Mobile & Wireless: Honeywell acquires Intermec

Each year, Modern partners with VDC Research to create our annual list of the Top 20 providers of automatic data capture solutions – the market space that includes mobile computing, bar code scanning and printing, voice recognition and RFID.

When I was reporting the list last fall, Richa Gupta, a VDC analyst who follows the bar code scanner and printer market, predicted we would see more consolidation in the year ahead. My first reaction was: Who’s left to acquire? After all, Datalogic had recently acquired Accu-Sort and Motorola was in the process of acquiring Psion. The only companies left on the chessboard were startups that might add new functionality but not much revenue to an existing player’s portfolio or established companies that I assumed were too big to acquire. But Gupta insisted there were more deals to come.

When I learned last Monday that Honeywell planned to acquire Intermec for $600 million, my first calls were to Gupta and Mike Liard, VDC’s vice president of AutoID and its resident RFID analyst.

Was Gupta surprised by the deal? “Not really,” she told me. “Because Intermec had been struggling the last we quarters, we had an inkling that an acquisition could be in the offing. We just didn’t know who would acquire them.”

Or, as Liard said: “Rumors have been swirling.”

By my math, Honeywell jumps from the number 3 player in the industry to number 2 - ahead of Zebra but still behind Motorola Solutions. The VDC team plans to crunch the numbers early next year.

Both analysts acknowledged that Honeywell has its work cut out for it. Despite a broad portfolio of products, Intermec has been giving up market share to Motorola and Zebra in the industrial bar code scanning and printing space that we cover at Modern; despite Vocollect’s huge base of installed customers, anecdotally, it has appeared as if many new voice implementations have been going to Vocollect competitors.

However, both analysts see a lot of upside for Honeywell.

Gupta pointed out that Honeywell has registered strong performance in the bar code scanning market since it’s acquisitions of Metrologic and Hand Held Products. However, Honeywell didn’t have a voice solution or a strong presence in bar code/RFID printers. “With Intermec’s stock price devalued, they were an attractive acquisition target,” she told me. “This is good news all the way around for both companies.”

You can read more of Gupta’s thoughts in her blog.

You can also read about the impact of the acquisition on the mobile computing market in a blog by the VDC Mobility Practice.

The deal also means that Honeywell is an immediate player in the RFID space, where Intermec has a portfolio of RFID products and RFID IP. That’s good news for Honewell, which is a leading provider of manufacturing execution software systems. Manufacturing has been one of the fastest-growing markets for RFID, where the technology is being used to track work-in-process, validate processes and keep track of tools and assets in real time. However, despite a great base of manufacturing clients, Honeywell didn’t introduce its first handheld RFID reader until last May. “Intermec’s core RFID market has been manufacturing and logistics,” Liard agreed. “This brings Honeywell immediate access to those markets.”

It also means that Honeywell, like Motorola, can now provide one-stop shopping for all of an IT department’s AutoID technologies.

More importantly, Liard believes we’re beginning to see a new definition of AutoID. He points out that visibility into inventory was the original value proposition for an AutoID solution. In the ensuing years, the industry has added the ability to monitor condition and status of a product with sensors and provide security of the product. Now, the industry is coupling AutoID technologies with advanced decision making software. Until now, Motorola was probably the only player that could check off all of those boxes. “When you can meet all four of those needs, the technology is easier to justify,” Liard says. “If you look at all the components Honeywell and Motorola have to offer, we’re starting to move in that direction.”