A Drop in the Sales of Handheld Devices in Warehousing Will Require Both Product and Software Differentiation to Spur New Business

By Ryan Wiggin | 3Q 2024 | IN-7454

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The industrial handheld device market took quite a hit in 2023, with revenue dropping by double-digit percentages in comparison to 2022. And the market doesn't appear to be bouncing back, with 1Q 2024 revenue still down from 2023 for major solution providers, continuing the drop in sales and new deployments.

Zebra Technologies reported a drop across all regions in comparison to 2022, with North American sales dropping by 17%, Europe Middle East & Africa (EMEA) by 26%, Asia-Pacific by 21%, and Latin America by 14%. Datalogic saw similar drops, with North America revenue falling by 10%, EMEA by 18%, and Asia-Pacific by 32%. And while only making up roughly 13% of the overall business, Honeywell's productivity, warehouse, and workflow solutions and services revenue was down over 30%, despite overall business revenue increasing by 3%.

The downturn has been attributed to a number of macroeconomic factors, most notably increased borrowing costs leading to lower overall investment in new solutions, deferral of Capital Expenditure (CAPEX) investment by new and existing clients, and an overall soft "goods economy" that persisted through 2023. All remain hopeful for an uplift through 2024, but it is unclear as to whether this return to growth is best achieved through diversification or existing product development.

Zebra, for example, has long been diversifying its offering, developing Autonomous Mobile Robot (AMR) and machine vision solutions through targeted acquisitions in order to create a more holistic offering to clients. But 2023 saw more of a focus on developing both mobile and fixed Radio Frequency Identification (RFID) capabilities with extended range scanning, and a start to the development of a Generative Artificial Intelligence (Gen AI) open-source model on devices to open new use cases. Datalogic has also outlined its 5-year product roadmap, with a focus on the use of Artificial Intelligence (AI) to enhance automatic data identification, but turnaround in growth prospects is expected more from its retail offerings, airport solutions, and a growth of electric in the automotive sector, not the industrial sector.

Other niche vendors see better prospects in the software space, as both a differentiator and go-to-market strategy. Wearable barcode scanner provider ProGlove continues to develop its software offering, aiming to provide warehouse operators with a bottom-up view of their operations. Leveraging data from each device, operators can assess process flow, congestions, and unnecessary walking time to better manage and optimize warehouse layout, and establish worker no-go zones executed through the devices to support health and safety. In an industry flooded with connected devices, the ability to convert available data into actionable insights for operators is becoming a critical selling point.

Vision-picking solution provider TeamViewer recently partnered with Manhattan Associates as part of the company's strategy to reduce friction to adoption. Integrating TeamViewer's vision picking solution and execution software with Manhattan's cloud-based Warehouse Management System (WMS) not only opens TeamViewer to Manhattan's extensive client base, but provides customers with a more comprehensive warehouse task execution package.

While macroeconomic pressures have played a role in the recent slump, there are broader concerns that the industrial device market is at a stage of maturity that will require vendors to change their approach if revenue is to regain growth. Once a warehouse or facility has adopted a set of scanning devices, there is typically a 5-year cycle of usage before companies consider a refresh. But if devices are still operational, which many still are given their rugged nature, users often see very little need to invest in more advanced devices with new capabilities. The strategies discussed by both Datalogic and Honeywell in their 2024 outlooks support this argument, both suggesting a greater focus on adjacent or alternative industries to reestablish growth in their device portfolio.

Pivoting to alternative industries or regions is a good strategy to take, but investing in device capabilities, supporting software packages, and forging industry partnerships may be a better long-term approach. By expanding solutions to incorporate operational analytics; establishing more comprehensive packages through partnerships; opening new go-to-markets with an established WMS vendor; or taking the time now to develop capabilities such as edge AI will help establish more differentiators between providers in the market. When companies then reach replacement cycles or new levels of the market raise investment in devices, providers with more advanced solutions and established industry partnerships stand in a much better position to capture more market share.

ABI Research also sees a persistent push toward not just supporting, but improving the warehouse worker experience in a bid to retain and attract personnel. Part of this is streamlining day-to-day tasks, and the other part is simplifying the training of new staff. And this is where more nascent device types such as wearables and vision-picking have an opportunity to gain greater traction, offering more ergonomic picking workflows and intuitive training systems for diverse workforces. There is, of course, risk to such providers that the larger, established device vendors will deliver similar device types, but niche vendors have the speed and agility that should be capitalized on to establish themselves as go-to providers of such solutions. Backing up product development with software that delivers actionable analytics and establishing strong go-to-market channels through targeted partnerships will be crucial to achieving this.