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

Datalogic Celebrates its 40th Anniversary

This week, Datalogic, a global leader in the market for barcode readers, mobile computers, machine vision systems, personal shopping/self-scanning systems and other AutoID solutions is celebrating its 40^th anniversary. During its infancy in the early 70s, the Company specialized in the manufacture of photoelectric sensors for the textile, ceramics and packaging industries, but via ongoing investment in in-house R&D and strategic acquisitions, Datalogic’s product portfolio has steadily expanded to include a spectrum of AutoID solutions. During four decades of operation, the Italy-based Company has also vastly increased the geographic scope of its business, expanding from its original European focus to become a truly global AutoID vendor.

While Datalogic has maintained an international presence across EMEA, Asia-Pacific and the Americas since the 80s, the Company has historically been strongest in its home European market. However, over the past 18 months, Datalogic has made a concerted effort to fortify its competitive position in the Americas, particularly within the US market. To achieve this goal, the Company recently completed two significant acquisitions—PPT Vision, a supplier of machine vision solutions, and Accu-Sort, a vendor of industrial scanning and imaging solutions.

Not only have both of these acquisitions materially boosted Datalogic’s market share within each respective technology market; they also have afforded the Company instant access to well-established regional distribution networks and new application/vertical opportunities. Via the Accu-Sort transaction, Datalogic became the stationary industrial barcode scanner share leader in the Americas, according to VDC’s data. VDC expects the Company will continue to strengthen its presence in that region as it integrates these two acquisitions and fully harnesses the operational and sales synergies they offer.

Looking to the future, VDC believes Datalogic will continue to build its presence in the AutoID markets via pursuing additional complementary acquisitions, logical expansion into adjacent/emerging technologies and maintaining its position as an AutoID innovator through ongoing R&D investment.

 

 

A Savvy Acquisition of Savi Technology?

In the late 2000s, Savi Technology, an active RFID solutions provider, was among the major beneficiaries of an approximately $430 million US Department of Defense (DoD) contract commonly referred to as “RFID III” (The Company also enjoyed strong growth through earlier announced large DoD RFID contracts). One of the principle objectives of this RFID funding was achieving “In-Transit Visibility” (ITV), which essentially meant establishing real-time insight into the progress and location of various DoD assets (e.g., cargo, personnel, vehicles, equipment, etc.) during their journey through the supply chain—from point of origin to final destination. The DoD selected Savi, along with several other well-known defense contractors (with Lockheed Martin, Savi’s parent company, being key among them), as the primary solution providers for the ITV initiative.

For its part in the contract, Savi Technology provided highly-rugged active RFID tags, which cost upwards of $100 per unit, along with other systems components. In the early days of the RFID III contract, the DoD struggled with best practices in regards to the recycling and reattachment of Savi’s tags to assets (e.g., cargo, intermodal containers) entering or re-entering the supply chain, despite their significant cost and the fact that the tags were reusable and designed for a 5-7 year lifecycle.

Several years into the RFID III contract, the Government Accountability Office (GAO) reviewed the practices of the DoD in the context of the ITV initiative. Among the findings of this investigation was the fact that significant funds were being squandered on new RFID tags, when the “old” tags could have (and should have) been reused many times over. Ultimately, this GAO revelation materially decreased demand for Savi’s tags and had a correspondingly negative impact on the company’s financial performance, especially on their renewable tag volume business. While Savi did enjoy some success outside the military space, deploying their solutions at a wide number of ports internationally, the company remained challenged by the slow pace of adoption for RFID-enabled cargo tracking and security applications, such as customs inspection.

It was no big secret in the RFID industry that Savi was struggling, and that its parent, Lockheed Martin, was looking to divest the business. Last week Savi announced that they had found a buyer.  The Company was acquired by LaSalle Capital, a private investor group based in Los Angeles. We expect LaSalle will likely seek to revitalize the Company and extend Savi’s presence outside its core historical market of Defense/Military within the US and its Allies to commercial markets. There is no shortage of potential avenues the company could explore to drive future growth with its current offerings, but we think RTLS and other forms of “RFID+” solutions (e.g., active RFID plus sensors) are among the most feasible options for Savi to pursue moving forward.

