Changing Requirements Power Growth in UPS and Surge Suppressor Markets


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These slides are from a webcast presented on 06/30/10. A full audio recording is available for download on our website During this webcast, Chris Rezendes, Executive Vice President, VDC Research, presents the end-user data from our UPS and Surge Suppressors, 2010-2014 Market Requirements and Opportunity Analysis. Specifically, he discusses: the user view of growth opportunities for power protection products; historic trends and future estimates for user spending on power protection product— including the effects tighter credit markets and capital budgets had on user’s IT budgets; significant drivers for increased and/or decreased user spending on UPS and surge suppression products—including the potential impact of alternative deployment methods, such as managed services; technical and commercial trends—including potential disruptions to predictable demand for specific UPS topology types and energy storage technologies; and key success requirements for a number of key stakeholder groups.

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Changing Requirements Power Growth in UPS and Surge Suppressor Markets

  1. 1. VDC Research Webcast: 2010 Power Protection Report – UPS and Surge Suppressors Changing Requirements Power Growth in UPS and Surge Markets Industrial Automation & Control Practice Christopher Rezendes – Executive Vice President David A. B. Laing – Senior Analyst Tim Shea – Senior Analyst
  2. 2. Recording Available These slides are from a webcast presented on 06/30/10 A f ll audio recording is available for download at: full di di i il bl f d l d t 1 –  2010 VDC Research Group, Inc.
  3. 3. VDC Research Group Complimentary marketing data on the Industrial Automation & Control Markets is available on our website at: 2 –  2010 VDC Research Group, Inc. Industrial Automation & Control Practice
  4. 4. Today’s Speaker • VDC Research Group  Founded in 1971, continuous, profitable operation for nearly 40 years  Focus on a number of embedded and niche network market segments  1,000 clients annually …90% technology suppliers, tech investors • Ch i Rezendes – E Chris R d Executive Vice President ti Vi P id t  19 years experience in embedded, industrial, defense and other mission critical and high available technology industries  14 years experience in senior management and leadership positions at a number of technology solutions and professional services organizations  2 years DARPA contracting  Chris has advised many of the largest and most respected technology companies in a number of technology segments worldwide  Chris is a graduate of Harvard University 3 –  2010 VDC Research Group, Inc. Industrial Automation & Control Practice
  5. 5. Agenda Introduction Historic Trends and Future Estimates for End User Spending Key Drivers for Market Growth Key Drivers for Decreased Spending Key Success Requirements Closing Remarks Q&A 4 –  2010 VDC Research Group, Inc. Industrial Automation & Control Practice
  6. 6. Survey Demographics – Enterprise Users St Strong representation b product / solution set and regional market t ti by d t l ti t d i l k t Product Coverage • Surveys covered enterprise and consumer market segments t • There were 334 respondents to the enterprise survey UPS Surge • The survey launch used multiple sources and partners 25% 25% to achieve the desired product and regional coverage • There was a good mix of business roles, Both 50% business types…  Operations  IT  Finance Regional Coverage • …and applications / markets that utilize power protection products APAC • In addition to enterprise and consumer users, this 22% program also polled channels l ll d h l Americas • We asked a broad range of questions about EMEA 58% 20%  Their businesses  Their power management and power protection requirements  Experiences with technologies and vendors p g  Investment plans 5 –  2010 VDC Research Group, Inc. Industrial Automation & Control Practice
  7. 7. Survey Demographics – Consumer Users A might b expected with consumers, more emphasis on surge…but th regional split i excellent As i ht be t d ith h i b t the i l lit is ll t Product Coverage • 480 unique, individual responses are captured in the th consumer survey database d t b • The consumer launch was targeted to provide a UPS balanced view of small business and home users 15% of power protection products • The survey launch used a panel resource to Both Surge 27% 58% ensure high quality of responses and meet the optimal mix of user types and locations • Although this survey was targeted at consumers and small business there was some channel representation Regional Coverage • Topics covered were similar to those defined in the enterprise survey APAC 24% Americas 47% EMEA 29% 6 –  2010 VDC Research Group, Inc. Industrial Automation & Control Practice
