Top 20 automatic data capture suppliers, 2015

Editor’s note: VDC Research Group no longer reports RFID market information. The analysis and graphs in this article reflect only the markets for rugged mobile device and bar code scanners and printers.

Last year, the global market for automatic data capture solutions (ADC) used in factories, warehouses and logistics applications reached $5.968 billion in sales, according to VDC Research Group.

The 2014 global sales figures represent an increase of 3.8% from 2013’s comparable estimate of $5.75 billion, which had stayed level with 2012. VDC data projects the market will post a compound annual growth rate (CAGR) of 4% through the next five years before reaching $7.2 billion in 2019. This includes a 4.6% CAGR for bar code scanners and printers, and a 3.2% CAGR for rugged mobile devices. See last year’s Top 20 ADC list.

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

In terms of global figures, each ADC market segment and about half of the Top 20 suppliers reported gains over last year, but a lot has changed in that time. According to Richa Gupta, senior analyst, AutoID and data capture for VDC Research, the dramatic fluctuation of currency exchange rates is one of the central stories of the year. “It is probably the biggest theme of how the market is shaping,” Gupta says. “A strong U.S. dollar has had a very big impact on European vendors and on sales in Japan and China.”
David Krebs, vice president of VDC’s enterprise mobility and connected devices, notes that heightened consumer demands are pressuring companies everywhere to change the way they produce and distribute products.

“Having identified the need for agile responses, more companies are looking at rugged mobile devices and related systems to help improve visibility and traceability within each facility and across the supply chain,” Krebs says. “With respect to mobile, the underlying theme still is the transition from legacy hardware and applications to modern ones. One thing that hasn’t changed is that the nature of the rugged mobile customer is as conservative as it has ever been. They are reluctant to change, especially in warehouses and materials management.”

With their challenge defined, suppliers report strong success in the past year as they, too, strive for agility in the face of rapid change.

The Top 20 ADC suppliers
Revenues for the Top 20 suppliers in 2014 totaled $5.531 billion, up 27% from 2013. Eight of the companies reported revenue declines, for a combined 10.5% decrease. Not including the two companies that are new to the list, the remaining 10 companies posted combined gains of nearly 40%.

The new No. 1 is Zebra, which last year acquired Motorola Solutions’ enterprise business to leap from third place. Zebra had previously reported $545 million in annual revenues, while Motorola had enjoyed several years at the top of the list with more that $1 billion. The top two companies, made up of last year’s top three, grew 20%. Honeywell Solutions posted the highest growth rate at 43%, followed by Cognex (eighth place, up from 12th place, 35%) and SATO (fourth place, 14.3%).

Continued consolidation at the top has made room for two companies new to the list. Cab Produkttechnik GmbH, whose offerings include printing solutions, earned $34 million in 2014 to claim the 20th spot. Unitech earned $45 million with its handheld scanners, mobile computer and RFID solutions, making a solid debut in 16th place.

“Last year we mentioned a number of smaller vendors that were taking share away from leading vendors such as Datalogic, Zebra and Honeywell,” Gupta says. “In 2014 there was a resurgence of the big three, all of which did pretty well in their core markets. Zebra had a good year with its legacy solutions like mobile and stationary bar code printers, which, overall, did better than the new business acquired from Motorola. And, 2014 saw mixed results for smaller vendors, but 2015 is looking better for them already, at least in the United States.”

The bar code printer and scanner market
Having followed the trend for the past few years, Gupta says the continued migration from 2D cameras to image-based scanning technologies has gained speed. “Back in 2013, the decline in 2D sales took vendors by surprise, but not anymore,” Gupta says. “Vendors are prepared for that migration and are in some cases actively transferring customers to image-based systems.”

Because the systems can scan 1D and 2D bar codes, take images, and automatically capture more data than in the past, Gupta says she has heard stories of imaging solutions that have brought about efficiencies. By combining all of those functions in one place, it might no longer be necessary to operate separate conveyor belts for 1D, 2D or absent bar codes.

In other trends, the wearable market in warehousing and distribution is still virtually non-existent, but Gupta says she is hearing a lot from suppliers about transferring mobile functionalities into wearable form factors. For now, from a bar code scanning standpoint, some vendors are working to figure out what the right wearable form factor is.“Will they only be used in applications where workers must use their hands, or is there a market for wearable outside of a hands-free environment?” Gupta asks. “The discussion is largely centered in the logistics vertical—warehousing and distribution and delivery.”

From the printing side, Gupta notes a strong push toward color label printing, driven by compliance with globally harmonized systems (GHS). These often require a minimum of two colors for on-demand label printers. Gupta says it’s been an opportunity for data capture providers, many of which are in the process of developing or promoting such solutions.

Trends in the rugged mobile device market
Consolidation has several implications for the wider industry, Krebs suggests, including the software platform landscape. Android operating systems continue to pursue Microsoft, the overwhelming market leader, and although end-users in the warehouse remain somewhat Windows-centric, the Android platform has continued to grow.

“It remains to be seen if everyone will go to Windows 10 Mobile or if Android will reach critical mass,” Krebs says. “For now, there are very different markets for rugged handhelds and smart phones, but we will probably enter a space in the near future where there will be more than one option for mobile operating systems in the warehouse.”

The recent announcement by Microsoft that Windows 7 security support will end in 2020 has added some urgency to the decision.
“Everyone is facing this deadline at the end of the decade, when most or a portion of this critical software will need to be rewritten,” Krebs says. “Customers wonder if they should wait for Microsoft to show them something viable, or if they abandon Microsoft and adopt Android. What am I losing or missing if I continue to wait?”

The nature of end-users’ software applications hasn’t changed much in 10 to 20 years, he says. In addition to innovative solutions, suppliers have been challenged to support the migration of legacy apps, which Krebs suggests was a factor in Zebra’s decision to acquire business units that specialize in migration. “There are lots of green screens and legacy apps,” he says, “and they’re being supported by much more capable devices.”

These devices are also helping to gradually erode silos within organizations. “It is still common for companies to operate with the idea that what goes on in the warehouse is one thing and distribution is another,” Krebs says. “But as they collect more data, we are seeing more sharing of that information.”

Of course, pharmaceutical as well as food and beverage companies are compelled to comply with regulatory mandates, but Krebs says high-value items are increasingly handled with greater tracking discipline, even in the absence of regulatory pressure. More sophisticated technologies such as RFID are penetrating those spaces.

“We’ve seen a small renaissance for RFID in apparel, and there’s nice growth there,” Krebs says, “but we still haven’t seen RFID penetrate the warehouse in any great way.”

Krebs is also watching trends around the impact of the Internet of Things on manufacturing and distribution. He suggests organizations are taking a more holistic approach. “Technologies that enable remote diagnostics and monitoring are central to the feedback loop,” he says. “Data might come from an individual performing maintenance on a product, where devices help track service history and offer multiple modes of data input.”

In the near future, Krebs anticipates the wearable form factor, particularly heads-up displays such as those developed by Google and the military, will not reach a price point that could lead to significant disruption in warehousing and distribution. “That said, VDC is very keen to watch developments around heads-up displays,” he says. “The next two to three years could see significant advancements in price and performance. For now, battery life has not been impressive and the ergonomics need work, but there is relevance in a lot of environments when you think about things like augmented reality.”

Collecting the data
This is Modern’s 13th annual look at the leading manufacturers of ADC hardware and solutions. Because the industry includes public and private companies, this is the seventh 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.