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

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.)

New AutoID Coverage from VDC: Announcing our Machine Vision Solutions Research Program

After several months of investigation and early market analysis conducted by our AutoID team, VDC Research Group is pleased to announce the launch of our 2014 Machine Vision Solutions Market Research Program. This new research is a natural fit with our legacy coverage of core AutoID technologies such as barcode scanners and imagers, RFID and RTLS as well as our on-going analysis within industrial automation and sensors sectors. VDC’s machine vision program will help AutoID vendors, industrial automation equipment suppliers and machine vision specialists understand the key trends, issues and drivers shaping the machine vision market in industrial and non-industrial sectors. 

Machine vision components and systems sales have emerged as a multi-billion dollar global market opportunity. At its core machine vision is the process of applying a range of technologies and methods to provide imaging-based automatic inspection, process control, robot guidance and much more. As these solutions become a more critical part of automating business processes and operations across industries, we expect broader end-user adoption and market growth in both manufacturing and non-manufacturing sectors.

The research program influencer period is now open for vendors and solutions providers.  Research program influencers help shape our upcoming machine vision market coverage, segmentations, analysis and more. Please contact VDC for more information about becoming a research influencer and gain early access to machine vision insights from our AutoID team. We can be reached at: i[email protected]

Key research program components include the following:

• Track 1: VDC Views: on machine vision solution selection & deployment

• Track 2: Machine Vision Market Analysis reports for:

-    Industrial/Manufacturing Sectors

-    Emerging Markets/Verticals

• Track 3: Vendor Spotlights & Evaluation Guide
• Track 4: Machine Vision End-user Analysis report

 What are some of the key questions answered by this research program?

• Where are the growth centers for machine vision components and solutions in terms of industry sectors, applications and regions?
• Which vendors and solutions providers are leading the machine vision market today? Which companies are considered innovators shaping the future direction of the machine vision landscape?
• Which types of enterprises most frequently deploy machine vision solutions and why?
• How will vendors differentiate themselves from their peers in the highly-fragmented, highly-competitive machine vision market?
• In which environments are the relatively less complex smart camera-based machine vision systems a significant threat to PC-based solutions?

Recap of VDC's AutoID Team's Q2 Blogs: Did You Miss Any?

If you missed any blog posts from Q2, here is a recap, including hyperlinks and core AutoID technology focus for each posting. 

A Preview of our Handheld Barcode Scanner Report

AutoID Focus: Barcode

The recent trends in the barcode industry continued in 2012. What is the state of the handheld barcode market? This article looks at the state of the barcode industry and provides insight into key trends and competitive dynamics for the handheld scanner market.

Cognex watching Microscan’s products like a “Hawk”; files IP infringement claim

AutoID Focus: Barcode

In April, Cognex filed a lawsuit against competitor Microscan’s Mobile Hawk product for patent infringement: Microscan is refuting the claim of infringement alleging it is original technology.   

How does Legislation Impact Barcode Technology Adoption?

AutoID Focus: Barcode 

Many governments have looked towards barcode technology to enhance traceability of highly counterfeited products (pharmaceuticals, food, etc.). Legislation usually takes time for implementation, however. How does legislation impact barcode adoption?  

Embedded Sensing & M2M Enable Advanced Efficient Agriculture with RFID

AutoID Focus: RFID

A new product from RFMicron, the Magnus chip, allows for upgrades in typical passive RFID technology. These upgrades enhance performance and adjust performance for given levels of moisture. One particular industry this could help is agriculture. Learn more by reading this post.

What is Shaking Up the Barcode Technology Market?

AutoID Focus: Barcode

2012 was interesting year for many markets, including the barcode market. Beyond economic stagnation and volatility, there are three other factors that contributed to the performance in the barcode technology market.

TEKLYNX International Partners with VDC Research on Recent Channel Leadership Workshops

AutoID Focus: Barcode

In mid May, TEKLYNX partnered with VDC, CEO Focus, and Felton Consulting, to present two separate channel leadership workshops. These workshops offered a valuable opportunity for executive-to-executive interactions. Well over 100 attendees participated in the two live events.

Is this the end of barcode labels as we know it?

AutoID Focus: Barcode

Many technologies are changing the traditional look of black and white barcodes. Two such relevant technologies are colored barcodes and watermarks (invisible barcodes). Do these technologies prove to be the demise for barcodes or are they merely complements?

The Power of Datalogic's Magellan 9800i - Now Available

AutoID Focus: Barcode

Growth in the barcode industry has continued, anchored by the need for camera based imagers. Datalogic, this June, released a game changer for the retail industry in the multi-plane camera based scanner-scale, the Magellan 9800i, specifically for checkout.

What You See is Just Not What You Eat Anymore

AutoID Focus: Barcode

In China, many wealthy people have looked towards international sources for their cuisine. Why? Because there have been several counterfeiting scandals over the past few years. Barcode and other AutoID technology can bring asset tracking capabilities to China.