  8. 8. For Context, a Recent View of Power Protection Demand U t 2008 virtually all products/markets were growing; with CAGR ranging f Up to 2008, i t ll ll d t / k t i ith CAGRs i from 5 -12% 12% 2007-2008 UPS and Surge Suppression Market Estimates – Supplier Revenues $4,500 $4,000 $3,500 $3,000 APAC $2,500 , EMEA $2,000 Americas $1,500 $1,000 $1 000 $500 $0 20 kVA and 2008 20.1 KVA and 2008 g Surge 2008 Under 2007 Over 2007 Suppression 2007 7 –  2010 VDC Research Group, Inc. Industrial Automation & Control Practice
  9. 9. A Modest Rebound in Spending The Th UPS market is recovering…but is not likely t re-attain th previous CAGR very soon k ti i b ti t lik l to tt i the i CAGRs As compared to 2009, do you expect your or • The data shown is for 205 enterprise UPS users your client s 2010 level of spending client's for UPS products to: • There is likely variation between product and market – it is expected that some applications / Increase Greatly (+10% or more) 8 markets will recover / grow faster than others • Our analysis during the next few weeks will focus Increase Significantly (+6% to 9%) 19 on this  Which industries?  What applications? Increase Slightly (+ 2 to 5%) 43 • Two larger reasons for the preponderance of ‘Stay about the same’ responses: Stay about the same ( Even or +/- 1%) 98  Power management and protection segments of IT budgets are among the most critical. Their defined roles are clearer than ever, and ROI complexity AND Decrease Slightly (-2 to -5%) 18 understanding are growing. These budgets did not crater, and they will not get pinched Decrease Significantly (-6 to -9%) 8  Second half of 2009 saw some ‘pop’ in spending that provided the beginning of a recovery from 2008 and the 2009 FH Decrease Greatly (- 10% or lower) 13 0 50 100 150 8 –  2010 VDC Research Group, Inc. Industrial Automation & Control Practice
  10. 10. Product Selection Criteria – Enterprise User Summary Some product features may not deliver th customer value needed t j tif th i added cost S d tf t t d li the t l d d to justify their dd d t Top 5 Highest Rated UPS Top 5 Highest Rated Surge Suppressor Hardware Feature Requirements Feature Requirements Automatic voltage Warranty 3.93 4.22 regulation Extended battery runtime 4.10 Failure indicators 3.78 Line conditioning 3.84 Always on outlet Al tl t 3.75 3 75 Indicators/Audible alarms 3.79 Connected equipment guarantee 3.62 "Hot swap" batteries 3.47 Number of outlets 3.55 0 1 2 3 4 5 0 1 2 3 4 5 Note: Scale 1 (low) to 5 (high) 9 –  2010 VDC Research Group, Inc. Industrial Automation & Control Practice
  11. 11. Supplier Selection Criteria – Enterprise User Summary Promotion i no substitute f reputation and a good value proposition P ti is b tit t for t ti d d l iti Top 10 UPS Supplier Top 10 Surge Suppressor Supplier Selection Criteria Selection Criteria Reputation for 4.22 Price/Value 4.11 quality/reliability Price/Value 4.17 Warranty coverage 3.87 Customer service 4.12 Reputation for quality/reliability 3.80 Warranty coverage 4.12 Delivery/Availability 3.78 Past experience with Connected equipment 4.05 3.74 manufacturer guarantee Delivery/Availability 3.97 Customer service 3.63 Connected equipment Past experience with 3.78 3.57 guarantee manufacturer p Field Service and repair 3.77 g Brand name recognition 3.43 Technical support & Specification sheets/Product 3.72 3.28 training literature Specification 3.71 Recommended by others 3.25 sheets/Product literature 3.0 3.5 4.0 4.5 5.0 3.0 4.0 5.0 Note: Scale 1 (low) to 5 (high) 10 –  2010 VDC Research Group, Inc. Industrial Automation & Control Practice
  12. 12. Sample Technology Trend: Storage Lack f i f L k of information i a l di i ti is leading impediment t new storage t h l di t to t technology growth th What are major reasons you / your clients • The survey asked enterprise users of battery have not considered using or chose not to technology about their consideration of t h l b t th i id ti f use alternate energy storage technologies? alternate types of energy storage • There was nearly a 2 : 1 adoption / rejection They are impractical for our application 22% ratio of the 30% respondents that indicated consideration of new storage technology We/they do not have enough 45% • 11% of enterprise respondents were already information about them using alternative energy storage products • The ~70% of respondents that have not Unsure of the technology and/or its y reliability 34% considered or have rejected new storage technologies cited the reasons in the chart to the left They take up too much space 8% • The challenge: when you consider the previous slide as context, with all of its They do not provide enough y p g commodity-like market implications, capturing y p p g storage 6% prospects attention with more complex messaging is doubly difficult They are too expensive 20% Note: Does not sum up to 100% as multiple selections were allowed 0% 10% 20% 30% 40% 50% 11 –  2010 VDC Research Group, Inc. Industrial Automation & Control Practice
