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

New Report: Mobile Barcode Scanners – Shaping the Future of the Data Capture Industry

(VDC recently published a report focused on Mobile Barcode Scanners. The following blog highlights some of our thoughts on this market and its potential.)

The data capture industry is constantly changing. Handheld barcode scanning is no longer restricted to traditional pistol grip form factors or rugged mobile devices as pairing or integrating scanners with consumer devices is increasingly becoming a popular option for organizations’ barcode scanning applications. Capitalizing on growing smartphone adoption in the enterprise space, new and emerging hardware vendors such as Infinite Peripherals & Koamtac and non-traditional ISV participants like Scandit and Manatee Works (now part of Cognex) are challenging AIDC incumbents by bringing data capture technology to a wider audience in new ways.

As retail, logistics, and health care organizations face growing pressures to support vital workforce operations, improve customer experiences and improve productivity, consumer smart device-based solutions such as companion scanners, sleds, and barcode scanning software platforms are being evaluated as viable solutions to replace or be deployed alongside traditional purpose-built devices. The following are short descriptions of mobile scanning form factors that are available in the market.

• Companion scanners: Small form-factor barcode scanners that pair with other devices via Bluetooth/Wi-Fi.
• Sleds: Peripherals that encase and enable consumer-grade smart devices for enterprise- grade scanning.
• Personal Shopping Solutions: Mobile computer solutions that are used by consumers for shopping in store.
• Software platforms: Software development kits that enable consumer-grade smart devices to use their built-in cameras for enterprise-grade barcode scanning

Exhibit: Respondents’ Plans to Replace Purpose-built Scanners with Mobile Scanning Devices

According to results from VDC’s recent survey of mobile scanner end users and evaluators, 63% of organizations are considering replacing their purpose-built scanner investments with mobile scanners for daily operations. Respondents surveyed across retail, logistics, and health care are currently evaluating the option to deploy mobile scanning solutions to support daily operations. Consumer smartphone-based scanning solutions are also gaining consideration in the enterprise space as companies evaluate BYOD policies and alternatives to traditional purpose-built scanners. However, while mobile scanners do make barcode scanning available to a wider audience and broader range of applications, concerns related to initial investments and deployment costs remain.

VDC believes that mobile scanners are just about starting to present growth potential; application development will play a major role in sustaining long-term business development for vendors in the mobile scanning ecosystem, creating apps for enterprise uses cases and extending vendors’ products to wider audiences. Distributors with vertical expertise and a strong application developer network will be key components to success, since vendors must differentiate themselves from competitors and establish strong brand images.

Mobile scanner vendors profiled as part of this report – Amazon.com, Code, Datalogic, Grabba International, Hiku, Honeywell, Infinite Peripherals, Koamtac, Opticon (OptoElectronics Co. Ltd.), Scandit, Socket Mobile, and Zebra Technologies

For more information and insights on this report, please feel free to download the Executive Brief and contact us to learn how to gain access to the full report.

Written by Shahroze Husain and Richa Gupta. For more information, be sure to review our full mobile scanning report- Mobile Barcode Scanners or contact us at [email protected].The author can be contacted directly at [email protected]

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.

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?

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

More and more companies are turning to item-level RFID tagging to boost inventory accuracy throughout the supply chain. So, DC VELOCITY magazine asks: How will this affect distribution centers? To find out, Susan Lacefield, Associate Managing Editor of the publication, sought insights from industry experts.

To support an article published on May 14^th, Susan conducted interviews with me and others such as Avery Dennison’s Mark Hill and Intermec’s Kurt Mensch and Bruce Stubbs to discuss the progression of RFID at the item-level and the technology’s impact on distribution centers. She produced an excellent piece for DC VELOCITY and her interest in the topic was evident when we spoke.

In fact, Susan wanted to provide DC VELOCITY’s readership and audience with a deeper analysis of the subject, so she asked me to participate in a webcast to discuss how DCs can take advantage of RFID. Susan moderated a webcast on June 27^th, asking me a series of questions focused on item-level tagging and the current and future role of RFID in distribution center operations.  We had approximately 50 people attend the 45-minute webcast, with many attendees submitting questions that I was able to address at the end.

I would like to personally thank Susan Lacefield and DC VELOCITY for asking me to participate in the article and webcast.  I believe that as RFID adoption at the item level increases within the retail sector, it is critical to provide more education and awareness of the technology’s influence on supply chain and distribution center operations. Based on her great article and our webcast, I think Susan agrees.   

TEKLYNX International Partners with VDC Research on Recent Channel Leadership Workshops

TEKLYNX International recently conducted two live exclusive workshops for resellers, partnering
with VDC Research Group, CEO Focus and Felton Consulting for the events. The virtual workshops were designed for executive-to-executive dialogue on topics to help better position TEKLYNX’s reseller partners and their AIDC business for continued growth and success. These workshops also served as a fitting platform for TEKLYNX to unveil its new Strategic Partner Program.

Thefirst live “Channel Leadership: Fast Lane to Success” workshop was held Thursday, May 16^th and drewover 85 attendees. It was an outstanding turnout and a highly successful event.  And, due to a high level of demand, TEKLYNX invested in a second workshop that took place Wednesday, May 22^nd that netted roughly 40 attendees.    

