Blog | November 9, 2016

Rugged Hardware Market Flattens

Source: Field Technologies Magazine
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By Brian Albright, Field Technologies

Hardware Industry Flattens

A few recent reports from VDC Research show that demand for rugged mobile devices is flattening, and that we can expect some additional shifts in the operating system landscape moving forward.

In an October blog, analyst Cameron Roche took note of a decline in shipments in the second quarter of 2016. According to VDC, second quarter rugged mobile hardware shipments showed a 4.4 percent revenue drop year over year, while unit shipments fell 2.4 percent. Most of that drop came via a reduction in shipments for handheld/PDA device and forklift mounted computers, while rugged notebooks and tablets saw year over year growth.

The company also recently released a new report, “The Global Market for Rugged Handheld Computers and Smartphones for Line-of-Business Applications,” that provides an overview of the enterprise rugged device market.

According to the report, current challenges in the market include OS migration, the end of life of older Windows mobile platforms, and increased competition from non-rugged consumer devices like smartphones. 

The Android OS gained significant ground in 2016 while demand for legacy Windows Embedded Handheld 6.x further eroded. The next-gen mobile Windows OS will likely affect OS adoption in 2017. Apple and Samsung hold 50% of the global smartphone market, and a combined share of greater than 80 percent of the enterprise in some regions.

As previously noted, the market contracted in the first half of 2016 and will require a very strong Q4 to recover as “Q3 results are likely to be mixed.” Overall, VDC projects 2016 revenues to be essentially flat over 2015. Zebra and Honeywell continue to lead the rugged device market, with “competition for the number-three position intensifying among Datalogic, Bluebird, and Panasonic.”

Part of the 2016 decline was driven by hardware refreshes in the postal sector in 2014/2015 that have since concluded. The courier market will likely update next, while retailers will also provide new demand moving forward

In the second quarter results announced in October, VDC says that tablets saw modest growth, with the Americas and APAC rebounding over Q1 and posting revenue gains compared to the same period in 2016.

“With that said, EMEA experienced stagnation and saw a minor contraction [year over year] compared against Q2 2015,” Roche wrote. “As screen real-estate becomes more and more important, vendors are generally trending towards larger display sizes. Interest in the 10” and 12” space continues to grow, especially within the semi-rugged category of devices due to their weight difference compared with heavier fully rugged devices. These larger semi-rugged tablets would often be placed head-to-head in competition with many consumer grade tablets in industries which are heavily client/customer facing (i.e., hospitality, retail, and transportation are prime targets given their non-hazardous contexts). Additionally, interest in smaller 7”- 8” tablets is also growing for the fully rugged classification. These smaller tablets are often used in automotive or flight-line mechanical inspection contexts.”

The rugged notebook sector had its second consecutive quarter of growth.

Another new VDC report on barcode scanning also shows an increase in demand for mobile scanning solutions. That includes companion scanners, sleds and sleeves for enterprise-grade mobile devices.

VDC estimates that the current global hardware market size for companion scanners and sled solutions is between $50 and $60M. Leading vendors in this space include Honeywell, Infinite Peripherals, KoamTac, and Zebra Technologies. Although the sled/sleeve segment stands at less than 5 percent of the handheld scanner hardware market now, VDC “anticipates this segment to register double-digit growth rates.”