  13. 13. Sample Market Development Trends: POS and PCs In I 2010 - 2014 th 2014, there will lik l b changes i th d ill likely be h in the demand f d from some markets / applications k t li ti Point of Sales (POS):  The consumer and enterprise survey groups showed this to be a strong area of growth  POS systems need uninterrupted power / access to network in order to complete transactions  Customer transactions are more frequently “cashless” using credit or debit cards  For a small business owner, being able to sell during a blackout can make all the difference  Large stores may transition from small individual UPS units for each register to a UPS / Generator installation that supports the entire building Desktop PCs:  The consumer and enterprise survey groups show this to be an area of weakening demand for both surge and UPS products  Increased use of laptops and other portable devices which, by design, have battery backup  Use of centralized “cloud computing” reduces the necessity of local desktop backup  Use of solid state hard drives and backup drives, and new software reduce likelihood of disk crash and data loss during power outage 12 –  2010 VDC Research Group, Inc. Industrial Automation & Control Practice
  14. 14. Uneven Surge Demand Could Feel Like Rollercoaster New purchases, more capability and advanced f t N h bilit d d d features d i growth…but not b d replacement drive th b t t broad l t Consumers Enterprise 60% 51% “I don t think I will be I don't “We see increased We buying anything new that reliability and lifetime of will need surge existing surge protection.” suppression units.” Consumers Enterprise 77% 30% “We have some new “ Replacement of less things that need to be capable surge protected against power suppression units ( g pp (e.g., surge.” more outlets, higher rating, more features)” 13 –  2010 VDC Research Group, Inc. Industrial Automation & Control Practice
  15. 15. More Powerful Drivers for Increased UPS Investment More than economic cycles, change i IT & operations priorities, d i M th i l h in ti i iti drives d demand f UPS products d for d t Enterprise 29% Consumers “New IT technologies such 40% as solid state hard drives drives, “Increased use of Laptop backup drives, and software computers versus lower risk of power related desktop computers.” crashes and data loss…” Consumers Enterprise 60% 66% “New things that need “Expansion of business / UPS protection.” facilities.” 14 –  2010 VDC Research Group, Inc. Industrial Automation & Control Practice
  16. 16. Summary – Things to Consider Among many thi A things, th VDC study will explore the following topics the t d ill l th f ll i t i Enterprise Market:  What are the links between an improving economy and demand for power protection?  Which segments / regions will have the highest growth potential?  How does power management and protection tie in to the dominant themes of agility and productivity in addition to traditional themes such as efficiency? Technology Shifts:  Will high voltage DC busses become more mainstream in data centers?  Will new IT software / hardware create changes in corporate IT architecture that impact the types and quantities of power protection products that will be needed? Consumer Market:  Will increased HDTV and 3D adoption increase the need for higher end power protection products?  What will be the other home use products that will increase power protection demand? Power Grid Trends:  Will the increasing use of alternate energy sources cause imbalances between supply and demand thereby increasing the likelihood of power quality issues? Climate Changes:  Will extreme weather conditions (ice storms, wind, lightning) aggravated by climate change create increased demand f power protection products? d d for i d ? 15 –  2010 VDC Research Group, Inc. Industrial Automation & Control Practice
  17. 17. How will VDC coverage help clients stay on top of the market? Track 1: User Requirements and Channel Analysis  Volume 1: UPS  Volume 2: Power Line Surge Suppressors Track 2: Supply Side Analysis  Volume 1: UPS Under 20kVA – Americas  Volume 2: UPS Under 20kVA – EMEA  Volume 3: UPS Under 20kVA – APAC  Volume 4: UPS 20.1 kVA and over – Americas  Volume 5: UPS 20.1 kVA and over – EMEA  Volume 6: UPS 20.1 kVA and over – APAC  Volume 7: Power Line Surge Suppressors – Americas  Volume 8: Power Line Surge Suppressors – EMEA  Volume 9: Power Line Surge Suppressors – APAC ACTUAL MARKET STUDY PUBLICATION DATE FORECAST MARKET SIZE SIZE / SUPPLIER SHARE Service Year 2010 2009 2010-2014 16 –  2010 VDC Research Group, Inc. Industrial Automation & Control Practice
  18. 18. Q&A Session Thank You for Attending this VDC Webcast g For more information about VDC Research coverage of the global markets for Power Protection Products, or the recently published 2009 Position Sensor Market, Touch Screen Sensors and Displays Global Market Demand and Customer p y Requirements Analysis studies, please contact: Christopher Rezendes – Executive Vice President | 508.653.9000 x120 David Laing – Senior Analyst / Program Manager | 508.653.9000 x146 Tim Shea – Senior Analyst | 508.653.9000 x132 Bob Perugini – Account Executive 508 653 9000 bperugini@vdcresearch com | 508.653.9000 x144 17 –  2010 VDC Research Group, Inc. Industrial Automation & Control Practice