Dissecting Honeywell’s Intermec Acquisition: The Potential Road Ahead

Yes, it has been a few weeks since Honeywell announced that it had signed a definitive agreement to acquire Intermec.

While this continues to be subject to regulatory approvals, in this blog post I share some thoughts on how this deal may shape up and impact the barcode vendor landscape.

Intermec is an active participant in two barcode technology hardware markets – Barcode Printers and Handheld Barcode Scanners.

The company has a relatively small presence in the barcode scanning market, with a recent entry into the general purpose scanner space. However, in this category Intermec is up against industry behemoths including Motorola Solutions, Datalogic and Honeywell.

I expect Honeywell to fully integrate this part of Intermec’s business into their own; especially given how closely aligned it is with one of Honeywell’s core AIDC competencies. Barcode printing is, however, a whole other conversation.

Intermec is one of the leading barcode printer vendors, according to our research. They rank 5th in our global vendor share chart and are considered to be among the most innovative and resilient brands in the space. Intermec has, over the past 12-18 months, introduced several new barcode printers to the market across all form factors – desktop, industrial and portable.

Backed by its strong IP in the space, the organization is well-respected and has a strong presence in each of the regional markets. Is this a business that Honeywell has experience in and is entirely comfortable with?

Now this is pure speculation, but I would think not. In my opinion, Intermec’s real value for Honeywell lies in its following areas of expertise – rugged mobile devices, voice technology, barcode scanners and RFID.

The barcode printing and media/consumables business is quite possibly one that Honeywell would look to sell to a suitable candidate with an inherent knowledge of this fragmented market and its competitive dynamics, particularly as this doesn’t necessarily fit in with Honeywell’s growth strategy.

To determine the likely contenders vying for Intermec’s barcode printer and consumables business is challenging, but here are my two top picks:

1. ZEBRA TECHNOLOGIES – the undisputed global leader in the barcode printing market. Zebra has a long history of innovation, credibility and dominance in this space. By acquiring this part of Intermec’s broad product portfolio, the company would gain considerable share in each of the regional markets while also successfully leveraging Intermec’s significant presence in the Manufacturing and Transportation & Logistics verticals. Intermec’s strong printer consumables sales would only work to sweeten the pot.
2. SATO CORPORATION – barcode printer market leader in Asia-Pacific, with a much smaller presence in other regions. SATO is a billion-dollar AIDC organization with a business model that is a little different from that of its competitors – a much heavier contribution of consumables sales to overall revenues as opposed to hardware. SATO could significantly benefit from Intermec’s strong barcode printer sales into the Americas and Europe, growing its market presence and share in these regions via a single acquisition.

While it is all pure speculation at this time, I will certainly be keeping an ear out for any such market developments. Stay tuned.