The document summarizes a webcast on barcode and RFID convergence presented by VDC Research. It discusses how barcode and RFID technologies are increasingly being integrated to provide greater visibility across supply chains. The Electronic Product Code (EPC) standard enables this convergence by allowing both technologies to represent items in a common way. Examples show convergence occurring in various industries and applications. Expectations are that convergence will continue as adoption of RFID grows and companies seek to leverage multiple technologies and data sources.

1. VDC Research WebcastBarcode & RFID Convergence: Enabling Greater Visibility Through Standards Prepared for GS1/EPC Global US AutoID & Transaction Automation Practice Tom Wimmer, Practice Director Drew Nathanson, Director of Research Operations

2. Frequently Asked Questions Can I get the slides from this presentation? YES Is this webcast being recorded? YES Can I ask a question? YES 1–  2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice

3. VDC Research Copy of webcast, white paper and complimentary insights and data on the RFID & Barcode market available at: http://vdcresearch.com/market_research/autoid/research_reports.aspx Audio and copy of webcast and white paper available at: http://www.gs1us.org/epcglobal_us/education 2–  2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice

4. Agenda Overview & Definitions What’s Converging? Why Convergence? Where is Convergence Happening? EPC – Enabling Convergence Expectations 3–  2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice

5. Barcodes or RFID?? 4–  2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice It’s not an either or proposition

6. It’s a More Harmonious Story! Working together, the two support existing requirements while providing added benefits 5–  2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice

7. Key Descriptions What is Convergence? Convergence refers to previously separate technologies and solutions that now share resources and interact with each other synergistically, creating new efficiencies and additional value. What is Automatic Identification and Data Capture (AIDC)? AIDC is the non-manual identification, collection and routing of information about an object. What is Barcode and RFID? Barcode: An optical, machine readable representation of data that can be used to show information for a specific object. RFID: A wireless, machine readable piece of memory that can be used to gather, store and show data for a specific object. What is the Electronic Product Code (EPC™)? An RFID-friendly encoding scheme that represents the same GS1 identifiers used with U.P.C. barcodes for the identification of a specific instance or a type of trade item or asset. Provides a bridge between legacy AIDC systems and new solutions and is supported by a suite of globally accepted technical standards. Ensures items are identified and data is captured and shared in a common way that can be understood by all value chain participants. 6 –  2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice

9. QR Code

10. MaxiCode

11. Microsoft HCCB

13. UPC-A

14. EAN-13

15. ITF-14

17. High Frequency

19. Ultra Wideband

20. WiFi

22. AIDC has Architectures with Commonality Regardless of the technology, every AIDC system has common components 8–  2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice

23. What’s Converging? Technologies are being integrated with each other because the end user wants to leverage the information and attain the benefits from each independent system. Gathering and sharing information from independent systems can be attained by creating consistency within common architectures. This consistency can be accomplished by developing a single, unifying platform that will ensure that the information being used is essentially the same … a standard. Although technologies continue to be integrated with each other and leverage a diversity of carriers, the real convergence is occurring at the data level. Convergence is not about technology, its about commonality. The real convergence is happening at the data level 9–  2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice

24. GS1 US Visibility Framework 10–  2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice

25. Converging AIDC Technologies Survey of AIDC users indicates a diversity of converged/converging AIDC solutions Respondent Converged/Converging AIDC Solutions (N = 217) 11–  2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice

26. Why Convergence? Two technologies working together to provide the most value to the end-user Information stored on a barcode typically pertains to what the product is, where it came from and the date it was made or received. The same information is usually stored on an RFID chip; however, RFID also affords the opportunity to collect, append and store more information. Why Both? Desire to leverage both streams of business intelligence to ensure greater visibility, enhance decision making and obtain operational efficiencies RFID is better suited to meet the increasingly complex and constantly changing end user requirements; however, barcode is deeply entrenched in the heart of operations of most enterprises. A full conversion to RFID would be costly, incur downtime and most likely LIMIT information throughout the value chain (since it wouldn’t be supported by all participants) The two technologies working together can not only support existing requirements, but they also: Enables support for either technology within the value chain as well as provide an additional layer of redundancy and visibility. Provide the ability to enhance and add functionality to the systems with minimal invasiveness. Establish a migration path to a more advanced solution in which the end user has more control over pace and CAPEX. One solution is the proverbial standard, the other offers the same and more, but in order to get the ‘more’, the two have to work together as the same. In order for the two technologies to be able to work together, they need a common platform that will not only ensure the intelligence gathered from each solution is related to the same product / product types, but is also able to support the rapid addition of other technologies and their data. 12–  2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice

27. Convergence Drivers & Pains 13–  2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice

28. Where Convergence is Happening Converged barcode and RFID solutions are more common than most expect Convergence of AIDC solutions is occurring within nearly every region, vertical and facet of the value chain – from the point of manufacture through the point of sale. For the current RFID and Barcode industry, convergence is … Highly concentrated in government, manufacturing, transportation and retail. Primarily in support of shop-floor automation, supply chain management, asset tracking and inventory control. Rapidly expanding to other verticals and applications as EPC Gen2 adoption broadens in both brown and green field markets andmore hybrid products become available. 14–  2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice

29. Converged RFID & Barcode Solutions Continued convergence as adoption broadens Convergence of barcode and RFID requires a more robust hardware solution that can support both technologies – even though both are not used at every point within the value chain. Product examples include: Transponders RFID tag embedded between barcoded paper stock and adhesive backing OR RFID hard tags with a printed or marked barcode on housing Suppliers: Avery Dennison, Alien, Raflatac Readers RF enabled stationary or mobile devices with integrated barcode scan engine Suppliers: Motorola, Intermec Printers RF enabled thermal barcode printers Suppliers: Zebra, Printronix, Sato End-User Estimated % of Converged Tags Use by Vertical & Application (N = 145) 15–  2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice

30. Real World Examples 16–  2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice

31. EPC – Bringing it all Together The foundation of success of an AIDC systems depends on well-defined standards as much as it does the technology. Standards are the foundation for clear, understandable exchanges between companies in an increasingly globalized economy. Without them … business processes would be highly complex and less automated. The role of a standard increases as new/alternative means to capture and convey information are developed as is the case with barcode and RFID. The standard behind convergence in barcode and RFID is the Electronic Product Code (EPC). One of the fastest growing markets in RFID, EPC is expected to account for nearly $790 million in 2010, approaching $3 Billion within 5 years (~40% CAGR). On average, the EPC RFID end-user is more committed to the technology and typically has a larger RFID budget. EPC continues to exhibit some of the highest innovation levels in the industry, as well as some of the fastest price erosion rates. Most EPC revenue is from supply chain management applications and is concentrated (nearly 80% of total global revenues) in a small number of larger Tier I and II firms that are tagging a limited number of SKUs … there’s tremendous opportunity in both existing and new accounts, as well as new markets and applications. 17–  2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice

32. Benefits from those Using EPC 18–  2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice

33. Not Just for Supply Chain Anymore Automatic Vehicle Identification Asset Management Baggage Handling Shop-floor Automation Library Rental-item Tracking Hospitality (i.e.: tracking linens) Emerging EPC RFID applications 19–  2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice

34. Conclusions Convergence enables companies to extract value from multiple technologies and systems, and a common architecture enables them to do this in an efficient and effective manner. A common architecture enables convergence, and for barcode and RFID, that common architecture is the EPC, supported by the GS1 US visibility framework. Expectations As adoption of RFID increases, it will continue to converge with barcode and other AIDC solutions as companies look for ways to extend value and increase visibility, thus making the role of common architectures such as EPC more critical to a company’s ability to gather, leverage and share information. There will be an increased need to provide commonality for information being shared across value chains, regions, industries, companies and applications. There really is no such thing as a ‘pure’ supply chain anymore (i.e.: sources, systems, technologies) and value chain and system crossover is a necessity of doing business in our current and future global society. As AIDC technology development continues, it is expected that solutions will be created that will offer increased visibility and the ability to capture more information. The ability to easily leverage and port information from multiple systems – in real-time – will open up the floodgates for analytics, dashboards and real-time alerting, driving the decision making processes down as low as it can possibly be driven. Innovation and adoption of new technologies and systems to attain these efficiencies is anticipated to continue. AIDC technology is increasingly being built for standardization and extensibility as a way to simplify integration and meet future market demands for commonality and flexibility. 20–  2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice EPC: a cornerstone for today … and tomorrow

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38. Notice of Copyright  2010 VDC Research Group, Inc. The entire contents of Barcode & RFID Convergence: Enabling Greater Visibility Through Standards are proprietary to VDC Research Group, Inc. (VDC) and may not be distributed in either original or reproduced form to anyone outside the client’s internal organization within five (5) years of the report date without prior written permission of VDC. VDC has devoted its best efforts to obtain for and provide to its clients as accurate data as is possible. Nevertheless, we cannot be held responsible for incorrect information provided to us byvendors, users, or others that we interview. Nor can we be held responsible for forecasts of the future evolution of an industry, which, in retrospect, proves inaccurate. Our goal is to provide the best possible analysis of an industry, utilizing data obtained through a time-proven and rigorous research methodology, for our clients to employ in developing strategies to compete in an uncertain and ever-changing business environment. TRADEMARK ACKNOWLEDGEMENT: Many names of companies, associations, technologies, products and product types, etc. mentioned in this report comprise Trademarks, either registered or non-registered, owned by various entities. These are too numerous to mention individually. VDC acknowledges that ownership of these Trademarks exist and requests that readers acknowledge this as well. 24–  2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice