Quick Response Codes Part III : Will North America Embrace the Technology?

Using a camera phone to read two-dimensional bar codes has been a mainstay of the mobile scene in Japan for a few years. Japanese consumers point their cameras at codes printed in advertising to automatically surf to an advertiser's Web site in their WAP browsers or dial a contact center.

Now, as we saw in parts one and two of this multi-part series, mobile 2D visual code reading has opened a beachhead in the U.S. ScanBuy Inc. launched a trial earlier this year in San Francisco, using slightly different technology than the Japanese QR (Quick Response) codes and a different advertiser-pays business model.

Will North American consumers take to mobile visual code reading the way the Japanese did? And if so, how long will it take the market to evolve here?

It's a long way from a foregone conclusion, we believe. For starters, it's not clear that advertisers will buy into the ScanBuy value proposition - that by mediating the code reading transaction it can help advertisers connect more easily with mobile customers and provide them with valuable information about who and where those customers are.

Michael Liard, a research director at Allied Business Intelligence Inc. (ABI Research), believes the Japanese have probably blazed a trail that North Americans will eventually follow. But he also points out that other mobile add-in technologies - notably, near-field communications (NFC), an RFID technology being trialed for applications such as contactless point-of-sale payment - may give 2D bar coding a run for its money.

And Ken Dulaney, vice president of mobile computing at Gartner, notes that the U.S. is a more market-driven and less cohesive environment than Japan and it may be more difficult here to create the critical mass of users needed to make it worth the while of advertisers and other information providers to participate.

Vendors, needless to say, are bullish.

ScanBuy CEO Jonathan Bulkeley points out that his company has already launched services in Spain with Telefonica, with TDC in Denmark and Vivo in Brazil. Bulkeley says the company is in discussions with "most of the major carriers" in the U.S. and is in the process of developing projects in several other countries. He expects to announce eight to 10 new deployments in 2008.

"It's not, 'Is it going to happen?' anymore," Bulkeley says. "It's just a matter of when." He admits that a year ago he might have said the answer was four years from now, but he's much more optimistic today. He feels the technology and the concept will start to get "real traction" in all the markets where ScanBuy is active within the next six to 18 months.

We'll see.

In the meantime, ScanBuy is by no means the only North American company exploring the possibilities of mobile visual code scanning. And there may be other uses for the technology than the simple consumer advertising applications ScanBuy is pursuing and that dominate the Japanese experience.

Greg Hayden, chief technology officer at Luna Development, a small Windows Mobile-based business solutions developer in Toronto, Canada, is brimming with ideas for how the technology could be used - including some that don't entirely depend on a critical mass of consumers with reader software installed. Some the company is already developing into products.

Luna was introduced to the QR code phenomenon by business friends in Japan a little over a year ago. "We were immediately impressed with where we thought we could take this," Hayden says. They were convinced in fact that mobile bar code reading could be much more than it is in Japan today, and more than just a way to show consumers advertising.

One very simple notion: exchanging business card information.

Instead of printing hundreds of cards, you print a QR code on one card, or on a sticker that you slap on the back of your mobile. New business associates read the code with their phones. It contains your name, title, company name, contact information. Data capacity for QR codes is over 4,000 alphanumeric characters, plenty for this purpose. Software on the recipient's device could automatically format the data and insert it into a contact database.

That one probably does require a critical mass, if not of consumers, then of business users.

Hayden believes retail inventory is another potential application - not just for counting inventory, although that could be one use, but also to consolidate information about an item at point of sale (POS). Many computer products, and products in other categories too, carry multiple bar codes, plus serial number and SKU. All could be contained in one QR code, he points out.

This would simplify transactions by allowing the retailer to capture all the information he needs for his own records with one pass, plus print a summary of key data points that the customer might need right on the receipt.

"It's probably not compelling enough for retailers to change their whole process if they've already paid for a barcode[-based POS] system," Hayden concedes. "But if they don't already have a system, it does make sense." For one thing, using a cell phone to read barcodes would be cheaper than using expensive dedicated scanners, he says.

Would it be as fast, though, we wonder?

Hayden can think of a bunch of applications in the retail realm that might work if putting visual codes on product packaging became as ubiquitous as printing conventional barcodes is today.

QR codes could contain ingredients lists and other information typically printed on product packaging in text too small to easily read, for example. The user scans the code, which display the text in more readable form on his mobile screen - and/or he can save it for future reference. Or for a sight impaired person, a PDA could read the ingredients list and other information - adverse reactions printed on a pill bottle, for example - using text-to-speech simulation.

The list goes on. Consumers could create shopping lists at home by scanning QR codes on product packaging - and even capture QR coupons printed on the package, he suggests. One that retailers probably would not welcome is Hayden's suggestion that consumers could scan products on a shelf to automatically check prices at competing establishments.

But the visual code application Luna has most invested in so far is one for the real estate industry. It is at least partially advertising-related. Brokers could print codes on the signs posted on properties they're selling. When drive-by home hunters stop and scan the code, it could trigger one of a number of actions. They could be taken to a WAP Web page listing for the property, given a phone number for the listing agent to call later - or it might automatically dial the agent's number right then.

"Part of the process is thinking these [options] through for each individual customer and helping them figure out precisely what they want to do - other than just showing more advertising," Hayden says.

Luna is "close to" launching two packaged QR-related software products: a tailored application for real estate and a more generic advertising application based on the tried-and-true Japanese model.

It's pretty hard to avoid the advertising angle with mobile QR (and other visual) codes, but some marketers are at least coming up with innovative ways to use the technology.

For example, Dentsu Canada, an ad agency in Toronto, came up with a novel contest-related campaign for Vespa, the Italian scooter manufacturer. (Dentsu's Japanese parent, it's interesting to note, is credited with pioneering the use of QR codes for advertising in Japan.)

The firm plastered downtown Toronto streets last summer with pop-art posters showing an outline image of the iconic scooters, a QR code and the bold message, 'Scan me.' When consumers scanned the codes with their phone cameras, a message automatically popped up on their screen telling them whether they had won a prize. (The posters also directed them to a URL where they could download the reader software if they didn't already have it.)

A spokesperson for Canadian Scooter Corp., Vespa's distributor, told us the campaign was very local and short-lived but "quite successful. We were happy with the results and would definitely be open to doing something similar in the future. However, we don't currently have another QR campaign planned."

All of which, ultimately, tells us nothing about the future of mobile visual code reading in North America. The technology works and consumers who have used it seem to like it. It's also clear it has a multitude of possible uses - albeit with advertising-related applications cropping up more than any other.

But is that enough to guarantee the technology will be embraced by consumers, carriers, device manufacturers - advertisers? We'll see.

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