worldwide_industrialpc_10.pdf

Industrial PCs Worldwide

Outlook

M A R K E T A N A L Y S I S A N D F O R E C A S T T H R O U G H 2 0 1 4

Project Team:

Florian Güldner

David Humphrey

Paul Miller

Copyright 2010

ARC Advisory Group

All data contained in this report are proprietary to and copyrighted by ARC Advisory Group and

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Industrial PCs Worldwide Outlook • Table of Contents

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Table of Contents

List of Figures ............................................................................................................................................. A ARC Services ................................................................................................................................................ a 1. Executive Overview .......................................................................................................................... 1-1 2. Scope .................................................................................................................................................... 2-1

Key Issues Researched .........................................................................................................2-2 Manufacturing and Non-Manufacturing Applications ..........................................................2-2 Study Structure ...................................................................................................................2-3 Market Size and Forecast Definitions ...................................................................................2-4 Hardware ............................................................................................................................2-4 Embedded vs. Standard .......................................................................................................2-4 Form Factor and Housing.....................................................................................................2-5 Software..............................................................................................................................2-5 Other Software ....................................................................................................................2-6 Operating System ................................................................................................................2-6 Application ..........................................................................................................................2-6 Industries ............................................................................................................................2-7 Sales Channel, Distribution, and Customer Segmentation ....................................................2-7 Key Regional Segments ........................................................................................................2-9 Key Currency Factors ...........................................................................................................2-9 Forecasts ...........................................................................................................................2-10

3. Market Shares .................................................................................................................................... 3-1 Market Overview .................................................................................................................3-1 Competitive Analysis ...........................................................................................................3-4

Segmentation of Industrial PC Vendors .........................................................................3-4 Taiwanese Suppliers ......................................................................................................3-6 The Case of Embedded ..................................................................................................3-7 Business Models and Sales Channels .............................................................................3-7

SWOT Analysis of Business Models ......................................................................................3-8

SWOT: Full-Line Automation Suppliers .........................................................................3-9 SWOT: Focused Automation Suppliers ........................................................................3-10 SWOT: PC-Based Control Suppliers .............................................................................3-11 SWOT: Pure IPC Supplier ............................................................................................3-12 SWOT: Specialized in Silicon .......................................................................................3-13

Competitive Drivers ...........................................................................................................3-14

New Competitors ........................................................................................................3-14


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New Product Substitutes .............................................................................................3-15 Customer Bargaining Power ........................................................................................3-15 Supplier Bargaining Power ..........................................................................................3-15

Regional Markets ..............................................................................................................3-16 Europe, Middle East, and Africa .........................................................................................3-16 Asia ...................................................................................................................................3-17 The Americas .....................................................................................................................3-17 Leading Suppliers of Industrial PCs ....................................................................................3-19

Siemens ......................................................................................................................3-19 Advantech ...................................................................................................................3-20 B&R.............................................................................................................................3-20 Beckhoff ......................................................................................................................3-21 EVOC Group ................................................................................................................3-22 NEC .............................................................................................................................3-23 Schneider Electric ........................................................................................................3-23

4. Market Analysis and Forecast ......................................................................................................... 4-1

The Global Economy and the Market for Industrial PCs........................................................4-1 Global Economic Development .....................................................................................4-1 The Economic Crisis – An Overview ...............................................................................4-2 Economic Stimulus Packages Around the World ............................................................4-3 Impact of Natural Resource Prices .................................................................................4-4 Capital Investment and its Dependency on the Business Cycle ......................................4-4

Industry Trends ...................................................................................................................4-5

Aerospace & Defense ....................................................................................................4-7 Automotive ...................................................................................................................4-7 Semiconductor ..............................................................................................................4-8 Machinery .....................................................................................................................4-8 Metal Working ............................................................................................................4-10 Food & Beverage and Consumer Packaged Goods (CPG) .............................................4-10 Pharmaceutical ...........................................................................................................4-11 Chemical .....................................................................................................................4-12 Electricity Production and Other Utilities .....................................................................4-12 Oil & Gas and Petrochemicals ......................................................................................4-12 Pulp & Paper ...............................................................................................................4-13 Building Automation ...................................................................................................4-13

Regional Economic and IPC Trends ....................................................................................4-14 North America – Limited Acceptance of IPCs, Limited Economic Growth .....................4-14 Asia: Diverse Economies, Same Outlook? ...................................................................4-15 China: Communists Saving Capitalism? .......................................................................4-16 Japan: Recession - Not Again! .....................................................................................4-17 India: Strong Like a Hungry Elephant ..........................................................................4-18 Asia’s Tiger States: Taiwan, Singapore, Hong Kong, South Korea ..................................4-19 Western Europe: Epicenter of Machine Builders & Automation Suppliers ...................4-20


