changing requirements power growth in ups and surge suppressor markets

VDC Research Webcast:2010 Power Protection Report –2010 Power Protection Report UPS and Surge SuppressorsChanging Requirements Power Growth in UPS and Surge Markets

Industrial Automation & Control PracticeChristopher Rezendes – Executive Vice President

Changing Requirements Power Growth in UPS and Surge Markets

David A. B. Laing – Senior AnalystTim Shea – Senior Analyst

Recording Available

These slides are from a webcast presented on 06/30/10

A f ll di di i il bl f d l d tA full audio recording is available for download at:

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

2 – 2010 VDC Research Group, Inc.Industrial Automation & Control Practice

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 R d E ti Vi P id t• Chris Rezendes – Executive Vice President 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 organizationsnumber 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 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 SpendingKey Drivers for Decreased Spending

Key Success Requirements

Closing Remarks

Q & A


Survey Demographics – Enterprise UsersSt t ti b d t / l ti t d i l k t

• Surveys covered enterprise and consumer market t

Strong representation by product / solution set and regional market

Product Coveragesegments

• There were 334 respondents to the enterprise survey

• The survey launch used multiple sources and partners to achieve the desired product and regional coverage

Surge25%

UPS25%

regional coverage

• There was a good mix of business roles, business types… Operations IT

Both50%

Finance

• …and applications / markets that utilize power protection products

• In addition to enterprise and consumer users, this l ll d h l

APAC22%

Regional Coverage

program also polled channels

• We asked a broad range of questions about Their businesses Their power management and power protection requirements Experiences with technologies and vendors

Americas58%EMEA

20%

22%

p g Investment plans


Survey Demographics – Consumer UsersA i ht b t d ith h i b t th i l lit i ll t

• 480 unique, individual responses are captured in th d t b

As might be expected with consumers, more emphasis on surge…but the regional split is excellent

Product Coveragethe consumer survey database

• The consumer launch was targeted to provide a balanced view of small business and home users of power protection products

• The survey launch used a panel resource to

UPS15%

• The survey launch used a panel resource to 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

Surge58%

Both27%

representation

• Topics covered were similar to those defined in the enterprise survey

APAC24%

Regional Coverage

Americas47%

EMEA29%

24%


For Context, a Recent View of Power Protection DemandU t 2008 i t ll ll d t / k t i ith CAGR i f 5 12%

2007-2008 UPS and Surge Suppression Market Estimates – Supplier Revenues

Up to 2008, virtually all products/markets were growing; with CAGRs ranging from 5 -12%

$4,000

$4,500

$2,500

$3,000

$3,500

APAC

$1 000

$1,500

$2,000

,EMEA

Americas

$0

$500

$1,000

20 kVA and 2008 20.1 KVA and 2008 Surge 2008Under 2007 Over 2007

gSuppression

2007


A Modest Rebound in SpendingTh UPS k t i i b t i t lik l t tt i th i CAGR

As compared to 2009, do you expect your or your client's 2010 level of spending

• The data shown is for 205 enterprise UPS users

The UPS market is recovering…but is not likely to re-attain the previous CAGRs very soon

8Increase Greatly (+10% or more)

your client s 2010 level of spending for UPS products to: • There is likely variation between product and

market – it is expected that some applications /markets will recover /grow faster than others

• Our analysis during the next few weeks will focus on this

43

19

Increase Slightly (+ 2 to 5%)

Increase Significantly (+6% to 9%) on this Which industries? What applications?

• Two larger reasons for the preponderance of ‘Stay about the same’ responses:

18

98

Decrease Slightly (-2 to -5%)

Stay about the same ( Even or +/- 1%) Power management and protection segments of IT budgets are among the most critical. Their defined roles are clearer than ever, and ROI complexity AND understanding are growing. These budgets did not crater, and they will not get pinched

13

8

Decrease Greatly (- 10% or lower)

Decrease Significantly (-6 to -9%) Second half of 2009 saw some ‘pop’ in spending that provided the beginning of a recovery from 2008 and the 2009 FH

0 50 100 150


Product Selection Criteria – Enterprise User SummaryS d t f t t d li th t l d d t j tif th i dd d t

Top 5 Highest Rated UPS Hardware Feature Requirements

Top 5 Highest Rated Surge Suppressor Feature Requirements

Some product features may not deliver the customer value needed to justify their added cost

