Changing Requirements Power Growth in UPS and Surge Suppressor Markets

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

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

http://www.vdcresearch.com/market_research/industrial_automation/freeresearch.aspx

1 –  2010 VDC Research Group, Inc.

VDC Research Group

Complimentary marketing data on the
Industrial Automation & Control Markets
is available on our website at:
www.vdcresearch.com


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


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


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


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%


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


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


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)

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)

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%


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


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.”
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)”


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…”
60% 66%
“New things that need “Expansion of business /
UPS protection.” facilities.”


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 ?


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


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
cjr@vdcresearch.com | 508.653.9000 x120

David Laing – Senior Analyst / Program Manager
dlaing@vdcresearch.com | 508.653.9000 x146

Tim Shea – Senior Analyst
tims@vdcresearch.com | 508.653.9000 x132

Bob Perugini – Account Executive
bperugini@vdcresearch.com 508 653 9000
bperugini@vdcresearch com | 508.653.9000 x144


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