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

Asia Trumps the Americas and Europe in Barcode Printer Investments in 2013

For the first time ever, Asia-Pacific trumped both the Americas as well as EMEA as the region accounting for the largest revenue share in 2013. VDC sees this as a direct reflection of the pickup in the Chinese manufacturing sector in the past 12 months, a result of its government’s diligent efforts to tackle slowing growth in the world’s second largest economy. Growing reliance on logistics service providers to get products to the final consumer on time coupled with their rising need for automation will also help spur continued investments in the near future. Industrial printer sales contracted 5% year-over-year in North America because of users’ increasing investments in lower cost desktop options that are well-suited for deployment across several application environments. One of the industry leaders was particularly impacted by this trend, leading to a significant drop in sales in the region. The European market looks set to come out of its slump of the past few years with the region experiencing a high single digit growth over 2012 backed by a stronger than expected economic revival.

In terms of market penetration, VDC expects enterprises competing in and servicing the transportation sector to drive barcode printer investments, with the vertical’s growing focus on automation and utilizing data capture solutions for everything from packaging to last mile delivery. Healthcare continues to be an attractive vertical, particularly in North America. Label printer adoption and use will rise considerably in this market given how there now are more patients, assets, and drugs that require labeling, via product tags, wristbands, and inventory labels. VDC does not expect this market to reach critical mass anytime soon, especially given how digitization – of records, patients, inventory – is a recent trend born out of evolving government regulations and mandates.

While we do not anticipate growth rates to scale new highs in North America and Europe, there is much for vendors to capitalize on in terms of regional and vertical market opportunities. To learn more about our global thermal barcode printer market coverage and how to gain access to the research, click here.

An Acquisition Worth the Cost: What Makes Cognex an Attractive Target

Cognex Corporation, a company specializing in machine vision and imaging products, has emerged as an industry leader in recent years. VDC just published a report that analyzes the company’s financials, product offerings, and future prospects, positioning it as an attractive, albeit expensive, acquisition target. Specifically, Cognex is recognized for its engineering focus, strong vision-related IP, product development innovation, expanding ID products business, and its growing presence in the logistics vertical.

Cognex’s gross margin is consistently among the highest in the industry, and it has seen a 9% revenue growth from 2012 to 2013. The company’s imager portfolio is growing in conjunction with the overall barcode scanning market and the global rise in automation investment. We sense Cognex’s acute interest in expanding into logistics, with the vertical’s growing focus on automation and utilizing data capture solutions for everything from packaging to last mile delivery.

Cognex’s leadership position, brand name, global reach, broad solutions portfolio, vertical market expertise, and a strong partner network make it a potentially valuable addition to certain engineering organizations. However, acquiring Cognex will come with its own unique set of challenges. The company’s market capitalization is at an all-time high of $3.3 billion, due to its strong performance in the industrial sector, especially over the past 18-24 months. VDC expects only organizations with deep pockets and/or access to significant amounts of capital or debt to even consider purchasing this company. Additional risk comes with Cognex’s dependence on the cyclical manufacturing sector. While the outlook is largely positive for the near future, this sector is prone to periodic weakness and has a high propensity to be impacted by global economic fluctuations. There is also considerable room for improvement in Cognex’s professional services portfolio, which make it rather reliant on its partner network.

Continued interest in and adoption of automation solutions to solve operational challenges and enhance supply chain visibility will spur camera-based product sales into the foreseeable future. VDC expects to see increased demand for machine vision solutions in non-manufacturing environments, which bodes well for Cognex. We firmly believe the company is poised for success, and well-positioned to capitalize on current and emerging opportunities, backed by its strong product portfolio and a keen focus on application engineering.

The full content of this VDC Views, Cognex as a Takeover Target, is currently available to all VDC clients on VDC Connect (www.vdcconnect.com).

(With significant contribution from Rachel Zacchea, Research Assistant)