Zebra Technologies CEO Anders Gustafsson: Defending Its Stripes

Don’t let the winsome name fool you. Zebra Technologies’ business is eminently pragmatic, focused around specialty digital printing and automatic identification solutions that help companies identify and track assets, transactions and people wherever they may be around the globe.

That’s a fancy way of describing a business that essentially revolves around printing labels. But then these are no ordinary labels, explains Zebra Technologies CEO Anders Gustafsson. While the company’s origins are in the ubiquitous black and white striped bar codes that inspired its moniker, its printing systems are now used for everything from managing inventory and warehouse operations to keeping tabs on employees and hospital patients.

“Our broad portfolio is one of our strengths,” says Gustafsson, who ticks off an impressive list of uses for the company’s bar code and RFID label printers. “We do the labels that retail pharmacies put on prescription medications, the electronic citations police officers hand out when they catch you speeding, the wristbands hospitals put on patients.”

While many CEOs who come into companies from the outside describe discovering one or more unpleasant surprises hiding in the corner office’s welcome-aboard foliage, Gustafsson, who took the helm in 2007, depicts just the opposite. “Part of my expectation was that our core markets were probably maturing,” he recalls. “That’s something we’ve since reevaluated. Today, we believe we actually have a lot more growth left in our core markets.”

Globalization, he points out, is extending the length and complexity of supply chains. That trend dovetails nicely into businesses geared toward making supply chains more efficient, as well as with Zebra’s footprint, which is larger than that of its closest competitors. While the bulk of the company’s approximately $800 million in annual sales are through resellers who are typically ruthless about margins Zebra has been able to duck the commoditization curse that plagues many IT oriented suppliers. “When it comes down to economics, even when our resellers can make more on a single printer by sourcing it through someone else, the total breadth, support and infrastructure we can offer enables them to make more money working with us,” notes Gustafsson.

Mobile work force and healthcare industry solutions like bar code prescription labels that encode patient information to satisfy HIPAA privacy requirements are growing markets for the company, he adds. Zebra recently debuted a smart-phone printing capability that lets workers print field service records, tracking tags, point-of-sale receipts and healthcare specimen labels directly from their BlackBerry devices to company printers from wherever they may be working. “Untethered work Forces the guy who delivers Coke to the convenience store, the person who takes receipt of your rental car at Hertz or Avis are a big, growing market,” asserts Gustafsson. Over the past decade, Zebra Technologies has also moved steadily into overseas markets. Ten years ago U.S. Sales accounted for 60 percent of sales; today the number is just 45 percent.

The company is also pushing forward on Radio-frequency Identification (RFID) label technology, which improves the efficiency of inventory tracking and management tags by incorporating more data and enabling labels to be read beyond the line of sight of the reader. Heralded as having the potential to revolutionize supply chain technology five years ago, RFID has yet to live up to its potential.

“RFID is a really versatile technology,” says Gustafsson. “But the applications with the most potential active RFID tags with batteries inside that let you communicate with that bar tag from far away rather than passive RFID tags, which are similar to traditional bar codes but with more information capacity were not pursued. Eventually it will have a good future, but it’s taken longer to realize than anyone anticipated.”

Still, the technology has already been employed in intriguing ways.

Zebra’s Ultra Wideband real time locating system, for example, can provide the precise location (within inches) of an asset or person. The system has been placed on the skateboards and bikes used in X-Games (an annual sports event that focuses on extreme action sports). The tags are used to measure competitors’ amplitude (the height and speed of jumps) and transmit that information to judges and an LED display for spectators in real time.

Despite its growth opportunities and innovative applications, Zebra Technologies’ sales took a 20 percent hit in 2009, and are expected to be under $800 million for the year a significant drop from $976.7 million in 2008. Volume declines and currency exchange rates both factored into the drop, says Gustafsson, who notes that the economic decline hit the company’s higher end products hardest. “We have the same overhead spread over fewer units,” he says. “And [two years] ago, the exchange rate was 1.6 euros to the dollar.”

But Gustafsson is optimistic about the year to come. “We think it will be a robust year for us,” says the 47-year old CEO, who hopes to “turbocharge” growth by pursuing greater market share in both core markets and growth markets like China. “We are in a unique position in that we’re one of the few if not the only companies in our space that’s financially and strategically strong. By moving from defense to offense in a nimble fashion we’re well positioned to capitalize on the recovery.”