mobile operating systems such as iOS and Android.  In our 2013 conversations so far, remote print management and mobile device support remain key software development areas. In fact, expect a leading barcode label generation software vendor to announce enhanced mobile device support as part of a major new product launch in early October.

Prediction #4:

Embracing the tech-savvy consumer – Scanning with and displaying barcodes on mobile device screens will continue to grow significantly among consumers. We predict more QSRs (quick service restaurants), convenience stores, restaurants, theme parks/ entertainment venues and other consumer-facing enterprises will invest in and deploy barcode imagers and consumer-grade mobile devices to interact with consumers (e.g., coupon redemption, payment, loyalty/rewards programs).

Update: This prediction was likely going to come true; however, the quick pace of adoption and strategy migration has taken vendors (and us) by surprise. For example, 2D imager adoption remains strong through three quarters with growth outpacing all other barcode product categories, especially in retail sectors. Providing examples of business strategies focused on targeting and serving  consumers armed with smartphones are supermarket chain Giant and Stop and Shop, drugstore chain CVS, and Australia’s eRX to name a few. In addition, according to their Q2 2013 Trend Report, ScanLife processed over 7 million scans in consecutive months for the first time ever, users tend to scan over 3x per month on average (a 22% increase from a year ago) and scanning from tablets has increased by a whopping 1300% from Q2 2012.

Revisiting Our Annual RFID &RTLS Predictions with One Quarter Remaining in 2013

With three quarters of 2013 already behind us, the VDC AutoID team thought it would be interesting to revisit the 2013 predictions we made at the start of the year. In this blog post we examine our RFID &RTLS predictions and offer an update with just three months left.    

Prediction #1:

Vendors – especially RTLS solution providers – will develop the “healthcare stare” – The use of RFID and RTLS is on the rise in healthcare, most notably in the US thanks to the VA’s announced $540M+ contract to track equipment and supplies at 21 of its Veteran Integrated Service Networks (VISNs)…This spark to the market (and sizeable contract) drew a lot of attention in 2012 and we expect the RFID and RTLS frenzy to continue in healthcare in 2013. However, we caution vendors (especially RTLS providers) to not focus solely on healthcare and to seek opportunities and market development in other vertical markets where the competitive field may be less crowded.

Update: This prediction has come true in that healthcare has been the star vertical for AutoID in 2013, but those with a healthcare-centric focus are actively seeking opportunities in other verticals. Successful, high-profile applications for RFID and RTLS in healthcare include asset management, sample tracking, temperature control in sample fridges and hygiene control. While there is strong growth to be realized in healthcare, the sector is challenge with long sales cycles and tight IT budgets. Over the last nine months I have fielded several inquiries about how to target and penetrate this emerging vertical – from both non-RFID/RTLS solution providers and larger consultancies looking for expansion opportunities. Perhaps more interesting is that I have also had a fair number of exchanges with healthcare-centric RFID and RTLS solution providers seeking market opportunities where their products and services may be leveraged outside of healthcare (i.e., industrial, retail enterprises).  

Prediction #2:

Passive UHF EPC item-level tagging (ILT) in the apparel sector will pick up the pace after a somewhat slow 2012 – This past year was a mild disappointment in terms of retailer deployment of RFID for ILT of apparel. For example, no major reader or printer/encoder orders were delivered, several large retailers remain behind originally announced plans (e.g., Wal-Mart, JC Penney) and some newer programs were pushed to or will start in 2013.  So what to expect in the year ahead? Even more American Apparel stores will go live with RFID (a bright spot for 2012 as well), Wal-Mart will reassess its RFID plans but remain committed, Macy’s will make its anticipated move, JC Penney has bigger worries than RFID, international retailer Zara will play a key role in increasing tag volumes and RFID EAS will become a more critical part of the ILT in apparel conversation.

Update: Retail continues to take strides in advancing item level tagging on a global scale. Numerous companies such as Mersmann and Borsheims are using RFID for solutions against theft of high-priced goods. Kohl’s, on the other hand, is implementing a full item level tagging solution that includes non-apparel items. The successes of many pilot programs have proven the value of RFID in retail and new retailers are joining the fray as a result. The number of RFID-enabled stores and annual tag volumes among existing users are rapidly expanding. RFID EAS solutions are under broader investigation this year as tagging techniques and the cost of tagging comes down.      

Prediction #3:

Embedded RFID keeps the forward momentum – At the end of 2011 we noted the rise of “RFID inside,” or embedded RFID, as a key trend to watch for in 2012.  We are keeping it on the list in 2013 after seeing a great deal of progress in 2012. With price points declining and form factors shrinking, we expect to see solutions and applications such as these expand and new innovations to be introduced in 2013.

Update: As the capability and power of RFID expands, RFID tags are producible thinner than paper, so does the ability to embed. Uses have sprung up for video games, clothing personalization, and even fiber composites. In addition, reader chipset shipments to support embedded RFID applications have grown sharply over the last two years, with 2013 volumes for embedded chipsets likely to outpace those for dedicated, finished readers. Reader module vendors such as ThingMagic continue to innovate and develop new solutions such as RFID-enabling consumer devices such as tablets. Embedded RFID seems to be the future of RFID usage.

