Top 20 automatic data capture (ADC) suppliers

The 2007 market numbers may indicate status quo for automatic data collection suppliers, but offerings are transitioning from products to solutions.

By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 10/1/2008

The market for industrial automatic data capture (ADC) systems in 2007 could best be summed up as “steady as she goes.” The ADC market includes handheld and stationary bar code scanning and imaging devices, bar code printers, consumables like bar code labels and RFID tags, RFID solutions for the supply chain, and rugged mobile computing solutions for the factory and warehouse.

The market grew just more than 10% between 2006 and 2007, topping $19.5 billion in sales, according to the analysts at VDC (508-653-9000, www.vdc-corp.com), a Massachusetts-based research firm.

That rate of growth matches the gains posted by the industry in 2006, a year that saw the industry rebound from an unexpected slow down. And as with 2006, the growth was spread across all market segments, with VDC projecting compound annual growth rates of 6.8% for mobile computers; 7.5% for bar code printers; and 7.6% for handheld scanners through 2012; the RFID market is expected to grow 31.3% per year for the next five years.

Within those categories, there were pockets of accelerated growth: The wearable mobile computer segment is growing 15% annually, more than twice the rate of the rest of the industry; the market for stationary bar code scanners is growing at twice the rate in Asia (10.1%) as in the Americas (4.8%).

“In North America and Western Europe, a lot of the growth is coming from replacement sales as end users upgrade their equipment,” says Tom Wimmer, director of VDC's AIDC and RFID Practice. “In the developing world, growth is being driven by end users that are adopting data collection technology to improve their business processes.”

The market leaders remained the same. However, there was a reshuffling of the deck: Once again, Motorola (800-722-6234, www.symbol.com), formerly Symbol Technologies, led the category with an estimated $2.05 billion in revenue. Motorola was followed this year by Dover Corp. (212-922-1640, www.dovercorporation.com) at $936 million, No. 4 on last year's list. Danaher (202-828-0850, www.danaher.com) remained in the third spot with $872 million. Thanks to acquisitions and growth in the RFID market, Zebra Technologies (847-634- 6700, www.zebra.com) jumped from No. 5 to No. 4 this year with $868 million. No. 2 last year, Intermec Technologies (800-755-5505, www.intermec.com) fell to the fifth spot with $849.2 million.

Not all the news was positive: Denso ID, No. 14 on our 2006 list, exited the North American market.

Collecting the data

This is Modern's seventh-annual look at the leading manufacturers of ADC hardware and solutions. To make our list, companies must sell in North America, though the chart includes worldwide revenues. Modern does not include resellers, systems integrators or other companies that do not manufacture ADC hardware. Since our readers are primarily focused on supply chain applications, we do not include companies whose primary focus is the retail checkout counter or non-industrial settings, like hospitals, libraries or resorts.

Because the industry includes public and private companies, the list is compiled from annual reports, SEC filings and estimates from VDC.

Trends in ADC

As the market picks up speed, several trends are defining the space.

Consolidation: If you look back to 2006, there were several major acquisitions, including the purchase of Symbol Technologies by Motorola. While there were fewer big deals last year, large industrial conglomerates followed Motorola's lead and jumped into the market, with the purchase by Honeywell of HandHeld Products for $390 million. Earlier this year, Honeywell paid $720 million to add Metrologic to its portfolio. The combined companies create a division that will approach nearly $600 million in sales in 2008.

With those kinds of numbers, Honeywell could be one of the top 7 players on next year's list. VDC expects to see similar acquisitions in the future. “We know of other conglomerates looking to get into the market,” says Kevin Permenter, an AIDC analyst. “They see it as synergistic with the sales and client relationships they already have and complementary to other products and services they already provide.”

Convergence: Today's warehouses are increasingly becoming multi-modal facilities; bar code scanning for receiving, put away and shipping; voice for case and item picking; and RFID for asset tracking. For the most part, each of those applications requires its own hardware and software. Technology providers, however, are responding with new multi-modal devices. “We're seeing a strong convergence trend,” says Permenter. “Hardware providers are taking hand held scanners and merging them with other devices to enable the mobile workforce.”

That convergence is also leading to the collection of more information about a product or asset, adds Wimmer. “Bar coding has been about what, when and where: What a product is, when it was put away and where it's located,” he says. “The convergence of bar codes with RFID and other sensing technologies is providing context about what's been happening to a product.”

Lower cost printers picking up market share: Last year, we reported that the market for high performance printers was being eroded by lower-cost printers, especially in the mid-tier. That trend continued in 2007. “Customers who used to buy feature-rich products are becoming more sophisticated,” says Wimmer. “They're only buying those features they need.” He adds that the market is also shifting from value-added resellers to direct marketers, especially among experienced end users. “Smaller companies, or companies that are just implementing bar code printing, still need the value that a reseller or integrator can provide,” Wimmer says. “For sophisticated users, it's no longer a mystery.”

From products to solutions: Hardware providers like Zebra, a printer company that has acquired several RFID and software solution companies, and CheckPoint, a provider of point-of-sale solutions that recently purchased OATSystems, a provider of RFID middleware solutions, illustrate another trend: The move from being equipment providers to total-solution providers. “The hardware providers realize that what they manufacture can be manufactured anywhere and possibly at a fraction of the cost,” says Louis Bianchin, senior analyst for RFID. “If they want to keep talented employees happy and busy, they need to transition into becoming value-added suppliers.”

RFID adoption continues: The total market for RFID in the industrial sector in 2007 was $2.2 billion, a figure Bianchin estimates could reach as much as $6.5 billion by 2012.

That said, the market for the EPC-style readers, tags and software championed by Wal-Mart and other retailers for tagging cartons and pallets in the retail supply chain was less than $250 million, roughly 10% of the worldwide market for RFID. “There were only about 60,000 EPC UHF readers sold last year,” Bianchin says, adding that's one of the reasons the leading RFID providers are looking at other applications to grow their businesses. “Anything related to the real-time location system (RTLS) market or asset tracking is doing well,” says Bianchin. “The ROI is right there within the four walls of a company, and you don't have to rely on the cooperation of your external partners.”

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