Copyright 2010 © ARC Advisory Group • ARCweb.com • For Internal Use Only • iii

Eastern Europe and Russia: The Wild East ..................................................................4-22 Middle East and Africa: Oil and the Forgotten Continent ............................................4-23 Latin America ..............................................................................................................4-24

Trends in the Automation Market......................................................................................4-25 Merge of Layers and Functions ....................................................................................4-25 Ever-Increasing Global Competition ............................................................................4-25 Customer Consolidation and Movements - Demand for Solutions ...............................4-26 IPCs and HMI Software – Soft Solutions .......................................................................4-27 Distributed Automation ..............................................................................................4-27 Networks in Manufacturing Automation .....................................................................4-27 Ongoing Demand for More Information – Handle, Store, and Use Data .......................4-28 Increased Operational Visualization – More Transparency ..........................................4-28 Serving the Installed Base ............................................................................................4-29 Deciding Between IPCs and PLCs/PACs ........................................................................4-29

Trends in the Industrial PC Market.....................................................................................4-29

The Atom ....................................................................................................................4-30 Computing Power – Gets Larger and Size-Independent ...............................................4-30 High Level of Customization ........................................................................................4-30 Increased Openness and Functionality ........................................................................4-31 Success of Microsoft Windows ....................................................................................4-31 PC-Based Safety Functionality .....................................................................................4-31 More Real-time Applications .......................................................................................4-31 DIN Rail PCs .................................................................................................................4-31 Hardware/Software Bundles to Address Specific Industry Requirements .....................4-32

Summary ...........................................................................................................................4-32

5. Supplier Profiles ................................................................................................................................ 5-1 Company: Aaeon ........................................................................................................................ 5-1 Company: Adlink ....................................................................................................................... 5-3 Company: Advantech ................................................................................................................ 5-5 Company: ASEM S.p.A. ............................................................................................................. 5-7 Company: Axiomtek .................................................................................................................. 5-9 Company: Beckhoff Automation ............................................................................................ 5-10 Company: BEG Bürkle ............................................................................................................. 5-12 Company: Boser ........................................................................................................................ 5-13 Company: B&R ......................................................................................................................... 5-14 Company: Contec ..................................................................................................................... 5-16 Company: Eurotech .................................................................................................................. 5-18 Company: EVOC ...................................................................................................................... 5-20 Company: Flytech ..................................................................................................................... 5-22 Company: Hitachi..................................................................................................................... 5-23 Company: ICP Electronics ....................................................................................................... 5-25


iv • Copyright 2010 © ARC Advisory Group • ARCweb.com • For Internal Use Only

Company: Kontron Elektronik ............................................................................................... 5-27 Company: Micro Innovation AG ............................................................................................ 5-29 Company: NEC ......................................................................................................................... 5-31 Company: Nematron ............................................................................................................... 5-32 Company: Pepperl + Fuchs ..................................................................................................... 5-34 Company: Lanner ..................................................................................................................... 5-37 Company: Rockwell Automation ........................................................................................... 5-39 Company: Schneider Electric .................................................................................................. 5-42 Company: Siemens ................................................................................................................... 5-45

Appendix A: Methodology Appendix B: Common Industry Terminology and Abbreviations

Industrial PCs Worldwide Outlook • List of Figures

Copyright 2010 © ARC Advisory Group • ARCweb.com • For Internal Use Only • A

List of Figures

2-1 Standard Industry Code Classifications - Process Industries .............................................. 2-12 2-2 Standard Industry Code Classifications - Discrete Industries ............................................. 2-13 2-3 Standard Industry Code Classifications - Service Industries ............................................... 2-14 3-1 Leading Suppliers of IPCs for North America ....................................................................... 3-24 3-2 Leading Suppliers of IPCs for EMEA ...................................................................................... 3-25 3-3 Leading Suppliers of IPCs for Asia ......................................................................................... 3-26 3-4 Leading Suppliers of IPCs for Latin America ........................................................................ 3-27