A Quick Scan of the 2012 AIM Summit Conference

Last week the VDC Auto ID team visited Chicago for the 2012 AIM Summit. AIM (Association for Automatic Identification and Mobility) is an industry standards and education organization dedicated to all AutoID and Mobility technologies—including barcode, RFID, RTLS and mobile devices. VDC was pleased to participate in this year’s event—both as attendees and presenters. AutoID VP Mike Liard delivered the opening keynote address during which he discussed current trends impacting the barcode and RFID markets. With a broad focus encompassing all AutoID technologies, there was a lot to take in during the event. Here are some of the key highlights:

• We believe the US FDA’s Unique Device Identifier (UDI) initiative could have a major impact on adoption and usage of Auto ID solutions in the healthcare vertical: Essentially, UDI is a federal mandate that will eventually require all medical devices to be individually marked with a code containing important information including manufacturer, model number and expiration date. Complex, high-risk (i.e., implantable) medical devices will be the first class of product to be effected by this new regulation (in 2014), but over the course of the following 5 years, the mandate will extend to other device classes as well. While the major objective driving the UDI legislation is improving patient safety and the effectiveness of medical device recalls, VDC believes the initiative could benefit healthcare enterprises by improving insight to their supply chains and supply inventory levels as well. Of course, realizing these adjacent UDI benefits may necessitate healthcare enterprises to augment current AutoID systems, but if the opportunity for strong ROI is there, we expect investment to follow.
• The barcode market is no longer just about linear and standard 2D barcodes: New 2D symbologies such as Han Xin code are emerging, and could have an impact on certain segments of the market. Han Xin code, introduced about a year ago, is a new two-dimensional matrix symbology. Han Xin codes are particularly effective at encoding large numbers of Chinese, numeric and ASCII characters, and can be printed in 84 different sizes. However, since this symbology is largely designed to encode Chinese characters, we expect its impact to be mostly limited to China and other parts of the Asia-Pacific region.
• Another relatively new symbology, called Ultracode, is also gaining traction: Ultracode was designed for printing on uneven surfaces/materials that are generally poorly suited to printing standard symbologies (e.g., stone, fiberboard, wood and other irregular surfaces). Also, thanks to its ability to be read even when damaged, Ultracode is also favored for applications where barcodes are highly susceptible to being damaged, such as supply chain and T&L.

In addition to being a great forum for engaging with the entire AutoID community, this year’s AIM Summit also provided a special opportunity to remember Bert Moore, a longtime industry advocate and AIM member, who passed away earlier in the year. Bert was given a heartfelt tribute during the post conference dinner and awards program—a fitting gesture considering his contributions to both the AIM organization and the broader AutoID industry for many years. VDC thanks AIM and its constituents for another great event and we look forward to next year’s show.

Bonjour from the NFC World Congress—Day 1 Conference Recap

VDC is back at the NFC World Congress in beautiful Nice, France. With a larger roster of delegates and exhibitors participating in this year’s conference, the event was moved from Sophia Antipolis (one of the suburbs surrounding Nice) right into the heart of the city for 2012. The first day of the Congress was dedicated to panel discussions and presentations, but thanks to a robust, well-rounded lineup of speakers, there is no shortage of interesting NFC-related insight to share. We will be certain to report the highlights of tomorrow’s session on the exhibition floor, but for now here is a review of some of today's presentation highlights:

• Microsoft demonstrated its NFC-enabled Windows Phone 8 during an engaging presentation led by John Skovron, the product manager leading the Windows Phone initiative. Long story short: both the phone and the Windows OS look very promising. While Microsoft’s earlier forays into consumer electronics are probably best forgotten (see: Zune mp3 player), we think the Windows Phone 8 (especially the OS) is a solid product. If consumers are willing to give it a chance, we think this device/OS could win share in the smartphone market and drive consumer-level adoption of NFC. Furthermore, we think Microsoft has its collective thinking in the right place when it comes to NFC applications. During the presentation, discussion surrounding near-term application opportunities focused on non-secure (i.e., non-payment) use-cases. We look forward to seeing the Windows Phone 8 solution launch soon.
• Nokia, Microsoft, Device Fidelity and GSMA kicked off today’s proceedings with a discussion of the implications of Apple’s ongoing absence from the NFC ecosystem, a timely topic considering that it was approximately one week ago the company announced definitively that the iPhone 5 would not include NFC. While this announcement was certainly disappointing for many NFC ecosystem stakeholders, the tone of today’s conversations was decidedly upbeat and resolute. As we suggested in our post-iPhone 5 announcement blog, it seems that Congress participants are generally viewing this development as a call-to-action to educate end users (both consumer and enterprise) about NFC.
• Samsung discussed the impressive sales performance of its Galaxy line of NFC-enabled smartphones. The company expects North American shipments of smartphones (all brands, not just Samsung) during 2013 will have an NFC attach-rate of 23%, up from approximately 8% this year, while global NFC smartphone shipments will nearly double, reaching 183 million units. Of course, only time will tell if these forecasts prove true, but regardless, they demonstrate the major growth potential that remains in the market for NFC-enabled smartphones and complimentary NFC solutions.

