Top 20 automatic data capture (ADC) suppliers, 2009

A strong start and a slow finish sums up 2008 for data collection technologies.

By Bob Trebilcock, Executive Editor -- Modern Materials Handling, 10/1/2009

The market for industrial automatic data capture (ADC) systems started out strong in 2008, but ran out of steam at the end of the year, according to Tom Wimmer, director, and Drew Nathanson, director of research operations, for VDC Research Group (508-653-9000, www.vdcresearch.com), a Massachusetts-based research firm.

ADC is a market that 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 ruggedized mobile computing solutions for the factory and warehouse.

"The beginning of 2008 was respectable across all of the technologies we cover," says Nathanson. "But the recession started hitting the books around the beginning of the fourth quarter and has continued to impact the industry since."

For that reason, it's hard to get a true picture of the market without looking at the way the global recession has hit the industry through this past September. After ending 2008 with just more than $18 billion in sales, VDC now estimates the total market for ADC solutions will shrink to $16.7 billion by the end of 2009. (Read last year's list.)

The slowdown has been felt across all technologies, even RFID which, while still growing, is growing at a much slower pace than in recent years. The market for EPC UHF hardware and tags, the kind used for cartons and pallets in the retail sector, actually shrank from less than $250 million in 2007 to $185 million in 2008.

Looking forward, Wimmer and Nathanson are projecting a compound annual growth rate of 6.1% for the overall market between 2008 and 2013, but much of that growth will come after 2010. In the individual sectors, they are projecting flat growth for the combined stationary and handheld scanners; negative growth (-1.4%) for the bar code printer market; modest (4.2%) growth for mobile computers; and positive (18.5%) growth for RFID solutions. While the latter sounds impressive, just last year, VDC was expecting compound annual growth for the RFID market at 31.3% per year for five years.

And while there were geographic pockets of growth within those categories in 2007, the market saw a global slowdown in 2008. "The thinking is pretty simple," says Wimmer. "If the supply chain is contracting and there are fewer goods moving, you're less likely to need or spend on automation."

Emerging markets are still growing, but the driver is not the adoption of new technology. Rather, the resale of used equipment is driving adoption. "They're adopting technology that's already a year or two old to meet compliance," says Nathanson. "And they're going to hang on to it."

The market leaders in 2008 included some familiar faces. Once again, Motorola (800-722-6234, www.motorola.com/us) led the category with an estimated $1.5 billion in revenue. Motorola was followed by Zebra Technologies (847-634-6700, www.zebra.com) with $738.7 million. The top five was rounded out by printer-maker Sato Corp. with $614.6 million (704-644-1650, www.satoamerica.com), Intermec Technologies (425-348-2600, www.intermec.com) with $541.5 million, and Datalogic (800-929-3221, www.datalogic.com) with $449.8 million, according to estimates from VDC.

Collecting the data

This is Modern's eighth-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, we asked VDC Research Group to compile the data: Since they cover this technology every day, they are closer to the market, especially to privately held companies. The primary difference between their complete list and ours is the exclusion of leading companies like UPM Raflatac (www.upmraflatac.com/northamerica/eng, $368 million); MooreWallace (www.moorewallace.com, $260 million); and Bemis (www.bemis.com, $243 million), major industry players that only manufacture consumables like bar code labels and RFID tags. We're focused on total solution providers.

Trends in ADC

Several trends defined the market last year, including some holdovers from 2007.

Innovation on hold: In this economic environment, end users are more likely to make do with what they have rather than invest in new technologies. Imaging, for instance, is a maturing technology that can do more than just take a picture of a bar code. "But the adoption rate has been slow because end users aren't yet willing to pay a premium for the additional capabilities," says Nathanson.

Consolidation on hold: 2006 and 2007 saw some major acquisitions, including the purchase of Symbol Technologies by Motorola. For now, those big acquisitions look like they're over. Most of the acquisitions, like Impinj's purchase of Intel's reader division, Tyco's purchase of Vue Technologies, and the acquisition of OATSystems by Checkpoint, were strategic. "The suppliers I talk to are looking for niche technologies that have some synergy with their existing business," says Wimmer.

Convergence: In the ADC industry, convergence refers to the combination of technologies, like bar code and voice, into a multi-modal solution for a unique business problem. While still an emerging trend, it is gaining traction. "The big change is in software that is more robust and flexible, and is capable of taking input of data from several technologies," says Nathanson.

Managed services: Just as software providers are looking at software-as-a-service (SaaS) as an alternative to licensing software, ADC technology providers are also looking at managed services to mitigate the upfront costs of buying and implementing a new data collection solution. "We're talking to suppliers who are thinking about leasing a solution, along with technical support and analytics as a new model," says Nathanson.

RFID adoption slows, but continues: "There's a lot of cautious optimism around RFID," says Wimmer. It's no longer the new kid on the block, but a maturing technology that is expanding in scope and functionality. The biggest change may be in the way that end users are thinking about RFID. "It's no longer a replacement technology for bar codes," says Wimmer. "Users are looking at it as a complimentary technology for things like asset tracking, or using sensors to monitor temperature in the cold supply chain."

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