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AutoID Market Shakeup - VDC's Thoughts on Honeywell Acquiring Intermec

At VDC, we have now, in a way, come to expect big acquisition-related news towards the end of calendar years – case in point, Datalogic’s acquisition of Accu-Sort and SMARTRAC N.V.’s acquisitions of UPM, KSW and Neology in Q4, 2011. Throughout 2012, VDC has talked about how we expect to see leading players in the space – for both barcode scanners and printers – to consider consolidating their competitive landscape and strengthen their leadership position in existing markets while also tapping into adjacent high-growth market opportunities. On December 10th, 2012, Honeywell International Inc. (NYS: HON) did just that – announcing its acquisition of one of the global leaders of AIDC solutions, Intermec (NYS: IN), for approximately $600 million in an all-cash transaction. Intermec is the only company involved in the development, manufacture, sale and integration of all core AIDC technologies (barcode scanners, barcode printers, RFID, rugged mobile computers, etc.), thereby giving enterprises with AIDC solution requirements a “one stop shop” alternative. Our focus in this blog post will be on highlighting the impact of the company’s acquisition on the barcode and RFID markets.

From a strategic perspective, some of the key benefits that Honeywell can leverage via this acquisition include:

  1. Honeywell has registered strong performance in the barcode scanning market since its acquisitions of Metrologic Instruments and Hand Held Products in the last decade. The company, however, has had an extremely limited presence, if at all, in other AIDC markets. It is only in May 2012, for example, that Honeywell’s AIDC division launched its first RFID-enabled device – the Optimus™ 5900 RFID mobile computer – capable of reading EPC Gen2 and ISO 18000-6B RFID tags. With this deal, the company has bought an immediate entry into several adjacent technology markets given Intermec’s relatively strong play in barcode and receipt printers, consumables, RFID printer/encoders, RFID readers, and other hardware. VDC considers Intermec’s strong IP (intellectual property) in the RFID market to have been a crucial decision driver for Honeywell especially as the company looks to capitalize on new, high-growth opportunities in this multi-billion dollar market – most notably in the Manufacturing and T&L verticals.
  2. Intermec’s value proposition as a “one stop shop” for AIDC resonates, in particular, with warehouse and manufacturing IT professionals looking to standardize on one branded platform. The company has also been investing resources towards building out its presence in the health care services market – with new product introductions and channel alliances. This acquisition thus gives Honeywell significant leverage in these vertical markets.

Despite all these synergies, VDC expects Honeywell to face stiff challenges as it looks to revive Intermec’s financial performance in its key markets – across regions, verticals and technology segments – and minimize the revenue impact of economic volatility in Europe. The company has, however, been very active with new product introductions across its barcode scanning and printing portfolios over the past 6-12 months, showcasing a continued focus on research and development initiatives.

The deal is a very strategic move by Honeywell and certainly shakes up the competitive landscape in the AutoID market. The addition of Intermec’s large installed base of customers and channel partners to its own positions the company for continued success in increasingly difficult and demanding operating conditions. Questions remain on what this means for Intermec’s employees, product lines and channel. And we will have the answers for you once this acquisition closes out in 2013.

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