We have another busy day tomorrow filled with meetings and seeing the best new NFC products and demonstrations the exhibition floor has to offer. Check back here tomorrow for another update from the Cote d’ Azur. Au revoir for now!

Wait ‘til Next Year (At least)…No NFC for the iPhone 5

Today Apple unveiled its much-anticipated iPhone 5—but NFC was not among the new features. While the new iPhone includes LTE, a 4 inch screen and a range of other incremental improvements, there will be no NFC in the iPhone for at least another year. We expect Apple’s latest NFC snub caught some by surprise, especially because several NFC-related patents granted to Apple during the past year suggested that the iPhone 5 would include the technology.

While the possibility remains some future iPhone iteration could integrate NFC, at this point, VDC does not foresee this happening unless material progress is made in the global NFC ecosystem—particularly in regards to the development of a robust contactless infrastructure in all regional markets, stronger enterprise investment in B2C apps and demonstrated consumer interest in using the technology. Time and again, Apple has deferred the integration of new technologies into its devices until they are fully proven, broadly accepted by the market and the company has developed a solution to support (if not monetize) them. At this point in time, NFC meets none of these criteria and, frankly, it is difficult to envision NFC progressing so significantly during the next 12 months that the iPhone 5s (or whatever the next generation device is called) would include NFC. It could happen, certainly, but we would not bet on it.

Furthermore, for at least the next year, Apple can legitimately be considered an NFC competitor. Via its new Passbook app, which is a key new iOS 6 feature, Apple is no longer on the contactless solution sidelines—it has adopted barcode in lieu of NFC. Passbook, which is essentially a mobile wallet of sorts, is capable of supporting certain contactless transactions, including ticketing (e.g., Delta Airlines) and payment at specific merchants (e.g., Starbucks). Just because Passbook is enabled by mobile barcode today does not mean future versions are precluded from NFC integration. However, in regions (such as the US) where the iPhone is especially dominant, NFC will remain challenged to become the preferred enabler of various mobile applications (e.g., payment, marketing, loyalty, etc.)

While the iPhone 5 announcement is certainly bad news for the prospects of the broader NFC market, there are still bright spots:

• Android is a larger and faster growing mobile OS: this is particularly true in EMEA and APAC where contactless infrastructure is more prevalent, and Android already supports NFC
• NFC has key differentiators that QR code, 2D barcode and the Cloud cannot match: These include speed/ease of use, stronger security, P2P capability and the ability to transmit information without a network connection
• New mobile OS options supporting NFC are in the pipeline: Windows Mobile, for example, will reach the market soon and could drive NFC adoption if it's well-received by consumers

From our perspective at VDC, the iPhone 5 introduction should send one very clear message to those suppliers and developers already engaged in the NFC ecosystem: stop pinning the hopes of your company and the broader market on the participation of Apple. Not only may it never integrate NFC into the iPhone or any of its other devices, Apple is now competing directly against NFC by virtue of the Passbook app. Now is the time to educate consumers and enterprises about what NFC is, what it can do, and why it’s better than competing solutions. Continue waiting 'til next year and by then it may very well be too late.

Remembering Bert Moore, AutoID Industry Veteran

We are deeply saddened by the passing of Bert Moore, a 25+ year veteran of the AutoID industry and a recognized expert on the subject, who passed away on July 6, 2012. His tremendous contributions to this community will be missed, but Bert will live on through the legacy of his stewardship and educational efforts on behalf of the entire AutoID ecosystem.

For many years, Bert served the AutoID community in a host of different capacities. As the director of IDAT Consulting & Education, Bert provided educational and consultative services to companies evaluating investment in/deployment of various AutoID solution types.