4.22Automatic voltage regulation

Hardware Feature Requirements

3.93Warranty

Feature Requirements

4.10Extended battery runtime

3 75

3.78

Al tl t

Failure indicators

3.79

3.84

Indicators/Audible alarms

Line conditioning

3.62

3.75

Connected equipment guarantee

Always on outlet

3.47"Hot swap" batteries 3.55Number of outlets

0 1 2 3 4 5 0 1 2 3 4 5


Note: Scale 1 (low) to 5 (high)

Supplier Selection Criteria – Enterprise User SummaryP ti i b tit t f t ti d d l iti

Top 10 UPS Supplier Selection Criteria

Top 10 Surge Suppressor Supplier Selection Criteria

Promotion is no substitute for reputation and a good value proposition

4.17

4.22

Price/Value

Reputation for quality/reliability

Selection Criteria

3.87

4.11

Warranty coverage

Price/Value

Selection Criteria

4.05

4.12

4.12

Past experience with manufacturer

Warranty coverage

Customer service

3.74

3.78

3.80


Delivery/Availability

Reputation for quality/reliability

3.77

3.78

3.97

Field Service and repair


Delivery/Availability

3.43

3.57

3.63

Brand name recognition

Past experience with manufacturer

Customer service

3.71

3.72

Specification sheets/Product literature

Technical support & training

p

3.25

3.28

Recommended by others

Specification sheets/Product literature

g

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: StorageL k f i f ti i l di i di t t t t h l th

What are major reasons you /your clients have not considered using or chose not to

• The survey asked enterprise users of battery t h l b t th i id ti f

Lack of information is a leading impediment to new storage technology growth

22%They are impractical for our application

have not considered using or chose not to use alternate energy storage technologies?

technology about their consideration of alternate types of energy storage

• There was nearly a 2 :1 adoption / rejection ratio of the 30% respondents that indicated consideration of new storage technology

34%

45%

Unsure of the technology and/or its reliability

We/they do not have enough information about them

• 11% of enterprise respondents were already using alternative energy storage products

• The ~70% of respondents that have not considered or have rejected new storage

6%

8%

They do not provide enough

They take up too much space

ytechnologies cited the reasons in the chart to the left

• The challenge: when you consider the previous slide as context, with all of its commodity-like market implications, capturing

20%

6%

They are too expensive

y p gstorage

y p p gprospects attention with more complex messaging is doubly difficult

Note: Does not sum up to 100% as multiple selections were allowed0% 10% 20% 30% 40% 50%


Sample Market Development Trends: POS and PCsI 2010 2014 th ill lik l b h i th d d f k t / li ti

Point of Sales (POS):

In 2010- 2014, there will likely be changes in the demand from some markets / applications

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 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 productsand 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 RollercoasterN h bilit d d d f t d i th b t t b d l tNew purchases, more capability and advanced features drive growth…but not broad replacement

Consumers60%

“I don't think I will be

Enterprise51%

“We see increasedI don t think I will be buying anything new that

will need surge protection.”

Consumers

We see increased reliability and lifetime of

existing surge suppression units.”

EnterpriseConsumers77%

“We have some new things that need to be

protected against power

Enterprise30%

“ Replacement of less capable surge

suppression units (e.g., protected against power surge.”

pp ( gmore outlets, higher

rating, more features)”


More Powerful Drivers for Increased UPS InvestmentM th i l h i IT & ti i iti d i d d f UPS d tMore than economic cycles, change in IT & operations priorities, drives demand for UPS products

Consumers40%

Enterprise29%

“New IT technologies such as solid state hard drives

“Increased use of Laptop computers versus

desktop computers.”

Consumers

as solid state hard drives, backup drives, and software lower risk of power related crashes and data loss…”

EnterpriseConsumers 60%

“New things that need UPS protection.”

Enterprise66%

“Expansion of business /facilities.”


Summary – Things to ConsiderA thi th VDC t d ill l th f ll i t i

Enterprise Market:

Among many things, the VDC study will explore the following topics

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

d d f i d ?demand for power protection products?


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 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

STUDY PUBLICATION DATEACTUAL MARKET

SIZE/SUPPLIER SHAREFORECAST MARKET SIZE

Service Year 2010 2009 2010-2014


Service Year 2010 2009 2010-2014

Q&A Session

Thank You for Attending this VDC WebcastgFor 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 yRequirements Analysis studies, please contact:

Christopher Rezendes – Executive Vice [email protected] | 508.653.9000 x120

David Laing – Senior Analyst / Program [email protected] | 508.653.9000 x146

Tim Shea Senior AnalystTim Shea – Senior [email protected] | 508.653.9000 x132

Bob Perugini – Account Executivebperugini@vdcresearch com | 508 653 9000 [email protected] | 508.653.9000 x144


changing requirements power growth in ups and surge suppressor markets

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