VDC's AutoID & Data Capture Practice's Summer Intern Gets Enamored by RFID

AutoID Focus: RFID

Several factors of everyday life are often misunderstood or generally ignored. VDC’s AutoID & Data Capture Practice's summer intern’s baptism into the world of AutoID, especially RFID, was eye opening and empowering. 

The Magic of Macy’s Omni-Channel Retailing Strategy Becoming More Potent with RFID

AutoID Focus: RFID

Omni-channel retail is an ideal in which all channels of a retailer are seamlessly integrated such that information is shared in real time. Macy’s has implemented RFID at the item-level for apparel and moving toward tagging other items with the goal of enabling omni-channel retailing.

The RFID Application Invasion Marches on

AutoID Focus: RFID

Friedrich Dick (a German cutlery company), Fleye (an action sports filming company), and the government of Taipei are all using RFID in creative ways. As RFID becomes more affordable and accessible, a higher number of companies and organizations are looking to implement RFID as solutions.

DC Velocity Talks Item-Level RFID and Distribution Centers with VDC’s Mike Liard

AutoID Focus: RFID

DC Velocity magazine sought thought leadership from several RFID experts on the impact that item-level RFID tagging will have on distribution centers. Mike Liard, of VDC, helped DC Velocity on both an article and a webcast concerning this issue.

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.

Epson Mobilizes to Address Rapidly Growing mPOS Opportunity

Still questioning whether consumer-grade mobile POS (mPOS) devices are a short-lived trend or a here-to-stay expansion of the broader front-end technology solutions at many leading mainstream merchants? Here is another strong point in favor of the latter: Epson, the global market leader in POS receipt printers, recently announced its Mobilink P60 mobile receipt and label printer supports Bluetooth connectivity to facilitate wireless pairing with all Apple i-devices and a diversity of other Bluetooth-equipped consumer-grade devices. The Company simultaneously introduced a new software development kit (SDK) for iOS, Android and Windows operating systems that is intended to expedite the development of mPOS and label printing applications that leverage the Bluetooth-enabled Mobilink printer.

As mPOS solutions gain stronger adoption among retailers and hospitality operators—sometimes as an enterprise’s exclusive POS system—the demand for reliable, easy-to-use printing solutions that complement the mobility and empowerment mPOS provides workers is growing increasingly strong. In response, a number of POS receipt printer vendors—including Epson—have been swift to launch portable versions of their standard, stationary POS printers. These portable printers are certainly smaller than their stationary counterparts and are “mobile” in the sense that they can be easily transported. However, while smaller in relative terms, they are not ideally sized to be wearable for the average worker.

For this reason, we believe a Bluetooth-enabled printer such as Epson’s offering will­­­­ be well-received by many mPOS deploying merchants, especially those using mPOS “within the four walls,” as opposed to in field-sales or other remote applications. The deployment of Bluetooth-enabled stationary and portable printers enables mPOS-equipped associates to fulfill any printing requirements encountered during their shift while freeing them from the burden of carrying another device on their person. Furthermore, enabling on-the-go, mobile printing via shared Bluetooth-enabled (or other wirelessly accessible) devices allows enterprises to reduce printing hardware investment by eliminating the need to equip every associate with their own mobile printer. Accordingly, in the case of many mPOS deployments, we expect this approach to mobile printing will be favored both for its lower investment costs and freeing employees from carrying additional equipment.

VeriFone Furls its SAIL

Less than a year after launching its SAIL m.payment solution, payment terminal giant VeriFone has essentially pulled the plug on the product, which is its version of a Square-style card reader dongle. Citing a number of major challenges, including fierce competition in this nascent, but rapidly-growing market and the razor-thin margins on SAIL-based payments, the Company’s CEO officially disclosed SAIL would cease operations (save for continuing to service current users) in its recent Q4 earnings call.

While it is somewhat surprising that a well-established company like VeriFone is bailing out on a new product so quickly, the closure of SAIL clearly demonstrates the cutthroat competition in this market and could portend further consolidation or business failures of other similar ventures in the near-term. Certainly there is no shortage of Square-like solutions, with numerous hardware- and software-based competitors in the consumer-grade device mobile payment market (including Intuit, Paypal, Dwolla, iZettle and Groupon, just to name some high-profile players). Perhaps even more problematic for these m.payment service providers is that the business model on which they are founded is generally a race-to-the-bottom in regards to profit margins, with the major differentiator between each competitor often being the percentage fee charged for processing payments.