As the Director of AIM's (Association of Automatic Identification and Mobility) Technical Communications and Media Relations, Bert wrote and edited AIM's newsletters "RFID Connections" and "AIM Connections." In his role at AIM, he also served as the recording secretary for the Association’s Technical Symbology Committee (TSC) and RFID Experts Group (REG) and was a member of the RFID Emblem maintenance committee. 

In addition to his work with AIM, Bert also served on ANSI’s (American National Standards Institute) Data Identifier maintenance committee and chaired the CompTIA RFID+ Certification cornerstone committee.

During his years of service to the AutoID ecosystem, Bert received a number of honors and awards in recognition of his outstanding work, including the AIM USA "Industry Service Award" in 1992 and the 2010 recipient of the AIM "Excellence in Journalism" Award. In 1997, Bert was selected as a charter member of the AIDC 100 organization, an association of individuals who have made significant contributions to education within the AIDC industry. We thank Bert for his years of service to the Auto-ID community and send our thoughts to his family and loved ones.

Apple Confirms m.Wallet Application in iOS 6…

...But, contrary what the NFC-related rumors swirling around Apple would suggest, this app uses QR codes, not NFC. At the company’s 2012 Worldwide Developers Conference (WWDC) keynote address, the company introduced an updated version of its mobile operating system, iOS 6, which features Passbook, a new mobile wallet app that enables a range of cards, tickets, coupons and other credential types to be stored electronically in a mobile device. Passbook is an app tailor-made for many of the use cases associated with NFC—transportation and event ticketing, loyalty, mobile marketing/couponing and, of course, mobile payment, but leverages QR codes instead of NFC. At least for the time being, Apple remains on the sidelines of the NFC ecosystem.

Unfortunately for NFC and the vendors working to bring this technology to the mainstream, competing solutions like QR codes can enable many of the same applications as NFC with far less complexity and cost, although QR codes lack the inherent security NFC offers. Unlike NFC, which requires merchants to invest in contactless infrastructure, QR code-based apps generally can be enabled without major hardware investment, since they leverage hardware such as scanners/imagers that are already installed at most merchants. VDC views the costs associated with specialized contactless hardware as one of the most immediate and obvious barriers to merchant adoption of NFC.

From a consumer adoption perspective, NFC is equally challenged due to relatively weak awareness and accessibility. While QR codes are highly recognizable and printed on everything from real estate signs to product packaging to billboards, NFC-tagged items are highly uncommon and, not surprisingly, lack the immediate recognition of QR codes. As with merchants, consumers do not require a special device to read/display QR codes—almost any common smartphone is capable of supporting a QR app, making QR codes far more accessible to the masses today. In comparison, the population of consumers currently using NFC, while growing, is still highly limited. While NFC smartphone penetration levels could in theory one day approach the levels of smartphone adoption in general, but at this point in time, such a reality seems to be at least several years away, if not entirely uncertain.

To be clear, this recent announcement does not by any means preclude Apple from integrating NFC in its future hardware or software offerings. However, it clearly demonstrates that the company can and will enable many of the same applications (such as an m.wallet) discussed in the context of NFC via alternate technologies. Could Apple announce its support of NFC with the iPhone 5 later this year? Certainly—but we advise any enterprise evaluating NFC investment not to bank on it. 

RFID Journal – Day 2 Blog

On the final day of the show, I met with more exhibitors and anxiously waited to hear who had won the RFID Journal awards this year.  For those of you who don't know about the winners, we tweeted them yesterday.  http://twitter.com/#!/vdc_rfid

Cubic: If you are not familiar with the government sector, then you might not know about this Cubic.  This company is a market leader in Asset Management and Supply Chain solutions to the military ... and they are beginning to get into the enterprise side of the market.  Cubic offers long range asset visibility and management in a diversity of environments (including very harsh ones) via a mesh network that can be rapidly deployed.  They have been adding a tremendous amount of benefit to the military as seen in this Washington Times article   I am eager to learn more about this company and its capabilities.