Prediction #4:

Honeywell Scanning & Mobility will get strategic on RFID – and quickly – after announcing its first RFID product and the acquisition of Intermec in 2012 – After some exploration of RFID while acquiring several barcode scanner and mobile computing companies over the last few years, Honeywell made some eye-catching RFID moves in 2012. They made a subtle move in introducing an RFID reader and then made a major move in announcing the acquisition of Intermec (a major RFID IP holder and RFID equipment manufacturer). We predict Honeywell will aggressively develop its RFID strategy in 2013, becoming a strong competitor in select verticals and applications that play to the combined strengths of Honeywell and Intermec.  What’s next for Honeywell – RTLS in 2013 or 2014?

Update: Although the EU had approved the acquisition in 2012, the progress had been slow moving through much of 2013 due to challenges by the FTC. In mid-September the acquisition was approved after a decision by the FTC around 2D image engine competition. With the elongated inquiry period, Honeywell’s RFID strategy remains to be seen and we may gain some insight before the year ends. VDC will keep a close eye on the process of integrating Intermec, especially Intermec’s RFID business (and IP portfolio). It may be far too soon to look ahead, but if Honeywell’s vision is to become the true, sole total AutoID solutions provider, then they would need to think about adding RTLS to the mix in my opinion. I am sure, however, that Honeywell is much more focused on making Intermec part of their operations and determining their strategies for new-to-them solutions like thermal barcode printing before they would consider pursuing another new technology such as RTLS.

Honeywell's Acquisition of Intermec Finally Comes Through

More than 9 months after Honeywell declared its intent to acquire Intermec, the Federal Trade Commission announced its decision to place conditions on this proposed merger. The FTC took issue with the competitive impact on the 2D scan engine market rather than challenge the more obvious areas that industry observers believed to be behind the delay (and request for additional information) – Intermec’s rugged mobile device and RFID business divisions. While a relatively small market in revenue size, the scan engine component itself is critical to the barcode scanning function. VDC believes this product category is of growing strategic importance today. Technology advancements are making it possible to integrate the power of professional-grade scanning into everyday mobile devices. This, in our opinion, has made it imperative for the Commission to ensure that Motorola and Honeywell are not, essentially, the only vendors competing in the US market. By affording Italy-based Datalogic the choice of licensing Intermec’s 2D scan engine patents for the next 12 years, the FTC is making a concerted effort to lower barriers to entry and encourage competition in the high-volume, high-growth market for 2D imagers in the US.

While this $600 million deal was approved by the EU in June, the “anticompetitive” conditions put forth by the FTC in the US will particularly benefit Motorola Solutions (MSI) and Datalogic in the near-term. Our speculation is grounded in the following:

• MSI continues to retain exclusive use of its 2D engine portfolio, giving it a distinct competitive edge over its peers in the space.

• Datalogic, which has an enviable portfolio of scan engine-related patents in Europe that allow the company to sell its 2D imager products, now gains immediate access to a new set of patents in the US. This removes the company’s biggest barrier to competing more effectively in the US and provides a rapid path to product development based on licensure.

We will keep a close eye on market and competitive landscape evolution as a result of these licensing stipulations. More to come.

 

Update (09/17/13): Honeywell has completed its acquisition of Intermec, as announced via this press release on the company website.

Out With the Old – Breathing New Life into Barcode Technology Deployments

We read countless articles on current and emerging barcode applications in retail, logistics and manufacturing environments. It is not very often that you come across new and interesting applications outside of these traditional verticals in developing economies. This is why a recent news article about barcode use across all departments at the University of Pune was most refreshing.

The next large adoption opportunity for barcode technologies in emerging markets might just lie in the education sector. India’s University of Pune (UoP) will use barcode technology to track and process examinations administered this fall. The education industry is not necessarily new to barcode technologies, but the university’s unique application stands out as innovative within the commercial services sector.

The University plans to implement a barcode system across all 12 of its departments for the October/ November 2013 exam session. UoP consists of nearly 700,000 students across 680 affiliated colleges and 300 recognized institutions. The October/ November and March/ April examination periods each generate close to 1 million papers needing assessment. After a 2008 incident in which exam questions were obtained by students prior to an exam period, the controller of the university’s examinations called for steps to prevent such cases in the future. By placing barcodes on answer sheets, the University aims to eliminate the chances of post-exam malpractice by significantly reducing manual processing of the answer sheets.

The barcode system was employed on a limited, experimental basis during the March/ April 2013 examination session and proved to be effective. The barcodes contain information such as the student’s department and seat number, and the exam subject. In the experimental period, exams were processed faster and more efficiently while removing manual intervention in critical post-exam work.

If UoP’s widespread implementation goes smoothly, other universities are sure to catch on. The prospect of massively improving exam processes is undoubtedly attractive, but other classroom applications such as attendance tracking, lesson enhancement, and progress tracking present additional opportunities for barcode adoption. In emerging markets such as India and China, AutoID vendors and their solution partners will greatly benefit from targeting large scale deployment options in non-traditional sectors. While not mainstream, these unconventional citations of barcode adoption speak to how barcoding is increasingly becoming a part of this modern society’s DNA.

(A special thank you to Scott O’ Leary for his significant contributions to this blog post. Scott is currently a Research Assistant in VDC’s AutoID & Data Capture practice.)