Barcode and RFID – Market Update & 2010 Outlook

Barcode & RFIDBarcode & RFID

Market Update & 2010 Outlook

Tom WimmerDirector, Auto ID & Transaction Automation Practice

Drew NathansonDirector, Research Operations

Recording Available

These slides are from a webcast presented on 01/20/10.

A full audio recording is available for download at:

http://www.vdcresearch.com/market_research/t id/f h #autoid/freeresearch.aspx#

VDC Research

Complimentary insights & marketing data on barcode and RFID markets is available at:

www.vdcresearch.com

2 – 2010 VDC Research Group, Inc.AutoID & Transaction Automation Practice

Today’s Speakers

• Tom Wimmer

Tom manages VDC’s AIDC and Transaction Automation Practice, which follows advancements in barcode, RFID and retail automation.

Prior to VDC, Tom spent 11 years managing the market research function at Zebra Technologies, a leading provider of barcode printing, card printing and RFID solutions.

• Drew Nathanson

Drew Nathanson directs research operations for VDC, interacting daily with Practice Directors and analysts from each of VDC’s practices: Embedded Hardware, Embedded Software, Industrial Automation and Control, Mobile and Wireless, and AIDC and Transaction Automation., ,

Prior to VDC, Drew worked for a number of companies helping to commercialize several emerging technologies


Agenda for Today’s Presentation

• 2009 year in review

What were the underlying causes of the market contraction?

Which segments of the AIDC market were most impacted?

What tactics did suppliers take to insulate themselves?

• 2010: VDC’s expectations

What are the macro economic trends that will impact future investments in barcode and RFID technologies?

Which market segments will provide the strongest near-term growth opportunities?Which market segments will provide the strongest near term growth opportunities?

Where will barcode and RFID technologies most likely converge, presenting opportunities for cross selling and increased collaboration among suppliers and their distribution partners?

• VDC’s 2010 Market Intelligence Planning Services

Coverage focus shifting from products to the solutions they enable


2009 Year in Review

• The global recession adversely impacted nearly all suppliers of AIDC technology.

• RFID was more insulated than barcode, but both segments saw material contraction.

• Time honored sales and support models are no longer resonating:

The global recession is forcing suppliers to innovate beyond the technologies they develop and The global recession is forcing suppliers to innovate beyond the technologies they develop and support

• Deploying customers are increasingly looking to their technology suppliers to put skin in the game by:

Quantifying and guaranteeing the benefits of deployment

Assuming project management accountability

Insulating against obsolescence

Developing financing models that reduce opportunity costs and free up capital to address competingDeveloping financing models that reduce opportunity costs and free up capital to address competing IT initiatives


2009 Year in Review: BarcodeR i d i ifi t t ti f b d h dRecession caused a significant contraction of core barcode hardware

Yr/Yr Growth: Core Barcode Hardware

15.0%

5 0%0.0%5.0%

10.0%

2008 2009 2010 2011 2012 2013

-20.0%-15.0%-10.0%-5.0% 2008 2009 2010 2011 2012 2013

-25.0%

Handheld Scanners Stationary Scanners Barcode Printers TOTAL

2008 2009 2010 2011 2012 2013


2009 Year in Review: RFID G th l d b t id t t hi t i l th t dGrowth slowed but rapid return to historical growth expected

Yr/Yr Growth: Core RFID Hardware

25.0%

10.0%15.0%20.0%25.0%

-10 0%-5.0%0.0%5.0%

2008 2009 2010 2011 2012 2013

-10.0%

Transponders Readers Printer/Encoders Total

2008 2009 2010 2011 2012 2013


What were the underlying causes of contraction?Gl b l R i I t C AIDC S t H d t

• The global recession brought contraction in demand, production and employment, which in-

Global Recession Impacts Core AIDC Segments Hardest

turn created increased supply chain capacity and decreased supply chain velocity.

• Reductions in capacity and velocity softened the automation imperative in core supply chain segments: manufacturing, T&L and retail.

• Enterprises delayed deployment of planned large scale projects, placing increased emphasis on cost reduction by lengthening refresh cycles and supporting installed solutions.


