More AutoID Industry Consolidation on the Horizon - Who's Next?

by Richa Gupta | 09/24/2014

How will the final quarter of 2014 shape up for the AutoID and Data Capture industry? Can the market accommodate or even handle one more acquisition? I believe it can. In this blog, I will highlight my top picks for:

  • The company most likely to make an acquisition
  • The company (or business division) most likely to be acquired

The AIDC market has had a rather interesting 18 to 24 months with some big name acquisitions. First, there was Honeywell’s acquisition of Intermec Technologies. When this deal closed in September of last year, the Federal Trade Commission (FTC) placed conditions on this proposed merger, taking issue with the competitive impact of this merger on the 2D barcode OEM scan engine market. In order to ensure that Motorola Solutions and Honeywell are not, essentially, the only vendors competing in the US market for this product category, the FTC afforded Italy-based Datalogic the choice of licensing Intermec’s 2D scan engine patents for the next 12 years. That aside, Honeywell now became involved in the development, manufacture, sale and integration of all core AIDC technologies (barcode scanners, barcode printers, RFID, rugged mobile computers, etc.), giving enterprises with AIDC solution requirements a “one stop shop” alternative.

And then there was Zebra Technologies’ rather unexpected acquisition of Motorola Solutions’ Enterprise business unit in April, 2014 for $3.45 billion. This deal continues to remain subject to regulatory approval, although VDC does not anticipate any issues here. Zebra has now gained direct entry into the broader AIDC market, making it a one-stop-shop much like Honeywell. In addition to its leadership position in the thermal label printer market, Zebra inherits Motorola’s leadership position in rugged handheld computing and barcode scanning, segmented entirely complementary to Zebra’s existing solutions portfolio. However, the deal does have us wondering. To what extent was its timing influenced by longtime Zebra partner Honeywell’s acquisition of Intermec and the addition of their printers to Honeywell’s solutions portfolio, rendering its partnership with Zebra essentially unnecessary?

No, I do not expect either of these companies to jump in and make another acquisition anytime soon. The industry veteran I am looking at is Datalogic, part of the “big 3” in the AIDC space, together with Honeywell and Motorola Solutions. The company last made an acquisition towards the end of 2011 when it boughtAccusort from Danaher Corporation. Along similar lines, I would not be surprised if Datalogic considered acquiring Datamax-O’Neil (D-O), the printer division of Dover Corporation, a highly diversified manufacturing conglomerate. Datalogic was rumored to be very interested in buying Intermec Technologies. However, the purchase price ended up being too rich for them.

D-O is one of the leaders in the thermal printer market, with strong stationary and portable portfolios. Datalogic is now the only one of the big 3 to which the “one throat to choke” market paradigm does not apply. By acquiring D-O, Datalogic will not only own a comprehensive printer portfolio, but will also have a full solution suite to offer to its industrial automation partner and customer base. D-O’s mobile printer suite will also serve Datalogic well as it sells its mobile computers and scanners into retail and professional service environments.

In the past year, Datalogic has frequently emphasized on its focus on the industrial and logistics verticals. With a sharp focus on product innovation and feature support, D-O is boosting its position in manufacturing and transportation, while also, more importantly, extending its reach into non-industrial markets. The company’s performance in its core hardware category has stagnated in the past two years. Could being part of an AIDC industry behemoth help turn its fortunes?

From VDC’s perspective, a one-stop-shop approach does not necessarily give one company an edge over the other anymore. No data capture vendor is immune to growing enterprise investments in consumer devices, which is essentially taking away from their AutoID budgets. However, such an acquisition would, at the very least, help Datalogic get back on par with its two largest competitors in this market in terms of solution offerings. And that should be enough for now.

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