IMAGERS CONTINUE TO GAIN SHARE IN

VDC: A regional pattern in the uptake of imaging-based bar code scanning technology. In 2004 (the base year of our research), imaging technology in North America grew at more than double the rate of traditional laser-based scanning technology. In contrast, the Asia-Pacific region experienced strong growth in laser scanners in 2004. The growth of imagers in the North American market is a trend that appears to have continued in 2005 and is likely to spread across the regional and vertical markets in the coming years.

Although laser-based technology still comprises the majority of scanner revenues across all regions, the 2003-2004 growth rate for imagers in North America provides evidence that the gap between laser- and imaging-based scanner shipments may be closing. As with previous AIDC trends that originated in the US

In the North American market, imaging technology has been growing at a faster rate than laser technology for several years. However, the demand for imaging scanners may currently be competing more directly with laser scanners in both the handheld and stationary segments of that market (see Exhibits I and II). In the stationary scanning market, excluding POS scanners, laser scanners realized negative growth as imagers grew at record levels.

There appears to be a growing acceptance of imaging-based technology for multiple applications due the improved capability of the technology and competitive price points. Specifically, imaging technology is growing at a faster rate than laser-based technology due to the following factors:

• decreasing unit prices of imaging scanners due to broader acceptance of the technology and increased adoption of 2D and PDF417 bar coding solutions, primarily within the transportation/logistics vertical market;

• improved performance of imaging-based scanners as research & development efforts progress imaging technology, and more importantly the algorithm decoding software;

• increased durability enabled by imaging-based solutions, as they do not contain the moving parts associated with laser-based technology;

• heightened end-user familiarity with imaging-based technology outside of the AIDC context, such as digital cameras; and

• growing supplier push for alternatives to laser-based technology due to prohibitive intellectual property rights surrounding that technology and the increased desire to capture market share in the growing imaging segment of the industry.

Although imaging-based scanners are beginning to capture incremental market share from laser-based scanners primarily in North America, that trend is increasingly prevalent in Europe. Currently both laser- and imaging-based scanning solutions are experiencing strong growth in Europe; however, imaging is gaining momentum, especially in the industrial/manufacturing vertical segment. The North American market may provide a preview of what is to come in the European (and eventually Asia-Pacific) markets. The 2006 Global AIDC Business Planning Service Publ 20060103