Which product segments of the AIDC market were most impacted by the recession?p y

• Most Impacted: Barcode • Most Impacted: RFID

Laser scanners

• Handheld

• Stationary

Readers

Printer/Encoders

EPC UHF Hardware

Stationary barcode label printers

• Least Impacted: Barcode

Imagers

• Least Impacted RFID

Middleware/Edgeware

Installation/Integration Services

Scan engines

Mobile transaction printers

Consumables


What tactics did suppliers take to insulate themselves from the recession?

• To begin with, none did. Virtually every supplier of AIDC and RFID equipment suffered in 2009. With rare exception.

• However, there are a number of survival strategies and tactics that enabled some to fare better than others.

• Three of the most common included:

Care and feeding of the installed base

Bundling complementary solution components

Aggressive focus on channel management retention and support Aggressive focus on channel management, retention and support

• One of the most successful and oft overlooked:

Deployment of new business models aimed at mitigating risk while maximizing value


Key Questions for 2010

• What are the macro economic trends that will impact future investments in barcode and RFID technologies?

• Which market segments will provide the strongest near-term growth opportunities?

• Where will barcode and RFID technologies most likely converge, presenting opportunities for cross selling and increased collaboration among suppliers and their distribution partners?

• What sales and deployment models present serious investment consideration in the coming 12-24 months?


What are the macro economic trends that will impact future investments in barcode and RFID?p

• Increased Global Demand and Manufacturing

Further development of standards and solutions capable of supporting global value chains and breaking down region adoption barriers

Requires deeper integration (Enterprise, Value Chains)

Facilitate global expansion into core and emerging markets Facilitate global expansion into core and emerging markets

• More Scrutiny and Management of Investments

Necessitates Reliable and Reproducible Business Models

Pushes back onto the supply community to mitigate risk meet current and future requirementsPushes back onto the supply community to mitigate risk, meet current and future requirements, improve customer relationships, and innovate

• Enhanced Security

Increased emphasis on secure value chains, pedigrees, and chain-of-custody

More development of gathering, securing, sharing, routing, and leveraging of business intelligence

• Increased Mobility

Broader deployment, emphasis on convergence with a wider range of enterprise and mission critical systems and consumers


systems – and consumers

Which market segments will provide the strongest near-term growth opportunities?g pp

V ti l M k t A li tiVertical Markets Applications

Health Care

Commercial Services

Government

Patient Safety

Asset and People Tracking

Field Sales/Serviceode

Government

Specialty Retail

Field Sales/Service

Self-Service & Customer Interaction ManagementBar

c

Commercial Services

Electronics

Supply Chain Management

Asset & People Tracking

Government

Health Care

Manufacturing

Pharmaceuticals

Ticketing

Contactless Payment

Sensing/Monitoring

ID/Access Control/Security

RFI

D


Pharmaceuticals

Retail

ID/Access Control/Security

Where are the centers of convergence for barcode and RFID?

• Products

Readers and Scanners

Printers and Encoders

Tickets, tags, labels, other consumables

Open platform middleware/edgeware

• Applications

Supply Chain Management and Track/Trace

Asset Management

Security and Anti-counterfeiting

Access Control and ID

TicketingTicketing

MRO (Maintenance, Repair, Overhaul)

WIP and Sample Tracking

LBS (Location Based Services)


POS and Customer Loyalty

What sales and deployment models should be evaluated/considered in the coming 12-24 months?g

• Deploying enterprises are looking for suppliers willing to assume increased accountability for those solutions they sell and support.

• This requirement is being addressed by forward thinking suppliers through:

Managed Service Offerings (hosted models)

• Higher performance and lower liability

• Opportunity cost reduction or elimination

Easily customizable ROI frameworks and sales tools

The Deployment of Project Management Offices to support key accounts and high growth segments The Deployment of Project Management Offices to support key accounts and high growth segments


VDC’s 2010 Market Intelligence Planning Services

• Feedback from clients regarding 2009 services:

More information on the solutions and associated operational requirements

More granularity, specificity, and insight

Receipt of business intelligence earlier and more promptly

• How VDC is addressing these requests

Increased coverage of solutions supported by core products and technologies covered

More context and commentary on market trends, applications, end user requirements & preferences, use environments supplier strategies provided in a higher value add and less complex formatuse environments, supplier strategies … provided in a higher value add and less complex format

