Looking behind the Intermec Vocollect acquisition

What happens when you combine the #1 provider of voice recognition solutions with the #3 provider of automatic data capture solutions? That’s a question Intermec and Vocollect will begin to answer over the coming months and years.

Yesterday, Intermec announced that it has entered into a definitive agreement to acquire Vocollect for $190 million in cash.

Intermec was #3 on Modern’s 2010 list of the Top 20 suppliers of automatic data capture solutions, while Vocollect was #14. Intermec has not announced its complete 2010 results just yet, but based on estimates, the combined companies will have in excess of $795 million in revenue for 2010 – enough to give Zebra Technologies a run for the #2 spot behind Motorola.

In the press release, Intermec laid out some of the rationale for the combined companies:

• The transaction will expand Intermec’s product and application offerings in the warehouse space …..

• It also establishes Intermec as a player in the fast growing area of voice in industrial applications …..

• Finally, both Intermec and Vocollect gain access to expanded market channels, customer bases and partner networks.

Earl Thompson, Intermec’s senior vice president of mobile business solutions, expanded on the press release. The acquisition, he said, will further Intermec’s corporate strategy to be a much stronger player in the warehouse. He also believes there are real opportunities for voice to expand, both geographically into new territories and markets, and in how the technology is applied. “Clearly, there’s an adoption opportunity for voice in emerging markets in Latin America and Asia,” he said. “But we also think North America is an under-penetrated market. Voice is only in 10 to 15% of facilities and it’s mostly focused on picking applications. We think voice is still an early and disruptive technology that can be applied to more workflows beyond picking.”

The acquisition also suggests that voice may be ready to evolve from a point solution – one that is installed by the voice solution provider – to a larger, integrated data collection solution that integrates with other modes of data collection, said David Krebs, director of the mobile and wireless practice at VDC Research: “We think there a lot of greenfield opportunities for voice as we enter this emerging wave of multi-modal applications that combine voice with other technologies.”

Krebs added that he will be watching to see how Intermec’s ADC competitors respond. “The acquisition strengthens Intermec’s warehouse portfolio,” he said. “If they can integrate Vocollect into their portfolio, it will be interesting to see how Motorola, LXE and Psion respond. They all compete indirectly against Vocollect and now they’ll be competing directly against Intermec as well.”

For now, Vocollect solutions will be offered by Intermec; but, Vocollect will continue to go to market with proprietary hardware and software solutions that are available to end users that may have someone else’s hardware in place for bar code scanning and mobile computing. “At this point, there’s no reason to change that go-to-market strategy,” said Thompson.

Intermec to acquire Vocollect
Vocollect will broaden Intermec’s applications and solution offerings in the warehouse workflow and help to establish a leading position in software-oriented solutions.