VDC Research Webcast:

Data Capture

Technology Investment: Refresh or Upgrade?

Tom WimmerDirector, Auto ID & Transaction Automation Practice

Christopher RezendesExecutive Vice President

Recording Available

These slides are from a webcast presented on 9/8/10.

A full audio recording is available at:

https://vdcresearch.webex.com/vdcresearch/lsr.php?AT

=pb&SP=EC&rID=2680477&rKey=b8e005ed3f498806

VDC Research

2 – 2010 VDC Research Group, Inc.

AutoID & Transaction Automation Practice

Complimentary marketing data on the

Imaging & Other AutoID Markets

is available on our website at:

www.vdcresearch.com

3 – 2010 VDC Research Group, Inc.

AutoID & Transaction Automation Practice

Today’s Speakers

• VDC Research Group

Founded in 1971, continuous, profitable operation for nearly 40 years

Focus on a number of embedded and niche network market segments

1,000 clients annually …90% technology suppliers, tech investors

• Tom Wimmer –Director

Tom manages VDC’s AIDC & Transaction Automation Practice, which follows

advancements in symbology marking and data capture, RFID and retail automation.

Tom and his team support three core market intelligence services focusing on the

aforementioned collections of technology.

This research includes original, direct-contact, primary research into three key

stakeholder communities making up these markets: suppliers, integrators, and users.

His clients include virtually every leading, fastest growing and otherwise exceptional

supplier of AutoID and retail automation technology in the world.

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.

4 – 2010 VDC Research Group, Inc.

AutoID & Transaction Automation Practice

Agenda for Today’s Presentation

• How will demand for imaging solutions scale in coming years?

• Which standards and mandates are driving adoption?

• What are the barriers to adoption, and how can they be overcome?

• Which applications will receive investment consideration in the near-term?

• Are new channels required to support the implementation of imaging solutions?

5 – 2010 VDC Research Group, Inc.

AutoID & Transaction Automation Practice

Imaging Opportunity Overview

• Most core AIDC technologies were hammered in 2009, and data capture was no exception.

Consider these global yr / yr growth rates:

Contraction, handheld scanner segment: 22.1%

Contraction, stationary scanner segment: 29.4%

Contraction , barcode label printer segment: 22.7%

• Imaging solutions bucked this trend. Consider these yr/yr growth rates:

The 2D handheld Imager segment grew by 19.0%

The 2D scan engine segment grew by 34.9%

• And while all product categories within the stationary scanner segment (including imaging

product categories) contracted in 2009, the industrial imager segment contracted least of all.

6 – 2010 VDC Research Group, Inc.

AutoID & Transaction Automation Practice

Imaging Opportunity: Product Category Demand

0

50

100

150

200

250

300

350

400

450

(Mill

ion

s o

f D

olla

rs)

Handheld Scanner Demand Segmented by Product Type

2009 = $631.5M

0

25

50

75

100

125

(Mill

ions o

f D

olla

rs)

Scan Engine Demand Segmented by Product Type

2009 = $163.8 M

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

450.0

(Mill

ions o

f D

olla

rs)

Stationary Scanner Demand Segmented by Product Type

2009 = $660.5 M

7 – 2010 VDC Research Group, Inc.

AutoID & Transaction Automation Practice

What’s Driving Demand for Imaging Solutions?

• Standards are said to drive adoption, but not all standards have teeth. Myriad standards

have been written supporting the adoption of 2D symbologies:

IATA published its BCBP (Barcoded Boarding Pass Standard in 2005. Used by more than 200 airports,

the standard was updated in 2008 to include symbologies for mobile phones and again in 2009 to address

the need for digital signature capture.

The American National Standards Institute (ANSI) published a new 2D standard: ANSI MH 10.8.3M.

It recommends the use of PDF417 for all shipping, receiving and supporting EDI documentation.

The U.S. Department of Defense has designated PDF417 as the standard 2D bar code for logistics

applications and EDI formatting on paper labels.

The American Association of Motor Vehicle Administrators (AAMVA), has approved and published

PDF417 for a broad range of driver and motor vehicle applications.

The Automotive Industry Action Group (AIAG) 2D Applications Committee has selected PDF417 for its key

2D production and logistics applications, and has adopted the B-10 standard for shipping and receiving.

• Similarly, customer compliance, industry compliance and regulatory compliance mandates

have had only marginal impact as adoption drivers. Even the U.S. government’s UID

initiatives have had only marginal impact.

• So, what IS driving demand for imaging solutions?

Standards and mandates? Not so much…

8 – 2010 VDC Research Group, Inc.

AutoID & Transaction Automation Practice

Quest for Continuous Improvement in Operations

0% 10% 20% 30% 40% 50% 60% 70%

Government Compliance

Customer Preference

Industry Compliance

Operations Improvement

What primary considerations drove your organization to invest in imaging?

Tops the list of investment considerations …

• Remember the Wal*Mart RFID initiative?

• This is different (thankfully).

• Deploying enterprises are seeing imaging as a tool to support competitive differentiation!

9 – 2010 VDC Research Group, Inc.

AutoID & Transaction Automation Practice

But, Barriers to Adoption do Exist

• Imaging is more than a product category, it’s a platform for application development.

• Investments should be supported by a clearly defined application migration plan.

• More comprehensive ROI models are required to justify initial investment while paving

the way for subsequent investments.

0% 10% 20% 30% 40%

Using alternative technologies

Cost of training and development

Evaluating alternative technologies

Other, please specify:

Don't know

System integration complexity

Satisfied with current manual processes

No clear return on investment (ROI)

High cost of adoption

What are the primary barriers keeping your organization from investing in imaging?