Through the workshop attendees engaged in discussions around:

- The past, present and future of the AIDC industry – to ensure attendees’ businesses align with future AIDC customer/user trends to avoid falling behind.

- Best-in-class business strategies and processes.

- Tools to leverage to grow, track and manage resellers’ businesses.

- Tips to stay competitive and relevant through the right product mix, competencies and partners.

VDC Research was very excited to be a part of this workshop to discuss how the AIDC market has evolved in terms of product development as well as end user adoption and reseller evolution. First, VDC took a look at end user AIDC product adoption trends. We then walked attendees through reseller trends and market dynamics – past, present and future.

During the workshops, the best way for us to depict the evolution of the AIDC market was through a bell curve, starting with the early innovators and moving through to new innovation. In the book Crossing the Chasm, the author proposes a “Technology Adoption Lifecycle,” represented by a bell-shaped curve which describes the chronology of when companies adopt technologies. Our curve was an adaptation and was shaped to reflect key points in time against user demand and end user classification types spanning the innovators in the 1970s through various end user adoption groups to the new innovation or innovators being seen today and in the future. We repeated the bell curve exercise for the reseller community, highlighting key moments in the storied history of AIDC.

The importance was to communicate how end user needs have changed with their demand over time and how those needs have impacted AIDC market and solution development, especially among the reseller community.   

Attendee feedback was extremely positive and stellar questions were posed throughout the workshops.

A special thank you to Laura Henderson, General Manager at TEKLYNX, and her highly dedicated team for inviting VDC Research to participate in and contribute to both workshops.

If you were unable to attend either workshop, please contact the TEKLYNX Partner Manager at 414-837-4768 for more information.

A Logical RFID Application That Still Carries Some Heavy "Baggage"

Baggage handling is one of those “no-brainer” applications for passive UHF RFID technology. The use
case just makes sense.  Yet, after more than decade, this application market still struggles with historical issues. Although the benefits of the technology are clear, there have only been a small number of deployments worldwide. As adoption is most challenged by cost concerns, implementation challenge considerations and long-standing disagreements over who should pay for the system (airlines or airports).

Airline passengers are some of the most dissatisfied consumers in the world, especially in the United States.  And, the situation is only becoming worse as airlines cut staff, eliminate routes, add fees, and raise ticket prices to compensate for excessive fuel costs and other economic pressures.  The result has been massively lower customer satisfaction ratings. 

One major sore spot for air travellers continues to be lost baggage. And, now the baggage problem
is being compounded as extra fees are being charged for additional checked
bags.  If the airline misplaces or loses a bag that received a surcharge, imagine how upset a passenger would become after paying for checking in that bag. The airline may lose more than the bag – it will likely lose that customer.

• Lost baggage and handling issues are the focus - The impetus for many projects
  is the need reduce the time to transfer luggage. According to sources at the
  Lisbon Airport, the passive UHF RFID-based baggage handling system (BHS) has
  reduced the time to handle a baggage transfer by 66%. Other advantages include
  increased customer satisfaction and reduced labor (time to search for bags).
• McCarran International Airport (Las Vegas, US) expanded its program in 2012 - The
  new Terminal 3 has 130 self-check-in kiosks at which passengers can print their
  own passive UHF RFID-enabled baggage tags. This is innovative as printing has
  primarily been done behind the counter. More airports are expected to come
  online within 2-3 years; however, baggage handling system ownership (airports
  vs. airlines) and tagging costs remain major adoption barriers.
• Other considerations:

            -       More airports are expected to come online within 2-3 years; however, baggage handling                     system ownership (airports vs. airlines) and tagging costs remain major adoption                     barriers.

            -       Travelers are paying more than ever for checked baggage; however, lost baggage rates                     remain high and lead to customer frustration.  RFID technology can solve this industry                     challenge and make customers feel they are charged for a premium service as opposed                     to a bag fee.

            -       Delivered inlays and tags must be Gen2 compliant to ensure interoperability and IATA-                    approved.

            -       Only when more airlines and airports adopt passive UHF solutions will the commercial                     airline industry realize the full benefits of RFID.

While adoption has been limited to date, successful installations have occurred throughout the world. Some of the more prominent deployments include Schiphol Airport in Amsterdam, McCarran Airport in Las Vegas, Milan’s Malpensa Airport, Hong Kong International Airport, Portugal-Lisbon Airport and Aalborg Airport in Denmark.

While it may take some time, VDC Research does expect more airports and airlines to strongly consider RFID baggage handling systems and begin pilots and deployments. Like with most things RFID, time and actions will tell.  

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.

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.

VDC Research's 13 AutoID Predictions for 2013: Barcode, RFID & RTLS and Mobile Customer Engagement Technologies

Happy New Year! On behalf of the AutoID team and all of VDC Research Group, we wish you all the
best in 2013.

Although 2012 has just concluded, it is never too soon to look ahead. So to start the new year off in an interesting way, the AutoID team has taken out our crystal ball once again to offer 13 predictions for the AutoID market in 2013, including Barcode, RFID & RTLS and Mobile Consumer Engagement Technologies (MCET). They are presented in no particular order.  

