Growth ahead for barcode equipment as automation intensifies and new product development gains pace

Citation

(1998), "Growth ahead for barcode equipment as automation intensifies and new product development gains pace", Sensor Review, Vol. 18 No. 3. https://doi.org/10.1108/sr.1998.08718cab.007

Growth ahead for barcode equipment as automation intensifies and new product development gains pace

Growth ahead for barcode equipment as automation intensifies and new product development gains pace

Keywords Barcodes, Scanners

Fierce competition and more supplier and customer mandates have led many companies to increase their automation of data collection processes and to incorporate barcode technology within their organisations. The growing significance and influence of this technology, as well as improved marketing is aiding the expansion of the barcode equipment market, rising from its revenue level of US$993.7 million in 1997 to US$2.75 billion in the year 2004 (see Figure 1).

According to a new study by Frost & Sullivan, the international marketing consulting company, manufacturers specialising in barcode technology invest a large amount of their profits in the research and development of new products. New product innovations, boasting enhanced features and a higher degree of functionality, are poised to fuel market growth and to provide end-users with a broader spectrum of products to choose from.

Figure 1 The European market for barcode equipment (per cent projections by revenues and market segmentation ­ 2004)

The barcode equipment market, which continues to follow trends borne out by the PC market, remains strong in Europe and has retained its growth potential. Barcode technology is still the most widely used and cost-efficient form of automatic identification technology. In addition to the introduction of more timely and accurate data collection systems, Frost & Sullivan's study also identifies a move by some companies to install wireless communication networks. Automisation of many processes is the key for a number of market players and public service sectors to make cost-cutting exercises effective.

The retail sector, the traditional stronghold of barcode equipment, is now making way for industrial applications, representing the most important growth area. Warehousing, product and component tracking, storage, document tracking and traceability are all becoming more important to many industrial sectors, reports Gareth Williams, IT Research Analyst at Frost & Sullivan.

Companies are increasingly moving their focus towards industrial markets. Manufacturers are tailoring their products for the industrial environment, to ensure that they maintain their market appeal. Products are re-designed and become more ruggedised in order to withstand harsh environmental changes, Mr Williams continues.

Two-D barcode symbology is expected to boost sales in the market for barcode technology. The number of applications left to be exploited remains substantial. Two-D symbology has already found favour with parcel carriers, mobile phone producers and in health-care. Present day barcode application areas could become more sophisticated through the use of 2-D technology, by providing a cheap data file source for manufacturers to track.

Manufacturers of barcode equipment have changed the way they do business and moved towards more indirect sales channels, enabling the small volume end-user to receive the necessary solution and support from the same place, either a VAR or system integrator or maybe a distributor.

Mr Williams says: "Manufacturers have worked very hard to ensure products that need to be handled are designed with the operator in mind. This has certainly been the case with the development of laser scanners that can be attached to a person's finger, helping to improve productivity of an operator. Repetitive strain injury has been addressed by barcode equipment manufacturers, but no doubt they will continue to alleviate this potential problem".

Scanning ranges of hand-held charge coupled devices (CCD) are being addressed and continue to improve. New hand-held laser scanners are being developed with fewer moving parts to reduce maintenance costs and to offer improvement on short product life-times.

Each player in the European barcode market tends to have one type of specialisation, but there is a distinct move by companies towards an expansion of their abilities. Through acquisitions and strategic alliances, companies are moving towards providing a wider variety of products and barcode technology solutions.

The number of competitors in the marketplace is likely to increase with the rising number of Far Eastern companies showing interest in the European market. Some companies are considering moving out of low-margin areas (such as hand-held CCD technology) into hand-held laser scanners. More competition is likely to occur within the batch data terminal segment as more companies incorporate scanners into their terminals.

Another trend highlighted by Frost & Sullivan's study is the move by batch data terminal producers to incorporate radio frequency technology into their products.

In terms of product types, data terminals currently account for just over 36.0 per cent of overall barcode equipment sales. The data terminal market's leading position is expected to remain unchanged over the period under review.

In its review of national markets, Frost & Sullivan confirms Germany's dominance, leading the field with a 25.6 per cent market share in 1997. Ranking second is the UK market (17.4 per cent), followed by France, valued at 15.4 per cent.

For further information contact Frost & Sullivan, Münchenerstrasse 30, 60329 Frankfurt/Main, Germany. Tel: +49 (69) 23 50 57; Fax: +49 (69) 23 45 66.