Some are actual, many are perceptual…

10 – 2010 VDC Research Group, Inc.

AutoID & Transaction Automation Practice

Growth in a Number of Segments

Sector Leading Segments Leading Applications Current Size Expected Growth

ManufacturingAutomotive / Aerospace

Electronics

Pharmaceuticals

Component ID

WIP

QA/QC

Medium Moderate

T&L Warehouses

Airports

Parcel delivery

Routing Tracking

QA / QC

Baggage handling

Boarding passes

Routing / Tracking

Large Moderate

RetailMass merchandise

Specialty retail

DIY

Age verification

Merchandise returns

Auto-forms population

Large Moderate

GovernmentPost offices

Public safety

Public health

Routing / Tracking

Asset Tracking

MRO

Inspections/ Citations

Small Fast

Health Care Hospitals

Surgical Centers

Hospice/ Managed Care

Patient Identification

Asset Management

Auto-Forms Population

Small Fast

Commercial Services Mobile Marketing Mobile tagging Small Slow

11 – 2010 VDC Research Group, Inc.

AutoID & Transaction Automation Practice

Channel Requirements are NOT so Different

• Imaging is rapidly becoming a critical agility-enabling tool in a number of horizontal

applications and vertical markets.

• As the installation environments and applications for imaging expand, suppliers will need

to rethink their OEM partnering strategies … imaging sockets are showing up in both highly

automated, and semi-automated environments – the opportunity is NOT limited

to handheld and fixed position scanner solution providers.

• At the same time, ISVs are gaining leverage in the post-recession IT market – this trend

was taking place before the recession, and now, with users focusing on smaller projects

as a means to achieving operational goals, imaging is winning sockets.

• It appears that the VAD channel might have enhanced its emerging technology support

toolkits at the same time that 2D imager developers radically improved price / performance

profiles of their solutions – the channel and the product are both ready for distribution.

• The imaging opportunities will require suppliers to consider slightly different approaches

to channel development.

12 – 2010 VDC Research Group, Inc.

AutoID & Transaction Automation Practice

What Do We Think?

• The winners in the imaging market will be talking about something much bigger and more powerful than the ‘typical’ imaging messaging.

• They will be talking about: Points of sales, delivery and service taking on the added burden of being proof points

for customers’ broad, perhaps complete view of an enterprise.

The most powerful customer experiences with an enterprise will be rooted in how associates support them, the customer.

How imaging can create opportunity for and leverage in associate interaction(s).

• They will also be talking about: ‘Futuristic‘ concepts, such as pervasive provenance – or cradle to grave tracking with portable 2D DB.

‘Boring’ tactical points, such as legacy integration.

• We think that as the planet migrates a bit away from alpha-numerics and toward images … these devices will be nearly ubiquitous in one form or another and in more markets than less.

13 – 2010 VDC Research Group, Inc.

AutoID & Transaction Automation Practice

What Should You Do?

• Get clear, and stay clear, that while imaging is very powerful, and the drivers for its

deployment acute, it rarely shows up on buyers’ lists of strategic technologies.

• Suppliers, and perhaps more importantly, their downstream partners – in the OEM, ISV,

and ISI stakeholder groups – need to insure that their messaging is contexted operationally

as well as technically.

• Remember: Most operators are not looking for more information, they are looking for more

accurate information, with more portability, security, and applicability … imaging can be

deployed as much for information assurance as new information production.

• Train your people to speak with great depth about the processes that your target customers

are required to support and document … and find the weak links where imaging can mitigate

liability and expand potential value-add.

• Be prepared to add new value … core imaging capabilities are closer to commodity than

anyone would like to acknowledge.

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 and preferences,

use 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 2010.

14 – 2010 VDC Research Group, Inc.

AutoID & Transaction Automation Practice

2010 Schedule & Core Deliverables: Barcode

15 – 2010 VDC Research Group, Inc.

AutoID & Transaction Automation Practice

RESEARCH SCHEDULE & DELIVERABLES

Volume 1: Handheld Scanners, Offering Segment Analysis……………………………..…..….Aug 2010

Volume 2: Stationary Scanners, Offering Segment Analysis…………………………..……..…Aug 2010

Volume 3: Barcode Printers, Offering Segment Analysis……………………………..…….…...Sept 2010

Volume 4: Barcode Printer Consumables, Offering Segment Analysis……………………......Sept 2010

Volume 5: Customer Requirements Analysis (across all product types)……………………..…Oct 2010

Vendor Profiles Delivered as part of the Offering Segment Analysis

Distribution Analysis Nov 2010

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

16 – 2010 VDC Research Group, Inc.

AutoID & Transaction Automation Practice

2010 Research Campaign Plan: Symbologies

Methodology Target Communities Approximate Sample Size

Phone Interviews

Handheld Barcode Scanner Suppliers 15

Stationary Barcode Scanner Suppliers 10

Barcode Printer Suppliers 20

Barcode Printer Consumables Suppliers 20

Distributors, resellers, VARs/SIs 25

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

17 – 2010 VDC Research Group, Inc.

AutoID & Transaction Automation Practice

Q&A Session

Thank You for Attending this VDC Webcast

For more information about VDC Research coverage of the

Global Markets for Imaging Solutions, please contact:

Tom WimmerDirector, Auto ID & Transaction Automation Technologies Practice

twimmer@vdcresearch.com | 630.279.7959

Chris RezendesExecutive Vice President

cjr@vdcresearch.com | 508.653.9000 x120

Janice SeidmanAccount Executive

jseidman@vdcresearch.com | 508.653.9000 x139