Date: 09/12/2010

VDC Research: Barcode and RFID converging to address enlarging authentication market

VDC has highlighted technology and market trends in barcode reader and RFID market, where both are converging. VDC Research Group says 2010 has been a banner year for the AIDC market, with many RFID and barcode suppliers experiencing double-digit growth.

The trends listed by VDC research in RFID domain include:

1. Adoption of Item-Level Tracking in Retail Continues to Surge: VDC expects item-level tracking applications in retail to continue to expand rapidly in 2011, as the solution is adopted in new accounts, scaled and expanded in existing accounts and embraced globally. Growth will also be further driven as RFID continues to migrate toward the point of manufacture.

2. Asset Tracking Applications Go Beyond Location: Asset tracking solutions will continue to expand beyond just providing the location of an asset. They will increasingly be leveraged to provide more information about the asset—its environment, movements and users—as a means to support and enhance business processes, increase asset utilization, support compliance and minimize costs.

3. Authentication and Anti-Counterfeiting Emerge as Leading Applications: Product authentication and anti-counterfeiting applications are anticipated to grow quickly and expand into a broad range of verticals over the next 3-5 years as companies look to create a more secure supply chain. These applications are expected to extend the functionality of existing systems beyond track and trace to protect brands, further improving ROI.

4.Solution Convergence Will Provide Key Benefits: Although there may be overlap in functionality and capabilities, the convergence of RFID, barcode and other AIDC solutions will provide the end-user more actionable business intelligence with little disruption to existing solutions and processes. The combination of these technologies will be particularly beneficial for applications and environments, such as supply chain and inventory management.

5. More Revenues to Come From New Accounts: Although approximately 80% of total global RFID revenues in 2009/2010 were from established accounts that have been evaluating/piloting the technologies for at least 18 months, VDC expects a shift in consumption coming from new accounts to occur in late 2011/early 2012. This tipping point will be a function of favorable pricing, increased packaging of solutions and availability of off-the-shelf solutions, more benchmark and performance metrics, enhanced standards and improved business models.

In the barcode domain the trends listed by VDC include:

1. 2D Imagers: The Solution Du Jour in 2011: Mobile marketing initiatives and continued investment in both retail and industrial use environments will be key drivers for 2D imaging solutions in 2011. As suppliers expand their product portfolios and 2D imager prices stabilize, VDC expects investment in 2D imagers to outpace laser scanners and linear imagers in coming years.

2. Increased Focus on Commercializing Emerging Applications: VDC Research expects AIDC suppliers to place an increased focus on recruiting and developing independent software vendors to commercialize emerging applications. Smartphones have been a boon to the application developer community and this community will be instrumental in cultivating demand for those AIDC suppliers who make it easy for developers to collaborate and bring solutions to market.

3. Making Green by Being Green: End customers are increasingly aware of the environmental impact of their own operations and are interested in solutions that reduce waste and operating expenses. In response, the AIDC supplier community has removed heavy metals from their products and has begun offering safer consumables with new capabilities, such as dual-sided substrates.

4. Growing Investment from Lower Tier Customers in Core AIDC Technologies: Suppliers have long recognized the revenue potential associated with serving tier 3 and 4 customers, but doing so cost effectively has been a continuous struggle. This is changing—VDC is seeing unprecedented investment in core AIDC technologies by this community, spurred by global standards, the availability of bundled off-the-shelf solutions, new channels and adjusted sales models.

5. “Open-Source Lite” Product Design Will Be Key to Increasing Opportunities: Hardware suppliers and their ODMs are approaching design more holistically, identifying opportunities to extend their value propositions to end-users and channel partners alike. By involving these communities directly into the design process, suppliers are designing hardware optimized for the user, the application and the country market, supported by software and services that drive more value.