SCDigest editorial staff

The News: In a somewhat surprising move, high tech giant Motorola announced it was buying automatic identification company Symbol Technologies.  While the sale of Symbol itself was perhaps not surprising, few were expecting the buyer to be Motorola.

The Impact: As with virtually every other technology area, consolidation is also hitting the automatic identification market (AIDC), with Symbol acquisition simply being the latest and largest in an on-going trend. The impact on end users will be modest compared with the fall-out from software industry mergers and acquisitions. In the end, there will be fewer choices, but probably not enough to impact competition, and users may actually benefit from the support and R&D of larger entities.

The Story: After the Wall Street Journal broke the story two weeks ago that Symbol might be acquired by Motorola, but was also willing to consider other bidders, the two companies subsequently announced a definitive deal.

Symbol, a manufacturer of bar code scanners, mobile terminals, wireless networks, RFID readers and other AIDC-related equipment, under the leadership of founder Jerry Schwartz, was one of the icons of the AIDC industry, and helped to create and drive the creation of the AIDC market in the late 1980s and early 1990s.

The company ran into accounting and legal troubles in the 2001, and has had trouble with generating high levels of profitability on its nearly $2 billion in annual sales after those troubles were cleaned up. Top line revenue growth has been better, but not outstanding, increasing 16% since 2003.

One AIDC observer told SCDigest, “Symbol continued to try to compete with Cisco on the wireless side of the business from a network and access point perspective, and that’s a hard path to success.” Symbol has also seen little revenue this far from its large acquisition of RFID player Matrics in 2004, though company execs have continued to say they believe the payoff will come down the road.

The Symbol deal follows a string of other recent transactions in the AIDC market. Recently, scanner manufacturer and Symbol competitor Metrologic announced it was being acquired by private equity firm Francisco Partners, scanner maker PSC was acquired by Datalogic, and printer manufacturers O’Neil and Markem were acquired by Dover Corp., which also owns bar code printer maker Datamax.

It seems hard to believe that a less than a decade ago there were two tradeshows – Scan Tech and ID Systems – that were focused on AIDC products and which featured hundreds and vendors and large end user crowds. The two shows were eventually consolidated, with Scan Tech morphing into the show Frontline, which closed down recently.

“It’s interesting and a little sad to remember those times now,” commented SCDigest editor Dan Gilmore. “There was a tremendous amount of excitement and user interest for the whole first half of the 1990s. But the equipment became commoditized, and suddenly the magic and interest at that level was gone.”

How Motorola will try to drive synergies with Symbol’s products isn’t yet clear. Like Symbol, Motorola has interest and products in RFID, and many believe there will be a growing convergence of mobile devices such cell phones (Motorola) and other types of devices (Symbol), especially for commercial applications, many of which may require bar code scanning and/or RFID reader capabilities.

What’s your take on Motorola’s acquisition of Symbol Technologies? Does AIDC industry consolidation have much impact on end customers? As an attendee or vendor, do you have memories of the go-go AIDC days of the early 1990s and the Scan Tech and ID Systems trade shows? Let us know your thoughts.