3-5 Leading Suppliers of IPCs for Chemical ................................................................................. 3-28 3-6 Leading Suppliers of IPCs for Oil & Gas ................................................................................ 3-29 3-7 Leading Suppliers of IPCs for Food & Beverage ................................................................... 3-30 3-8 Leading Suppliers of IPCs for Pharmaceutical & Biotech .................................................... 3-31 3-9 Leading Suppliers of IPCs for Pulp & Paper .......................................................................... 3-32 3-10 Leading Suppliers of IPCs for Electric Power ........................................................................ 3-33 3-11 Leading Suppliers of IPCs for Water & Wastewater ............................................................. 3-34 3-12 Leading Suppliers of IPCs for Cement & Glass ..................................................................... 3-35 3-13 Leading Suppliers of IPCs for Automotive ............................................................................ 3-36 3-14 Leading Suppliers of IPCs for Aerospace & Defense ............................................................ 3-37 3-15 Leading Suppliers of IPCs for Semiconductors ..................................................................... 3-38 3-16 Leading Suppliers of IPCs for Building Automation ............................................................ 3-39 3-17 Leading Suppliers of IPCs for Machinery Manufacturing ................................................... 3-40 3-18 Leading Suppliers of IPCs for Electronics & Electrical ......................................................... 3-41

3-19 Leading Suppliers of IPCs for Robotics .................................................................................. 3-42 3-20 Leading Suppliers of IPCs for HMI ......................................................................................... 3-43 3-21 Leading Suppliers of IPCs for Vision ...................................................................................... 3-44 3-22 Leading Suppliers of IPCs for Logic (Soft PLC) .................................................................... 3-45 3-23 Leading Suppliers of IPCs for Distributed Control (Soft DCS) .......................................... 3-46 3-24 Leading Suppliers of IPCs for Motion..................................................................................... 3-47 3-25 Leading Suppliers of IPCs for CNC ........................................................................................ 3-48 3-26 Leading Suppliers of IPCs for Data Acqisition ...................................................................... 3-49 3-27 Leading Suppliers of IPCs for Communication Gateway .................................................... 3-50 4-1 Total Shipments of IPCs ............................................................................................................ 4-35 4-2 Total Shipments of IPCs for North America .......................................................................... 4-36 4-3 Total Shipments of IPCs for EMEA ......................................................................................... 4-37 4-4 Total Shipments of IPCs for Asia ............................................................................................. 4-38 4-5 Total Shipments of IPCs for Latin America ............................................................................ 4-39 4-6 Total Shipments of IPCs by World Region ............................................................................. 4-40 4-7 Total Shipments of IPCs by World Region ............................................................................. 4-41


B • Copyright 2010 © ARC Advisory Group • ARCweb.com • For Internal Use Only

4-8 Total Shipments of IPCs by Revenue Category ..................................................................... 4-42 4-9 Total Shipments of IPCs for Hardware Revenue by Type ................................................... 4-43 4-10 Total Shipments of IPCs for Software Revenues By Type .................................................... 4-44 4-11 Total Shipments of IPCs for Chemical .................................................................................... 4-45 4-12 Total Shipments of IPCs for Oil & Gas .................................................................................... 4-46 4-13 Total Shipments of IPCs for Food & Beverage ....................................................................... 4-47 4-14 Total Shipments of IPCs for Pharmaceutical & Biotech........................................................ 4-48 4-15 Total Shipments of IPCs for Pulp & Paper ............................................................................. 4-49 4-16 Total Shipments of IPCs for Electric Power ........................................................................... 4-50 4-17 Total Shipments of IPCs for Water & Wastewater ................................................................ 4-51 4-18 Total Shipments of IPCs for Cement & Glass ........................................................................ 4-52 4-19 Total Shipments of IPCs for Automotive ................................................................................ 4-53 4-20 Total Shipments of IPCs for Aerospace & Defense ............................................................... 4-54 4-21 Total Shipments of IPCs for Semiconductors ......................................................................... 4-55 4-22 Total Shipments of IPCs for Building Automation ............................................................... 4-56 4-23 Total Shipments of IPCs for Machinery Manufacturing ...................................................... 4-57 4-24 Total Shipments of IPCs for Electronics & Electrical ............................................................ 4-58 4-25 Total Shipments of IPCs by Industry (5 years) ..................................................................... 4-59 4-26 Total Shipments of IPCs by Industry (2 year overview) ...................................................... 4-60

4-27 Total Shipments of IPCs by Sales Channel ............................................................................. 4-61 4-28 Total Shipments of IPCs by Customer Type .......................................................................... 4-62

