Top 20 automatic data capture suppliers

Last year, the market for data capture solutions used in factories, warehouses and logistics applications notched $11.066 billion in sales, according to Massachusetts-based VDC Research Group.

While that’s a modest increase over 2010’s estimate of $10.6 billion, the outlook going forward is positive, even in a choppy economy, according to Michael Liard, VDC’s vice president of AutoID. Liard and his colleagues are projecting a compound annual growth rate (CAGR) of 10% through 2016 for the overall industry, when the industry will reach $17.8 billion.

The ADC market includes handheld and stationary bar code scanning and imaging devices, bar code printers, RFID solutions for the supply chain and ruggedized mobile computing solutions for the factory and warehouse. VDC’s figures above do not include consumables associated with automatic data collection, such as bar code labels.

“The overall AutoID market has had its ups and downs over the last few years,” says Liard. “For instance, we see a continued commoditization of the core bar code market because of low cost products coming out of Asia. At the same time, we think there are opportunities for continued growth and innovation.”

The next iteration of AutoID growth, in Liard’s opinion, will come from hybrid solutions that bring together multiple data collection technologies to create new and more streamlined business processes.

“The adoption of AutoID technologies, like RFID, should always be about business process change and not just technology change,” Liard says. “That is finally happening, and it’s a positive thing for our industry.”

The 2011 market leaders included familiar faces: Once again, Motorola Solutions topped the chart with an estimated $1.427 billion in revenue. Zebra Technologies once again placed second with $595.4 million. The top five was rounded out by Honeywell, which took the No. 3 spot thanks to its acquisition of LXE; Intermec Technologies, which posted a strong year with $419.7 million; and Datalogic, which slid to the No. 5 position with $332.9 million. Read last year’s list of Top 20 automatic data capture suppliers.

In addition to growth, the industry continued to consolidate in 2011. In the first half of 2011, Intermec acquired Enterprise Mobile and Vocollect—an acquisition that should add more than $100 million to Intermec’s 2012 revenues. Honeywell acquired EMS Technologies, the parent company of LXE. In addition, 2011 also saw the acquisition of Accu-Sort Systems by Datalogic. More recently, Motorola moved to acquire Psion, No. 9 on this year’s list with $128.8 million. That deal will further widen Motorola’s lead next year.

Last, but not least, when looking at the overall AutoID market, Liard says there are two important trends to watch.

Commoditization, consolidation and price pressures: For years, the goal of the AutoID industry was to develop plug-and-play solutions. “We’ve achieved that,” Liard contends. “The new game for vendors is plug and stay.” As established players face new competition from low cost hardware coming out of Asia, they are challenged to add value through solutions to maintain their existing accounts or grow in new markets.

Geography = innovation: No one will be surprised to hear that Europe was a challenging market for the AutoID industry. However, opportunities continued in emerging markets in Asia and South America. One of the advantages of going into these new markets is that no existing RF and bar code infrastructure is in place. “Vendors have a clean slate,” Liard says. “They can ask their retail and manufacturing customers what their pain point is and then determine the best technology. That’s helping to fuel continued innovation.”

Collecting the data
This is Modern’s 11th annual look at the leading manufacturers of ADC hardware and solutions. Because the industry includes public and private companies, this is the fourth year in a row that VDC Research Group compiled our data—since they are covering this technology every day, they are closer to the market.

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 solutions, we do not include companies whose primary focus is the retail checkout counter or non-industrial settings, like hospitals, libraries or resorts. Nor do we include companies that only manufacture consumables like bar code labels and RFID tags.

According to Liard, VDC made some changes to its research methodology this year, which makes an apples-to-apples comparison to 2010 numbers difficult. The firm is no longer covering Hewlett Packard, since its presence in this space is limited. Sales figures for Printronix are limited to the company’s bar code printers and excludes its line matrix printers. For that reason, Printronix dropped off the chart. Moreover, VDC determined that it over-stated SATO’s prior year numbers, which gives the impression that there was a dip in performance. “SATO had a good 2011,” Liard says. “The appearance of a dip is the result of inaccurate numbers for 2010.”

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While a year-over-year comparison is difficult, Liard believes this year’s table is the best representation of the market available.

Market by market
Within the overall AutoID market are three distinct industry segments with their own distinct dynamics.