1. Barcode: More market aggregation ahead – Expect continued consolidation of the barcode
   hardware landscape, particularly to achieve growth across following dimensions:
   • Regional – Vendors seeking to grow their presence in emerging country markets,
     particularly targeting barcode printer and scanner vendors based out of
     Asia-Pacific.
   • Vertical – Vendors looking to increase their proliferation into high-growth industry
     verticals – particularly healthcare.
2. Barcode: Vendors will learn to “accessorize” – More barcode hardware players will actively
   look to enter the “accessories” market – developing sleds and/or sleeves to support consumer-grade device usage in enterprise environments. This is particularly relevant to vendors addressing customer-facing applications with their devices in retail, healthcare, hospitality and commercial services. 
3. Barcode: Future with mobility, not without in software market – An increasing number
   of barcode software solution 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). Today, mobile barcode label generation software penetration is in a very nascent stage, but we expect that to quickly change. Mobility IS the way forward across verticals and industries and the entire barcode value chain must and will respond accordingly.
4. Barcode: Embrace the tech-savvy consumer – Scanning with and displaying barcodes on mobile device screens will continue to grow significantly among consumers. Barcode vendors and their enterprise and retail customers must continuously adapt to this explosive trend. 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).
5. MCET: Mobile point-of-sale (mPOS) will remain the hottest technology among B2C business operators – This trend will be most prominent in retail, but increasingly in dining as well, despite the fact that enterprises often lack clear strategic objectives guiding their investment in the same. In 2013, MCET solution providers must assume leadership roles in educating their customers on technology selection, software and security, best-fit use cases for specific mobile devices/form factors and total cost of ownership (TCO).
6. MCET: NFC as a broader ecosystem will make little progress beyond incremental gains in
   shipments of NFC-enabled smartphones – Yes, this means more NFC-equipped phones in consumer hands, and limited scale pilots and tests will continue, but 2013 is not the year when the technology gains global-level traction. However, expect more TV commercials for mobile phones and mobile network operators (MNOs) to advertise NFC and its applications – and more importantly, look for more commercials to specifically mention the term “NFC” in order to engrain the technology in consumer minds.
7. MCET: Merchants’ general focus on mobility - mPOS in particular - will bring great opportunity for vendors of adjacent peripherals – POS peripheral vendors (e.g., receipt printers, barcode scanners, payment solutions) are expected to drive growth via innovative, highly-portable versions of these traditional POS extensions. These vendors will be jockeying for competitive position more aggressively in 2013, responding to burgeoning demand among retailers, restaurants, hospitality and other enterprises wanting to differentiate and augment their systems by  “going mobile” at the POS.
8. MCET: Contactless mobile payment via NFC will not explode in popularity among consumers during 2013, but consumer usage and merchant support of this application will experience strong growth – Barcodes displayed on mobile device screens and core/traditional RFID (e.g., contactless tickets, smartcards) – not NFC – will continue to enjoy broader global support for mobile payments in the foreseeablefuture. For NFC to gain ground in 2013, more NFC-enabled devices must reach consumer hands, more NFC-compatible payment terminals must be deployed and more collaboration among invested parties must occur within the NFC ecosystem (especially in terms of consumer education, transaction fee negotiations/resolution, and application development).
9. RFID & RTLS: 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).  However, the contract award to HP was not met without controversy in 2012 as IBM filed a protest to the US Government Accountability Office (GAO) and won the decision. The contract will be rebid among, at least, the six original bidders.  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.
10. RFID & RTLS: 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.
11. RFID & RTLS: 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. For example, ThingMagic released a new, smaller passive UHF reader module, Xerafy continued product development for embedded RFID specialty tags (e.g., tools), ICs and chipsets from players such as Impinj, NXP, Murata and AMS decreased their footprints, Coca-Cola Freestyle dispensers with passive UHF technology inside continued deploment, RFID and NFC made their way into consumer devices such as Keurig Vue coffee brewers and Nintendo Wii (Skylanders game) and much more. 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.
12. RFID & RTLS: 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?
13. AutoID: Governments in China and the EU continue to connect with the concept of the Internet of Things (IoT) – While the US government remains largely silent, China and
    the EU actively fund research IoT projects, create policies to govern the IoT and deploy IoT technologies (including RFID, NFC and sensors). Much of the IoT activity in the US has been at the city level (e.g., smart cities) and we do not expect that to change. In looking ahead and predicting where will be the epicenter of IoT innovation, we are placing our bets on China. Simply look at what is on the list of IoT development subsidy projects from China's Ministry of Industry and Information Technology and Ministry of Finance (announced November 2012). UHF and microwave RFID chip design, product technology R&D, miniaturized intelligent sensor technology R&D, ad-hoc networking technology for wireless sensor networks, intelligent logistics and intelligent traffic are among the 14 categories of project, comprising 149 projects in total, which will receive support from the government.

I would like to extend a special thank you to Richa Gupta (VDC’s barcode analyst) and John Shuster (VDC’s MCET analyst) for their contributions to this blog.