4-29 Total Shipments of IPCs for Robotics ...................................................................................... 4-63 4-30 Total Shipments of IPCs for HMI ............................................................................................ 4-64 4-31 Total Shipments of IPCs for Vision.......................................................................................... 4-65 4-32 Total Shipments of IPCs for Logic (Soft PLC) ....................................................................... 4-66 4-33 Total Shipments of IPCs for Distributed Control (Soft DCS) .............................................. 4-67 4-34 Total Shipments of IPCs for Motion ........................................................................................ 4-68 4-35 Total Shipments of IPCs for CNC ............................................................................................ 4-69 4-36 Total Shipments of IPCs for Data Acqisition.......................................................................... 4-70 4-37 Total Shipments of IPCs for Communication Gateway ........................................................ 4-71 4-38 Total Shipments of IPCs by Application ................................................................................. 4-72

4-39 Total Shipments of IPCs for 19" Rack Mount (Units) ........................................................... 4-73 4-40 Total Shipments of IPCs for Box PC (Units) .......................................................................... 4-74 4-41 Total Shipments of IPCs for DIN Rail (Units) ....................................................................... 4-75 4-42 Total Shipments of IPCs for Panel PC (Units) ....................................................................... 4-76 4-43 Total Shipments of IPCs by Type (Units) .............................................................................. 4-77

4-44 Shipments of Standard 19” Rack Mount Industrial PCs ...................................................... 4-78 4-45 Shipments of Standard Box Industrial PCs ............................................................................ 4-79 4-46 Shipments of Standard Panel Industrial PCs ......................................................................... 4-80 4-47 Shipments of Standard Industrial PCs by Type..................................................................... 4-81

4-48 Shipments of Embedded Industrial Din Rail PCs ................................................................. 4-82 4-49 Shipments of Embedded Industrial Box PCs ......................................................................... 4-83 4-50 Shipments of Embedded Industrial Panel PCs ...................................................................... 4-84


Copyright 2010 © ARC Advisory Group • ARCweb.com • For Internal Use Only • C

4-51 Shipments of Embedded Industrial 19” Rack Mount PCs ................................................... 4-85 4-52 Shipments of Embedded Industrial PCs by Type ................................................................. 4-86 4-53 Shipments of Industrial PCs by Type ...................................................................................... 4-87

3 ALLIED DRIVE DEDHAM MA 02026 USA T: 781-471-1000 F: 781-471-1100 arcweb.com

THOUGHT LEADERS FOR MANUFACTURING & SUPPLY CHAIN

ARC Consultant Biography

Florian Güldner

Analyst Automation

ARC Advisory Group

+49 211 3003 416

[email protected]

Research Areas of Expertise

Florian’s focus areas include PLCs, AC drives, motion control, and discrete sensors.

Responsibilities and Experience

Florian is part of the automation team covering manufacturing topics in Europe and is

located in ARC’s offices in Germany. At ARC, Florian specializes in economic modeling,

time series and business cycle analysis, and forecasting.

Florian has experience in the automation industry with Siemens and has a strong

background in energy markets. In particular, he worked for AREVA in Germany and the

US, as well as for E.On Energy. He is also experienced in strategic marketing and mergers &

acquisitions.

Education

Florian holds a Master Degree in Economics with Sociology and Psychology as minor

subjects. He studied at the Friedrich-Alexander-Universität in Erlangen (Germany) where

he focused on statistics, international markets, and the US economy.

ARC Research Reports and Publications

Working with the Automation team on various studies and reports.

About ARC Advisory Group

Founded in 1986, ARC Advisory Group has grown to become the Thought Leader in

Manufacturing and Supply Chain solutions. For even your most complex business issues,

our analysts have the expert industry knowledge and firsthand experience to help you find

the best answer. We focus on simple, yet critical goals: improving your return on assets,

operational performance, total cost of ownership, project time-to-benefit, and shareholder

value.



ARC Analyst Biography

David W. Humphrey

Director of Research – Europe

ARC Advisory Group

+49 89 323 88900

[email protected]


David Humphrey’s focus areas include manufacturing discrete and hybrid industries, par-

ticularly application areas such as packaging and safety, and product areas such as PLCs,

AC drives, motion control, and industrial networks.


David Humphrey is part of the automation consulting team at ARC covering manufacturing

topics in Europe and is located in ARC’s offices in Germany. In addition, he is a member of

ARC’s hybrid manufacturing, packaging and industrial networking teams.