Mobile computing: The market for ruggedized mobile computers reached $3.025 billion in 2011, says David Krebs, vice president of VDC’s mobile and wireless computing practice. Those figures include handheld/PDA devices, wearable mobile computers and lift truck-mounted devices used on the plant or DC shop floor or in port and yard applications.

Krebs estimates the overall market for mobile computing devices will grow by a compound annual growth rate (CAGR) of 6%, reaching about $4.05 billion by 2016.

As with 2010, transportation and warehousing continued to drive investment in mobile computing. And while 2011 saw a continuation of the recovery that started in 2010, Krebs is expecting some changes in 2012, especially in Europe. “Asia is extremely price competitive, but it’s the least penetrated market and it’s growing fast,” Krebs says. “In Europe, we’re seeing a slowdown, especially in the Mediterranean countries and the UK, where we think we’ll see some contraction in sales.”

Krebs is watching several trends:

• When it comes to operating systems, the mobile computing market is by and large owned by Microsoft, especially in the warehouse and logistics space. However, with the introduction of Windows 8, “there are questions as to whether that will create opportunities for alternative operating systems,” Krebs says. If a company is upgrading its hardware, it may look into other options available on the market.

• Mobile devices developed for the consumer market have not caught on in the warehouse to any degree, but they are being eyed for applications outside the DC, such as field service. “That has the possibility of disruption because IT managers want consistency,” Krebs says. The exception: Krebs is seeing interest in ruggedized tablets that can be used on and off a forklift. “I’m not talking about iPads,” he says. “These are purpose-built forklift solutions that are at a lower price point than the traditional forklift-mounted computer.”

• Multi-modal solutions, such as the combination of voice and bar code scanning or voice and light-directed picking, continue to gain steam as companies grapple with how to fill e-commerce orders accurately and efficiently.

Scanning and printing: VDC made some tweaks to its coverage of the bar code hardware market, making year-over-year comparisons difficult. However, even after adjustments, the market posted surprising gains in 2011.

Handheld scanners jumped 7% to $890 million, while the market for industrial fixed scanners increased by 6% to $682 million, according to Richa Gupta, the VDC analyst covering this market.
Meanwhile, the market for industrial printers, which includes bar code printers and the RFID printer/encoder market, reached $1.439 billion.

Gupta sees growth continuing, with five-year compound annual growth rates of between 6.1% (printers) to 8.6% (handheld scanners).

As with 2010, the largest area of growth was in the adoption of 2D and camera-based imaging technologies, which expanded by nearly 10%. “Handheld laser scanners are still the norm in the warehouse and on the factory floor,” says Gupta, “but the transportation and retail markets are migrating to 2D bar codes because of the value add they provide.”

In the future, Gupta also expects to see a growth in 2D scanners in industry sectors where there are compliance regulations, such as automotive, aerospace and pharmaceuticals. “You can encode a lot of information in a small area with a 2D bar code,” says Gupta. 

Looking forward, Gupta is expecting a slowdown in the market for bar code solutions in Europe, Asia and South America due to a slowdown in manufacturing. “Instead of double-digit growth, expect to see high single-digit growth,” Gupta says. At least for now, North America appears to be defying that trend. “Vendors expected a return to 2009 numbers and that hasn’t occurred yet,” Gupta says. She believes that the market is being buoyed by refresh cycles and the adoption of new technologies that offer more functionality.

RFID: The fastest-growing of the ADC segments, continued to expand by double-digit rates and topped $5 billion in 2011, up from $4.523 billion in 2010. Looking forward, the market is expected to post compound annual growth rates of 13.7%, according to Liard.

“The RFID market is a collection of applications,” Liard explains. “Some of the traditional RFID applications are growing at around 10%. Still other segments, like item-level asset and apparel tracking and real-time locating systems (RTLS) are growing in excess of 20% a year.” Beyond asset tracking, growth of the industrial RFID market is being driven by brand protection and anti-counterfeiting of high-value goods as well as the need for regulatory compliance in industries such as automotive, commercial aviation, food and beverage, and pharmaceutical.

The most positive development in the RFID market, however, is not the story of continued growth, Liard says. Rather, it’s that industry is finally using RFID to change the way it does business. “Whether it’s on the factory floor, in the DC or outside the four walls into the yard and logistics, RFID is driving innovation and business process change that’s meaningful,” says Liard. “That is a trend that is touching all industries.”