Top 20 ADC suppliers

Growth in the automatic data capture (ADC) market unexpectedly slowed in 2005.

By Corinne Kator, Associate Editor -- Modern Materials Handling, 10/1/2006

After a strong year in 2004, growth in the automatic data capture (ADC) market slowed to a more moderate pace in 2005. The slowdown was unexpected, and market analysts are still uncertain why it happened, says Andrew Nathanson, who directs ADC research at Venture Development Corp. (VDC), a Massachusetts-based research firm.

"The 2005 market was a little tough," says Nathanson. "Growth was also slower than expected in the first half of 2006, but we're not sure why. Companies just aren't spending what they said they would."

The flatness in the market is reflected in the revenues of the top 20 ADC suppliers, which advanced as a group at modest rates. In addition, the list looks much the same as it did last year: No new companies joined the list and only a few companies moved in the rankings.

The four largest companies—Symbol Technologies (No. 1), Intermec Technologies (No. 2), Danaher (No. 3) and Zebra Technologies (No. 4)—each retained the positions held last year. Of these top suppliers, only Danaher posted substantially larger numbers, growing from $666 million to $815 million, a jump of 22%. Most of this growth is attributed to the company's acquisition of Linx Printing Technologies in January 2005.

Most companies experiencing significant growth in 2005 attribute that growth to acquisitions.

Dover Corp. grew from $382 million in 2004 to $500 million in 2005 due to its acquisition of Datamax, an Orlando-based company specializing in bar code and RFID labeling. This growth moved Dover up one spot to No. 5, swapping with Sato Corp., now at No. 6.

Datalogic grew from $193 million in 2004 to $244 million in 2005, moving the company up one spot to No. 10. This growth came primarily from Datalogic's acquisitions of Italy-based Laservall and Dallas-based Informatics Inc.

Acquisitions will certainly have an impact on next year's rankings. In late 2005, Datalogic (No. 10) completed its acquisition of PSC (No. 11). This June, defense contractor Lockheed Martin acquired RFID supplier Savi Technologies (No. 17). Dover (No. 5) recently announced plans to acquire Markem (No. 7). Metrologic (No. 12) is being acquired by a group of private investors. And Symbol Technologies (No. 1) is being acquired by wireless communications company Motorola.

This is Modern's fifth annual compilation of the leading ADC suppliers. As in previous years, the list includes companies that manufacture and sell ADC hardware, software and consumables for industrial applications.

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. Because the industry includes public and private companies, the list is compiled from annual reports and interviews with company spokespeople and industry analysts.

Analysts at VDC break the ADC market into five segments: bar code scanning, bar code printing, consumables (such as labels, tags and printer ribbons), rugged mobile computers and RFID.

The bar code scanning market, according to VDC's Nathanson, reached $1.6 billion in 2005 and is projected to grow at a modest pace of around 6% a year through 2010. The $1.8 billion bar code printing market, he says, was projected to grow at 9.2%, but VDC plans to revise that projection to reflect a recent slowdown in the printer market.

The market for consumables reached $6.7 billion in 2005, he says, including revenues from new installations and existing systems. VDC forecasts that market will grow at 10.7% annually. The rugged mobile computing market, says VDC analyst David Krebs, reached $4.4 billion and is forecast to grow at 9%.

The much-hyped radio frequency identification (RFID) market, says Nathanson, reached $1.8 billion in 2005, including hardware, software and services for all applications. RFID in the supply chain, he says, reached $250 million. VDC expects the market for RFID in supply chain applications to grow at about 60% annually, making it the fastest growing application of RFID, except for sensing and monitoring.

RFID analyst Mike Liard, of ABI Research, sizes the market slightly larger. He estimates supply chain applications reached $317 million in 2005 and predicts supply chain applications for RFID will grow at a slightly stronger pace of 66%.

RFID was identified as an emerging technology in Modern's first ADC ranking four years ago and continues to make headlines as a technology.

"RFID continues to grow, though not at the level of expectation of many vendors and analysts," says Liard.

"RFID is not as gangbusters as many people had thought," he says, "but it's certainly playing a key role in the marketplace," affecting, for example, the design and sales of bar code printers.

While RFID tags aren't going to replace bar codes anytime soon, the RFID market shows definite signs of maturation and growth, says Liard. Performance, price and standards—three sticking points that have been holding back RFID adoption—are all improving sharply, he says. Prices for tags and readers are coming down, read rates are continually improving and the International Standards Organization has begun issuing global RFID standards (see A global standard for RFID - Modern - July 17, 2006).

Just as compliance drove the bar code market, says Liard, it continues to drive the RFID market. Liard and Nathanson both predict that other companies and agencies will follow the lead of Wal-Mart and the Department of Defense and begin mandating RFID tags as a means of tracking goods in the supply chain.

But bar codes took decades to become a globally accepted, synchronized tracking technology, says Liard, and RFID will have to experience a similar process.

Growth of RFID is the most prominent trend in today's ADC market, but analysts note several other trends affecting ADC suppliers.

Electronics suppliers of all kinds scrambled to meet a July 1 deadline to make their products compliant with new European environmental regulations. Makers of bar code printers and rugged mobile computers were among those eliminating lead, mercury, cadmium and other substances from their products to meet the Restriction of Hazardous Substances (RoHS) directive. They also created recycling programs for their products to comply with the European Waste Electrical and Electronic Equipment (WEEE) directive.

Complying with these regulations, says Nathanson, took a much larger toll on small companies than it did on the suppliers on our top 20 list.

Other trends, analysts say, include the growing popularity of mobile technologies, the continued growth of two-dimensional bar codes and an increase in direct part marking, particularly in aerospace and other heavy industries. We'll track all of those for next year's report on the world's largest ADC suppliers.