RedPine: Haven't heard of this company?  You will soon.  They have developed a dynamic multi-frequency RTLS solution integrated with a mesh network platform.  In other words, they have introduced a solution that can be function at 2.5 & 5 GHz while offering highly accurate location and sensing - in a very cost effective manner.  2.5 GHz is a high traffic frequency (i.e.: Bluetooth), so offering an enterprise the additional flexibility to work on the 5 GHz band is an attractive value proposition.  This company's RF expertise and innovative solutions have really caught my eye.  I'll be following this company closely.

William Frick: The speciality tag manufacturer, already well known in the labeling and converting communities, is beginning to garner more attention due to their ability to customize their transponders ... not only with a growing diversity of form factors and materials, but also because they are willing to develop and produce these tags in much lower volumes than their competitors.  In a time when most deployments can still be characterized as requiring customized tags at small volumes ... this business model makes a lot of sense.  And let's not forget that they have capacity, so they can grow with their clients. 

BTW ... congratulation to RFID Journal on their 10th anniversary of this show.  As always, a special thanks to Mark Roberti, Debbie Hughes and Deb Lambert for putting on another great show.  Looking forward to next year.

 

RFID Journal – Day 1 Blog

More vendors, more foot traffic and more dynamic solutions.  Unfortunately, I didn’t have time to visit them all on Day 1, but what I did get to see was exciting.  Here are a few highlights …

Murata:  The company is a large player in the electronics space, but has been flying under the radar in the RFID industry.  Not any more … Murata demonstrated some of the smallest reader modules and tags available today.  For example, they showed me the smallest NFC antenna and NFC reader modules I’ve seen to date.  To give you an idea of the size, the NFC reader module they showed me was only slightly bigger and thicker than the actual chip and the antenna was about half the size of the typical one used.  And there was no real sacrifice on performance.  Keep an eye on this company … you’ll probably see their products being integrated into a diversity of devices over the next 12-18 months.

Intermec:  We’ve been saying for a while that there is significant opportunity for tool tracking on vehicle fleets … there are millions of dollars worth of tools that are left behind or lost by employees.  Intermec has developed a unique and high performing solution that enables highly accurate reads in dense tag environments within the back of the vehicle by placing their latest antennas on the interior roof of the vehicle.  The system will most likely be connected to a mobile device or in-vehicle computer used by the driver.  This is not a solution for tracking the vehicle, but the tools and products within it. 

Aeroscout:  Up until about a year ago, Aeroscout was perceived primarily as a health care company, offering RTLS solutions to hospitals and other health related facilities.  But this is rapidly changing as the company continues to penetrate non-health care markets, such as industrial/manufacturing.  It seems as if there are many synergies between their solutions used in healthcare and those that need to be used in manufacturing (i.e.: tracking assets, ensuring compliance or calibration, etc.).  The company is very focused on Wi-Fi, so most of the increased activity is expected to be within the 4 walls of an enterprise. 

RFID Journal Live! 2012 – Preconference Blog

Today was the preconference for the 2012 RFID Journal Live show in Orlando … the show officially opens tomorrow.  Although we didn’t get to see many exhibits today (the exhibit show floor was closed most of the day), I did have the opportunity to get a preview from NXP on their latest and greatest NFC applications. 

NXP demonstrated an NFC application for home video game systems for the Wii and Xbox.  This application enables the user to save game progress or change characters by simply placing an avatar figurine on an NFC accessory for the gaming system (see the picture below).  The avatars and accessory have embedded NFC chips in them, which hold the gamer’s progress for that specific character.  The figurines are capable of being used at other gamers houses as long as the NFC accessory is present, which means you can take your characters with you to play at other locations.  Although limited to a specific game at this time, it could be easily developed for other character-based games.  Cool factor … very high!

They also showed an authentication application for alcohol.  The level of alcohol counterfeiting in some parts of the world is massive.  For example, they stated that 80% of a specific wine brand in APAC was counterfeit, and in Europe, deaths actually occurred due to toxic counterfeit solutions being used.  For this application, the NFC tag is embedded in the cap or seal of the bottle at the point of manufacture.  Although this isn’t new and is actually mandated in specific markets such as Korea (for tax purposes), what is new is that the consumer can authenticate their purchase in the retail store by simply placing it on a countertop reader.  Also new to this solution is the tamper proofing of the tag.  Once the bottle is opened, the tag is ripped and will identify itself as being compromised.  This provides the added protection from counterfeiting by preventing the refilling of brand bottles with counterfeit solutions.

More blogs to come as I get to see more of the show floor … stand by.