Manufacturers change route to market

The last few years saw a rationalisation in the route-to-market by most of the big AIDC manufacturers in that they reduced the number of direct relationships with resellers to a much lower level than before. This has addressed an imbalance that was generally referred to as the 80:20 rule, where 20 per cent of resellers were responsible for 80 per cent of revenue.

The remaining resellers with a direct relationship are engaged in partner programmes that usually require dedicated staff to attend accreditation training that guarantees the quality and level of services provided by them. This obviously benefits the end user but also the manufacturer itself as it protects the manufacturers reputation and brand.

As a result of this, the infrastructure to support a large number of resellers could be reduced or re-assigned to marketing, training, research and development.

Distribution
At the same time, manufacturers forged relationships with established AIDC distributors to provide a source for products and support for the remaining resellers.

In an effort to expand their customer base, these distributors are entering into relationships with IT vendors that were traditionally not active in the AIDC marketplace. In some areas, this has resulted in increased competition which can obviously be of benefit to the end user. On the other hand, lack of product knowledge has occasionally lead to confusion in providing pricing for the correct specification and an end user can have difficulty in getting the right level of support when something goes wrong.

The resellers that still have the direct partnership with the manufacturers and that are engaged in the accreditation programmes offer the end-user added value in a number of areas.

PC and PC peripheral vendors and maintenance companies are used to small margins and only too happy to pick up some business when they stumble across an opportunity with their existing customers. This is regarded as icing on the cake regardless of margin.

Hand held computers have many optional features such as different radio types, keypad, barcode scanner, terminal emulation, etc. The same is true for some of the enterprise type label printers. Vendors that are not aware of all these options often end up quoting a customer for equipment that does not include all the required features and this does cause problems, both for the established AIDC vendors and the end users.

Added value
The resellers that still have the direct partnership with the manufacturers and that are engaged in the accreditation programmes offer the end-user added value in a number of areas.

The accreditation training ensures that the partners have a good knowledge on the capabilities of the equipment they offer and are able to offer the right tool for the job. They are also generally aware of manufacturers development plans and any new products that may be coming available. Importantly, they are also able to inform potential users of any plans to discontinue products to protect them from investing in equipment that may become obsolete or be superseded by superior models at similar cost.

The availability of full integration services such as integration with existing ERP or warehouse management systems and programming of hand held computers enables the end user to deal with one supplier rather than a number of parties. This obviously eliminates the potential problem of identifying responsibility for any problems.

Other added value is offered by way of services such as wireless data collection consultancy and surveys. This can cover all types of wireless networks such as Bluetooth (WPAN), WiFi or 802.11x (WLAN) and GPRS (WWAN).

The accredited resellers will have to embrace the new opportunities, ensure that their value add service package is compelling and keep a wary eye on new entrants that may be coming from unexpected sources.

Unlike most non-accredited resellers, direct partners are able to carry-out site surveys and installations that guarantee adequate coverage. Often the use of more sophisticated antennae in strategic places can reduce the investment in RF infrastructure. The ability to address the concerns about WiFi security and to protect the end-users system from unwanted intruders is another important service available.

Wide availability of GPRS infrastructure and the service providers interest in growing their revenue by offering compelling voice/data packages, together with the explosion of wireless (both WiFi and GPRS) PDA-type devices has created a demand for applications involving the mobile worker.

Devices such as the XDA2 and low-cost PDAs serve a purpose as useful tools and, on the back of this, there is a growing demand for heavier duty, enterprise quality devices that have built-in bar code readers and up to three radios. These devices support Bluetooth to connect to portable printers, GPS receivers, WiFi for in-premise wireless LAN connection and GPRS for field workers who require regular data transfers with their companies main IT system. Most of them share a common platform in Microsofts Windows Mobile operating system, allowing development of powerful applications in .NET by developers with the appropriate skills.

In terms of impact on the key partners the developments in the route to market mean that there are fewer companies competing at the same level but it also means that there is potentially more competition at the lower end of the market, particularly when it comes to supplying hardware alone. On the other hand, the increase in wireless applications will provide more opportunities although in this market too, non-traditional AIDC players are also entering the market. The accredited resellers will have to embrace the new opportunities, ensure that their value add service package is compelling and keep a wary eye on new entrants that may be coming from unexpected sources.

Kees Spitters is Sales Manager for Codeway Limited. Codeway provides automatic identification technology for business to improve performance. The companys equipment, media and systems enable customers to identify products, track logistics, and control business operations. With mobile computers, wireless communications, and now RFID customers can have complete visibility and traceability throughout their supply chains.