Are You Benefiting From The Growth In AIDC?

In my September 2003 (An AIDC Renaissance?) and July 2004 (AIDC Is All The Rage ... Sort Of) Business Solutions columns, I noted that the outlook for AIDC (automatic identification and data collection) VARs was positive. Namely, sales would increase as IT budgets thawed out and certain technologies (e.g. RFID [radio frequency identification], wireless) evolved. Based on my conversations with many of you, that's exactly what has happened over the past year or so. Furthermore, as is suggested in various Business Solutions' articles each month, VARs need to diversify their line cards by adding complementary technologies. It may also help if you develop vertically focused solutions for emerging markets such as healthcare. But is all of this true for the future?

According to some new research from Venture Development Corp. (VDC), it seems the trend I noted last year is likely to continue. The nitty-gritty of this research can be found in VDC's recent study titled The Global AIDC Industry Business Planning Service 2004. The data for this study came from a number of sources, including information provided by almost 200 Business Solutions subscribers who attribute nearly 42% of their revenue to AIDC sales and services.

Without Services, VARs Are History
While this study is chock full of valuable industry data, its overarching theme seemed to me to be that the AIDC channel is in good shape for the next five years. And yes, by "good shape" I mean more sales opportunities. And no, this trend isn't just related to RFID. More tier-two and tier-three companies are adopting AIDC technologies and will need your value-added services. Note that I said services. That's because, with the increased number of VARs and integrators likely to pop up in the next few years, it's imperative you distinguish yourself with services. VDC's study states, "In future years, channel organizations offering hardware unaccompanied by any value-added services will find it increasingly difficult to derive higher margins as manufacturers restructure channel reward programs for partners with in-depth, vertical market expertise and the ability to provide complete industry-specific solutions."

RFID Isn't Just For AIDC VARs
And any discussion of the future of the AIDC industry wouldn't be complete without a mention of RFID. According to the study, nearly 40% of the reseller respondents offer RFID tags and readers. Currently, RFID accounts for approximately 5% of those resellers' sales. While I think the 40% statistic is impressive, I'm sure many of you may not be equally impressed with the 5% sales stat. But keep in mind these numbers are from 2003. It's likely more VARs are selling RFID now and that sales will increase thanks to the adoption of the EPC (electronic product code) Generation 2 standard.

If you want more ideas on which direction you should take in the coming years, contact VDC at www.vdc-corp.com for the details of this study. Also, in each issue of Business Solutions you can read about VARs and integrators who are adding complementary technologies (e.g. see the Channel Innovator Awards in this issue's Annual Guide To VAR Programs) and increasing sales from hot new markets.