Looking ahead to the future, we believe the mobile payment competitors that will be viable for the long-term will be those that successfully layer value-added applications/services such as loyalty, coupons/offers and other mobile commerce functionality on top of their basic payment processing service. To the extent that these adjacent applications drive stronger customer loyalty, larger average ticket sizes and increased footfall for merchants, m.payment service providers can leverage them to generate additional revenue streams, differentiate their offering and attract new merchant partners. Conversely, we expect m.payment providers that remain reliant on processing fees for the majority of their revenues will see fiercer competition, shrinking margins and increasingly stronger chances of failure as payment processing service becomes more commoditized.

 

 

 

Gemalto, G&D and ARM Launch Trustonic JV to Ease NFC SE Pains, but Will it Really Help?

If you frequent this blog, you already know we are generally bearish on the NFC’s near-term prospects as a m.payment and m.commerce enabler. While the technology certainly has some great features and benefits, NFC faces too many challenges—several of which are highly complex and/or expensive to address—for it to reach mass adoption at a global level for the headline applications with which it is associated, at least for the next several years. Among the thorniest issues associated with NFC-enabled secure applications (i.e., use-cases that require transmission of sensitive and/or personal information, including payment, ticketing, loyalty, etc.) are those related to the secure element (SE), the part of a smartphone where this information is kept:

• Where does the SE reside on a smartphone? (SIM, MicroSD, embedded, elsewhere?)
• What entity owns/controls the SE? (MNO, device manufacturer, card issuer, multiple entities?)

These questions are of material importance to the above-mentioned stakeholders (and others), especially in the context of m.payment, ticketing and other contactless applications where funds are transferred between parties (e.g., customer-to-merchant, person-to-person). Just as credit/debit card companies generate billions in fees annually from processing “plastic” payments, so too could NFC SE owners generate handsome interchange revenues (as well as “rental” fees if a third party entity requires use of a SE for its own app) for NFC-enabled contactless payment. As a result of the high stakes and multiple, self-interested entities jockeying for position, no clear, broadly-accepted determination has been reached on either of these SE-related issues—nor do we expect one to emerge anytime soon.

In the meantime, NFC market players ARM (a smartphone chip vendor), Gemalto (a TSM provider) and Giesecke & Devrient (a payment security solution provider) have launched a joint venture called Trustonic to create a semi-secure alternative to NFC SEs called Trusted Execution Environments (TEE). Essentially, the TEE resides in the main processor of a smartphone, which positions it to execute transactions and other processes more expediently relative to a standalone SE. However, since a TEE is not entirely isolated from the rest of the device, this increased speed comes at the expense of security—meaning that it is unlikely credit/debit card providers and other credential issuers with high security requirements are unlikely to grant approval to TEEs like Trustonic.

While it is promising to see the emergence of new and innovative solutions to address some of the challenges hindering NFC adoption, we do not expect the emergence of Trustonic or other SE alternatives to have a material near-term impact on the NFC ecosystem. VDC views NFC’s great potential as an enabler of B2C applications as being a “package deal,” where payment, loyalty, couponing and other functions are united by one contactless application. Unfortunately, in maneuvering around the sticky SE issues, Trustonic also has diminished the SE’s value as a vault-like safeguard for the most sensitive credential types, meaning the TEE only can support semi-secure NFC apps. In our opinion—one we suspect is shared by many B2C merchants—this approach limits NFC’s value proposition and Trustonic’s potential to drive broader adoption of the technology.

France-based m.Wallet Consortium Leader Chooses Barcode, not NFC

Auchan, a leading French supermarket chain, announced plans to launch a cross-merchant m.wallet app called Flash ‘n’ Pay (FNP). The FNP app will be very similar to the one currently in development at the Merchant-Customer Exchange (MCX), which we discussed in a previous post. Like MCX, the FNP app can be used with all credit/debit card brands, supports loyalty cards and is MNO and issuing-bank agnostic. FNP also shares the same enabling technology as MCX—the app will be barcode-based, not NFC.

Whereas France is among the countries leading European NFC adoption, one might understandably assume that a retailer-led m.wallet app designed for that market would be NFC-based, not barcode. However, NFC faces many of the same fundamental challenges to mass adoption in France that it does in most other countries: 

• NFC-based apps cannot be used by many current smartphone users—barcode is accessible to virtually all
• NFC-based payment requires cooperation across multiple stakeholders—barcode does not
• Barcode-based apps are easier and less costly to support—and many B2C merchants already have the requisite 2D imagers installed at the POS

Certainly, NFC adoption in France is stronger relative to most other national markets, thanks in large part to the French government’s recent commitment to fund contactless transportation infrastructure in approximately 15 cities. However, NFC’s long-term potential as a B2C commerce enabler in France—and in most countries, save for a select few in Asia-Pacific—remains highly uncertain.

We view Auchan’s selection of barcode for its m.wallet as a particularly noteworthy development by virtue of its regional context. If an NFC m.wallet is not viable for a French retailer, in which countries is it?  From our perspective, the FNP announcement demonstrates how far NFC has yet to progress before it attains mainstream status, even in the countries/regions where adoption is relatively strong today.