Improved data collection process, databases, models, and tools to enable deeper, more granular analyses and support of custom requirements

More focused scope of work with an accelerated research schedule as a means ensure delivery of most product in 1H 2010p


2010 Schedule and Core Deliverables: Barcode

RESEARCH SCHEDULE AND DELIVERABLES

Volume 1: Handheld Scanners, Offering Segment Analysis May 2010Volume 2: Stationary Scanners, Offering Segment Analysis May 2010Volume 3: Barcode Printers, Offering Segment Analysis June 2010Volume 4: Barcode Printer Consumables, Offering Segment Analysis June 2010, g g yVolume 5: Customer Requirements Analysis (across all product types) July 2010

Vendor Profiles Delivered as part of the Offering Segment AnalysisDistribution Analysis Delivered as part of the Offering Segment Analysis

Study Publication Date Actual Market Size/Supplier Share Forecast Market Size

Service Year 2010 2009 2010-2014

Monthly status reports Begin March 2010


Interim findings: 1 month prior to publication of each Offering Segment Analysis volume

2010 Research Campaign Plan: Barcode

Methodology Target Communities Approximate Sample Size

Handheld Barcode Scanner Suppliers 15

Ph I t i

Handheld Barcode Scanner Suppliers 15

Stationary Barcode Scanner Suppliers 10

B d P i t S li 20Phone Interviews Barcode Printer Suppliers 20

Barcode Printer Consumables Suppliers 20

Di t ib t ll VAR /SI 25Distributors, resellers, VARs/SIs 25

Web-based Interviews End users, distributors, resellers, VARs/SIs Target N > 500


2010 Schedule and Core Deliverables: RFID

RESEARCH SCHEDULE AND DELIVERABLESVolume 1: RFID Transponders, Transponder ICs, and Inlays, Supply-Side Analysis May 2010Volume 2: RFID Readers, Supply-Side Analysis May 2010Volume 3: RFID Printers/Encoders, Supply-Side Analysis June 2010Volume 4: RFID Middleware/Edgeware, Supply-Side Analysis June 2010Volume 5: RFID Professional Services Supply Side Analysis July 2010Volume 5: RFID Professional Services, Supply-Side Analysis July 2010Volume 6: Contactless Smartcards and RFID Ticketing Systems, Supply-Side Analysis July 2010Volume 7: RFID Vertical Markets, Data Book August 2010Volume 8: RFID Applications, Data Book August 2010Volume 9: RFID Market Drivers and Customer Requirements, End-User Analysis September 2010

Vendor Profiles Delivered as part of the Supply-Side Analysis

Study Publication Date Actual Market Size/Supplier Share Forecast Market SizeForecast Market Size

Service Year 2010 2009 2010-2014


Monthly status reports Begin March 2010Interim findings by volume 1 month prior to publication of each supply-side volume

2010 Research Campaign Plan: RFID

Methodology Target Communities Approximate Sample Size

RFID Hardware and Systems Suppliers 50

Phone Interviews

RFID Transponder and Reader IC Suppliers 10

RFID Middleware Suppliers 15

RFID Professional Service Providers 15

Contactless Smartcard System Suppliers 10

Web-based Interviews Enterprise end users and evaluators Target sample N~500


Founding Sponsor Benefits and Schedule

• Service Schedule:

Founding Sponsor enrollment: through January 31, 2010

Deliverables begin with Q1 Bulletin, with major reports: April through September 2010

Planning discussions with early subscribers: through February 2010

Monthly status reports: begin March 2010

Interim findings by volume one month prior to publication of each final report volume

• Founding sponsors receive the following benefits:

Opportunity to provide input on the study architecture, scope, direction

Monthly updates and real-time qualitative findings of interest at each major milestone throughout the execution phase of the study

Discounts from standard post-publication prices

Executive presentation that walks your team through the research sponsored


Q&A Session

Thank You for Attending this VDC Webinar

For more information about VDC Research coverage of the global markets for Barcode and RFID Technologies please contact:

Tom WimmerDirector, Auto ID and Transaction Automation Technologies [email protected] | 630-279-7959

Drew NathansonDirector, Research [email protected] | 508-653-9000 ext. 148

Peter Doran Account [email protected] | 508-653-9000 ext.139


Barcode and RFID – Market Update & 2010 Outlook

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