During this webcast, Tom Wimmer, Director of the AutoID & Transaction Automation Practice, discussed the emerging trends among the imaging solutions market from VDC’s 2010 Global Barcode Industry Business Planning Service and 2010 Retail & Transaction Automation Equipment Business Planning Service. Specifically, addressed: how demand for imaging solutions will scale in coming years; which standards and mandates are driving adoption; the barriers to adoption and how they can be overcome; which applications will receive investment consideration in the near-term; and the new channels required to support the implementation of imaging solutions.

1. VDC Research Webcast:
Data Capture
Technology Investment:
Refresh or Upgrade?
Tom Wimmer
Director, Auto ID & Transaction Automation Practice
Christopher Rezendes
Executive Vice President

2. 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

3. VDC Research
Complimentary marketing data on the
Imaging & Other AutoID Markets
is available on our website at:
www.vdcresearch.com
2– 2010 VDC Research Group, Inc.
AutoID & Transaction Automation Practice

4. 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.
3– 2010 VDC Research Group, Inc.
AutoID & Transaction Automation Practice

5. 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?
4– 2010 VDC Research Group, Inc.
AutoID & Transaction Automation Practice

6. 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.
5– 2010 VDC Research Group, Inc.
AutoID & Transaction Automation Practice

7. Imaging Opportunity: Product Category Demand
Handheld Scanner Demand
Segmented by Product Type
2009 = $631.5M
450
400 Stationary Scanner Demand
350 Segmented by Product Type
2009 = $660.5 M
(Millions of Dollars)
300
250
450.0 Scan Engine Demand
200
400.0 Segmented by Product Type
150
350.0 2009 = $163.8 M
100 125
(Millions of Dollars) 300.0
50 250.0
0 200.0 100
150.0
100.0 75
(Millions of Dollars)
50.0
0.0 50
25
0
6– 2010 VDC Research Group, Inc.
AutoID & Transaction Automation Practice

8. What’s Driving Demand for Imaging Solutions?
Standards and mandates? Not so much…
• 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?
7– 2010 VDC Research Group, Inc.
AutoID & Transaction Automation Practice

9. Quest for Continuous Improvement in Operations
Tops the list of investment considerations …
What primary considerations drove your
organization to invest in imaging?
Operations Improvement
Industry Compliance
Customer Preference
Government Compliance
0% 10% 20% 30% 40% 50% 60% 70%
• Remember the Wal*Mart RFID initiative?
• This is different (thankfully).
• Deploying enterprises are seeing imaging as a tool to support competitive differentiation!
8– 2010 VDC Research Group, Inc.
AutoID & Transaction Automation Practice

10. But, Barriers to Adoption do Exist
Some are actual, many are perceptual…
What are the primary barriers keeping your
organization from investing in imaging?
High cost of adoption
No clear return on investment (ROI)
Satisfied with current manual processes
System integration complexity
Don't know
Other, please specify:
Evaluating alternative technologies
Cost of training and development
Using alternative technologies
0% 10% 20% 30% 40%
• 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.
9– 2010 VDC Research Group, Inc.
AutoID & Transaction Automation Practice

11. Growth in a Number of Segments
Sector Leading Segments Leading Applications Current Size Expected Growth
Automotive / Aerospace Component ID
Manufacturing Electronics WIP Medium Moderate
Pharmaceuticals QA/QC
Routing Tracking
T&L Warehouses QA / QC
Airports Baggage handling Large Moderate
Parcel delivery Boarding passes
Routing / Tracking
Mass merchandise Age verification
Retail Specialty retail Merchandise returns Large Moderate
DIY Auto-forms population
Routing / Tracking
Post offices
Government Asset Tracking
Public safety Small Fast
MRO
Public health
Inspections / Citations
Health Care Hospitals Patient Identification
Surgical Centers Asset Management Small Fast
Hospice / Managed Care Auto-Forms Population
Commercial Services Mobile Marketing Mobile tagging Small Slow
10 – 2010 VDC Research Group, Inc.
AutoID & Transaction Automation Practice

12. 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.
11 – 2010 VDC Research Group, Inc.
AutoID & Transaction Automation Practice

13. 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.
12 – 2010 VDC Research Group, Inc.
AutoID & Transaction Automation Practice

14. 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.
13 – 2010 VDC Research Group, Inc.
AutoID & Transaction Automation Practice

15. 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

16. 2010 Schedule & Core Deliverables: Barcode
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
15 – 2010 VDC Research Group, Inc.
AutoID & Transaction Automation Practice

17. 2010 Research Campaign Plan: Symbologies
Methodology Target Communities Approximate Sample Size
Handheld Barcode Scanner Suppliers 15
Stationary Barcode Scanner Suppliers 10
Phone Interviews 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
16 – 2010 VDC Research Group, Inc.
AutoID & Transaction Automation Practice

18. 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 Wimmer
Director, Auto ID & Transaction Automation Technologies Practice
twimmer@vdcresearch.com | 630.279.7959
Chris Rezendes
Executive Vice President
cjr@vdcresearch.com | 508.653.9000 x120
Janice Seidman
Account Executive
jseidman@vdcresearch.com | 508.653.9000 x139
17 – 2010 VDC Research Group, Inc.
AutoID & Transaction Automation Practice