December 13, 2011, 4:47 PM

Microsoft opens its 2-D bar code system to rival QR codes

Experts see this as a tacit acknowledgment that QR has become the standard.

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In a surprising move, Microsoft Corp. today announced that its proprietary two-dimensional bar code system Microsoft Tag now can generate and read Quick Response, or QR, 2-D bar codes. This could be a sign that Microsoft has seen the writing on the wall—or perhaps the QR codes on the wall, not Tags.

“They have recognized that Tag will not be able to gain critical mass at this point,” says Dan Shust, director of emerging media at interactive marketing firm Resource Interactive.

One need only look around to see that the freely available, standardized QR codes are by far the dominant player in the 2-D bar code realm. The black-and-white squares with patterns of much smaller black-and-white squares within appear on everything from magazine ads to product packages to the sides of buildings. Microsoft Tags, black squares with jagged colorful diamond patterns or images, are not much in evidence.

A 2-D bar code links a shopper in the physical world to content in the virtual world. A shopper downloads a free 2-D bar code reader app on her smartphone. There are many that can read QR codes; Tags can only be read by the Microsoft Tag reader. She opens the app, which opens the smartphone’s camera. She points the camera at a 2-D bar code and the app reads it, automatically opens her smartphone’s web browser and connects her to mobile web-based content. 2-D bar codes have been used for a wide variety of promotions in retail, from e-mail sign-ups to product demonstration videos to free music downloads.

Microsoft insists it is not relenting to QR codes, and instead describes the move as an expansion of 2-D bar code services to give marketers more choice if they opt to go with Microsoft for 2-D campaigns.

“Consumer confusion as to which reader to use and overall market fragmentation was a significant factor in our decision to expand the Tag platform,” a Microsoft spokeswoman says. “By adding support for reading and creating QR Codes, Microsoft Tag delivers the freedom for brands to select the recognition format most appropriate for their customers, and grants customers a single app to launch those experiences.”

Microsoft declines to reveal the total number of Tag scans, but will say that the number of scans increased 390% between October 2010 and October 2011. There is no central QR code creator or monitor, but there have no doubt been tens of millions of QR code scans in recent years. For example, for the first three quarters of 2010, QR-driven company Scanbuy Inc.’s ScanLife reader app read 3.7 million QR codes, the firm says. That number increased 440% to 20 million for the same period this year.

Microsoft contends Tags are better than QR codes because Tags can be printed at smaller sizes than QR codes and still be read, which is true, and because they offer more reliable scanning, meaning the error rate is less than that for QR codes, though some experts say the difference can be marginal. Microsoft also says Tags are superior because they are more customizable—while QR codes can include logos and designs, Tags can mimic images and are indeed more vivid. Microsoft offers a free software development kit that integrates Tag reading functionality into a smartphone application.

QR codes, which debuted long before smartphones were invented and were used mainly for inventory control, had a head start on Tags, which Microsoft launched in January 2009. Microsoft entered the 2-D market after QR codes had already seen significant uptake among pioneering marketers. And QR codes were created as an open standard, and thus can be read by virtually any 2-D bar code reader, thus making them more accessible than the proprietary Tags. Marketers can easily integrate any number of free QR code scanners into their smartphone apps.

“Based on feedback we’ve heard in the industry, marketers wanted an easy way to use a full suite of recognition technologies all in one place,” writes Aaron Getz, general manager of Microsoft Tag, in a blog post today. “And with so many formats and readers on the market, there is increasing frustration among consumers over not knowing which reader to use for which code.”

This presumes the greater number of QR code creators and users will want to switch to or add Tags. That may be a tough row for Microsoft to hoe. But some analysts say that, while QR codes are indeed the dominant force, they’re not writing off Microsoft.

“The No. 1 reason I hear that Microsoft Tag is not used is that companies are concerned about a proprietary technology and the usual risks—being held captive in years to come, pace of innovation, etc.,” says Julie Ask, a vice president and principal analyst at Forrester Research Inc. “I think the move is smart—no downside. It removes a key barrier to adoption for marketers. It’s what we need in some ways: one reader, all codes.”

Microsoft’s move could mean some portion of the millions of smartphone owners with QR code reader apps shifting to the Microsoft Tag reader app. However, making consumers shift from an app they’re comfortable with to an app with which they are unfamiliar may prove challenging, some mobile analysts say.

But the entire QR versus Tag battle might be moot. Some mobile technology experts see a not-too-distant future where it’s the products or pictures, not codes, that are being scanned.

“QR codes are only a stepping stone to image recognition and we will see major use of image recognition within the next two years,” Shust predicts. “With image recognition you don’t have to visually augment packaging or print ads with a special code, and that is a plus to many designers and marketers. There are some issues that will still need to be worked out; for example, tracking two identical ads in different publications. Unique QR codes make that easy right now, but I see advances in image recognition that would allow for watermarks and such that will do the same thing.”

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