By this time next year, holiday shoppers could be pointing their cellphones at products on store shelves and seeing all kinds of information on their handsets. Retailers and manufacturers are setting standards that could ease the way for the next generation of barcodes, which can send out reams of information when scanned with a cellphone camera.
Industry groups are moving to make sure all phones can read all barcodes. That means U.S. retailers and manufacturers could be adopting the technology as early as the second half of next year, says Iain McCready, CEO of NeoMedia Technologies (NEOM), which markets barcode technology and services.
The so-called 2D barcodes -- also known as QR codes, for "Quick Response" -- can encode a lot more information than the UPC barcodes that have been used in stores for 35 years. Scanning a 2D barcode with the camera in a web-enabled phone can unlock product information, online videos, websites, coupons and other promotions.
A recent promotion was printed in the the barcodes on a million Pepsi cans in the United Kingdom. When scanned, they led shoppers to an entertainment website sponsored by Pepsico (PEP).
"It shows you what the manufacturer wants to share about that product," says McCready. "That's why they call it 'extended packaging.'"
The barcodes are already used in several countries abroad: One slightly cheesy promotional video from Korea shows a woman scanning packages of beef cuts in the supermarket to make sure there's no mad-cow recalls. QR codes even made a guest appearance as a clue in an episode of CSI: New York.
U.S. Slow on the Roll-out
In the U.S., 2D barcodes have gotten limited play -- mainly as promotional tools for companies such as Polo Ralph Lauren Corp. (RL), which broke ground with a 2008 U.S. Open promotion built around a barcode it placed on advertising. Papa John's Intl. (PZZA) put 2D barcodes in mailers in selected markets with a free pizza offer to promote a new mobile phone application.
There are several companies in the U.S. working on 2D barcodes, most notably Microsoft Corp. (MSFT), but that fragmentation is holding up adoption, says McCready. There are three main types of 2D barcodes, and the technology is open source, so readers can be developed that can read all three, says McCready.
But until that standard is set, it doesn't pay for retailers to fall in line. "It's taking a while to put these things in place, until there's an ecosystem available," says McCready. "But these barriers are falling now."
He noted barcode readers are beginning to appear among the software on new smartphones. NeoMedia just signed an agreement with Sony Ericsson, which will pre-install NeoReader software on all phones shipped starting in early 2010; that software can read all 2D barcodes.
Global Standards in the Works
In October, GS1, a non-profit group that oversees standards for retailers and manufacturers, agreed to work on global standards, much like it now runs a global database for old-school UPC barcodes. GS1 held a meeting with representatives of major manufacturers and retailers such as Wal-Mart Stores (WMT) and L'Oreal (LRLCY) to work out standards for mobile commerce that included the use of 2D barcodes. GS1 also signed a memorandum of understanding with the GSM Association, the leading telecom trade group.
The U.S. is ripe for this type of application. Surveys show shoppers are increasingly using their cellphones while shopping, and retailers have responded with promotions and shopping applications. The annual Deloitte Holiday Survey noted 19% of consumers have used a cell phone for shopping, either to research prices (45%), look up product information (40%) or download coupons or offers (32%).
With standards in place, McCready anticipates it will take approximately a year to see 2D barcodes implemented widely. He says he expects more developments leading to the GSMA's annual World Congress in Barcelona in February.
"Within six months after World Congress you would start to see things happen," he says. "There have been barriers, but we're knocking down barriers one by one."
Introduction to ETFs
The basics of Exchange Traded Funds and why ETFs are hot.View Course »