Identifying a brand new trend

The automatic identification and data capture market is becoming a key focus for the channel. Laura Hailstone reports

Traditionally, automatic identification and data capture (AIDC) products, or auto-ID as they are commonly referred to, have been the staple of specialist distributors and resellers. However, with distributors Ingram Micro, Interface Solutions and Midwich all launching dedicated auto-ID divisions this year, it appears that what was once viewed as a niche market is quickly gaining impetus among the IT channel.
Technologies that typically sit under the AIDC umbrella include barcodes, radio frequency identification (RFID), biometrics, magnetic strips, optical character recognition, smartcards and voice recognition.
Auto-ID products share the common purpose of identifying, tracking, recording, storing and communicating business, personal or product data.
Although most people will not have heard of AIDC, examples are all around us. Perhaps the simplest, most visible example is at a supermarket in the form of barcoding.
Another example is a credit card. Every time a card is swiped, the digitally stored data on the magnetic strip is read by an electronic reader. London Underground passengers who use Oyster cards are also using auto-ID in the form of smartcards.
So with auto-ID already fairly prevalent, where are the growth opportunities for resellers?

Room to grow
According to Alex Ward, commercial director at Midwich, the big growth opportunity exists around mobile auto-ID solutions. “Traditionally, auto-ID products have been adopted by supermarkets and warehousing and logistics firms. However, with the advent of mobile products, it has opened up the technology to practically any business in any vertical.”
Sukh Rayat, vice president at Avnet Technology Solutions Europe, agreed: “Mobile computing is the next evolution in auto-ID and resellers must get into this market.”
Clive Fearn, marketing manager for supply chain and the postal market at auto-ID printer vendor Zebra, said: “Mobility is a huge opportunity for our channel partners. We call it the mobile explosion. If I didn’t have a family and a mortgage I would set myself up as a provider of mobile auto-ID solutions.”
VAR Solidox started out in 2001 as an auto-ID reseller, but found that just dealing in auto-ID was too niche so it started to offer IT and AV products as well.
Ross Haselhurst, director of Solidox, told CRN: “Since the evolution of mobile devices, the growth opportunity is in mobile auto-ID solutions. What you can do now with just a handheld device is amazing. The price has also come down, which is helping to open up the market. You can buy a mobile phone with Bluetooth for less than £400 now and barcode scanners can work with Bluetooth mobile phones.”
But why the sudden interest in auto-ID from IT distributors?
Martin Smith, auto-ID business manager at Interface, told CRN: “Distributors are looking at the auto-ID space now because there is less margin erosion in auto-ID compared with IT hardware and because a convergence is taking place between traditional auto-ID products and new technology. Smartphones can talk to auto-ID printers, for example.”
There are three networks on which auto-ID mobile devices can work: a wireless personal area network (WPAN); a wireless LAN (WLAN); and a wireless wide area network (WWAN).
“The growth is driven by the fact that Wi-Fi is available pretty much everywhere now,” said Smith. “The opportunities for auto-ID products are very diverse.”

Channelling the benefits
According to Fearn, the attraction for the channel is very clear. “Auto-ID products carry significant margins - a lot more than traditional tin. VARs can make money on the hardware, software, peripherals, sales and support, but auto-ID is a different type of sale for a VAR - it is a solution sale so they will need to understand their customers’ pain.”
Avnet spotted the potential in the auto-ID space in 2006 when it acquired European RFID distributor Printex.
“In the past few years auto-ID has been about barcodes and scanners, but the market is changing. We offer bundles for resellers around applications for specific sectors such as retail, transport and logistics. We want to educate resellers about this market,” added Rayat.
Midwich has been planning its entry into the auto-ID space for the past 18 months.
“We decided to launch a dedicated division as it is a new area for the channel and resellers will need a certain amount of hand-holding initially. They will need us to work with them to find a bespoke package or application for their customers. The new division had been planned for a long time to make sure we had the right vendors, the right marketing and the right support. We wanted to make sure we could offer resellers a whole solution - it would be no good if we could just offer them a printer or scanner,” said Ward.
The new division went live last month with Zebra’s mobile printers, Cipherlab’s handheld scanners and Wasp Technologies’ all-in-one auto-ID solution aimed at SMEs.

Expansion plans
“VARs can now go to their customers and tell them they have a range of products that will improve and enhance their business, make them more efficient and give them a competitive edge,” said Ward.
The main sectors Midwich plans to focus on are health, transport, utilities and local government but the beauty, according to Ward, is that most sectors “have external mobility needs” these days.
“We want to be a major distributor in this space in the next two years. In the first year of trading I hope to have achieved turnover of between £1m and £2m,” revealed Ward.
He is also looking for between 250 and 300 resellers to join Midwich’s auto-ID mobility community. “We’re not just giving resellers tools and leaving them to get on with it; we want to work alongside them and help them ask the right questions to open the right doors.”
Smith, who previously worked for Zebra, is also looking to turn Interface into a big player in the auto-ID space. “We want to be well positioned for the continued growth and convergence in this sector, particularly in field mobility where mobile printing continues to grow and out-perform the market norm. Interface has realised that a specialist and focused team is required to make auto-ID a success as it requires a different mindset to selling traditional IT hardware,” said Smith.
Smith wants to recruit new vendors, particularly in the scanning side of auto-ID, and new resellers.

Moving forward
“Transport and logistics are areas that are investing in mobile terminals, printers and GPS handheld devices, but postal/delivery services is also a big market. New verticals that vendors are expecting to take off are hospitality and health,” he added.
Pierre Lams, founder of VAR Handheld PCs, said: “We’re taking advantage of the increased functionality of smart devices. Through our hand-e-pix software customers can capture an image on their handheld device, pinpoint the image’s location and feed the data back to their office.”
“We are not an auto-ID reseller, but we use wireless devices such as PDAs to capture data and automate it in the field,” said Lams.
Aside from the opportunity in mobility, RFID is another area of auto-ID that many predict will grow.
Ian Smith, chief executive of the AIDC European Centre of Excellence, said: “As Europe defines a European policy and as the world comes together on many issues,
we feel RFID will grow rapidly. Governments are seeing these technologies as the missing link in IT.”
Peter Harrup, chairman of IdTechEx, explained further: “Radio frequency regulations are more of a mess in Europe than anywhere else in the world, but they are being cleared up. RFID is around a $5bn (£2.5bn) business worldwide, but will be worth $25bn in five years’ time. A big opportunity exists for resellers around RFID cards that work from a distance. The Chinese are investing in a billion cards for secure access to the Olympic games.
“At the moment, 85 per cent of barcodes are printed directly onto products and the first products with RFID tags printed directly on them are coming out now. This also presents a big opportunity for resellers,” added Harrup.
Interface sets up auto-ID unit