David Humphrey has over 20 years of experience in industrial automation, including speci-

fying, designing, and programming control systems in areas ranging from automobile to

packaging, implementing projects involving PLCs, HMI hardware and software, industrial

networks, drives and motion control. Prior to ARC, he was Area Manager for automation

solutions in Rockwell Automation's Munich, Germany office. In addition, he has worked for

Raytheon Company and Termiflex, Inc. in the United States.

Education

David Humphrey holds a BE in Electrical Engineering and Computer Science from Stevens

Institute of Technology as well as MBA degrees from the Business and Economics University

of Vienna (Wirtschaftsuniversität Wien) and the University of South Carolina with a concen-

tration in International Business.


Networking Alliances Bridge the Gap between Enterprise and Factory, but Who Reaps

the Benefits?

Challenges of Industrial Ethernet


IO-Link and CompoNet Bring New Value to Machine Control Applications

Capital Expenditure Survey (annual)

Industrial Ethernet Networks the Digital Factory

Acceptance of PC-Based Control Is Increasing, But Varies around the World

Industrial Ethernet and Safety Highlight SPS-IPC-Drives Show

Are Safety Networks Ready for Ethernet?

Safety Solutions and Safe Networks Highlight Hanover Fair

German Carmakers Back PROFINET

Capital Expenditure Survey

Safetybus Systems

PLC Supplier Preferences

E-Business Strategies for OEMs

Other Published Work

Computer & Automation, Monthly ARC Essay


Founded in 1986, ARC Advisory Group has grown to become the Thought Leader in Manu-

facturing and Supply Chain solutions. For even your most complex business issues, our

analysts have the expert industry knowledge and firsthand experience to help you find the

best answer. We focus on simple, yet critical goals: improving your return on assets, opera-

tional performance, total cost of ownership, project time-to-benefit, and shareholder value.



ARC Consultant Biography

Paul Miller

Senior Editor/Analyst

ARC Advisory Group

781-471-1141

[email protected]


Paul’s focus areas at ARC include the water & wastewater and bulk terminal automation

industries.


Paul serves several different roles at ARC. In his senior editor role, Paul reviews and edits

many ARC market forecast studies, plus most ARC reports, insights, and other Advisory

Service deliverables. In his role as an analyst, Paul performs research, produces reports, and

consults with clients. Paul also serves as ARC’s main contact point for editorial requests and

general media relations.

Paul has been with ARC since August 2008. Prior to joining ARC, Paul was a contributing

editor for Putman Media’s CONTROL and INDUSTRIAL NETWORKING magazines for

almost a year. Prior to this, Paul served as global public relations manager for Invensys

Process Systems and, before that, The Foxboro Company for a total of 23 years. In this ca-

pacity, Paul closely followed the evolution of a number of different industrial automation

technology areas, including process control systems, advanced process control, fieldbus in-

strumentation, safety systems, simulation and optimization software, asset management

systems, industrial networking, cyber-security, and plant-to-enterprise integration.

Education

Paul earned a B.A. degree from Emerson College in Boston, MA.


Water & Wastewater Industry Strategies

Terminal Automation System Strategies (Parts I & II)

Sustainability Takes on Additional Meaning at 2008 ARC Orlando Forum


Other Published Work

It’s Back-to-School Time for Fieldbus Training – CONTROL magazine

A Dynamic Duo: Digital Valve Controllers Linked to Asset Management Systems – CONTROL

magazine

The Many Faces of SCADA – CONTROL magazine

Intrinsic Safety in the Digital Age – CONTROL magazine

Object Architectures in an Increasingly Services Oriented World – CONTROL magazine

Pressure-Based Level Measurements Keep Getting Better and Better – CONTROL magazine

Fiber Optics: More Than Just a Backbone – INDUSTRIAL NETWORKING magazine

Ins and Outs of Modular I/O: INDUSTRIAL NETWORKING magazine


Founded in 1986, ARC Advisory Group has grown to become the Thought Leader in Manu-

facturing and Supply Chain solutions. For even your most complex business issues, our

analysts have the expert industry knowledge and firsthand experience to help you find the

best answer. We focus on simple, yet critical goals: improving your return on assets, opera-

tional performance, total cost of ownership, project time-to-benefit, and shareholder value.

ARC Services

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Industrial PCs Worldwide Outlook • Executive Overview


After a decade of strong growth

in the industrial PC market, the

market participants had to deal

with a 19 percent drop in 2009

that hit many companies hard

and put a halt to the expansion

plans of some Asian suppliers.

Chapter 1

Executive Overview

The economic crisis hit the market for industrial PCs (IPCs) hard. The mar-

ket had enjoyed high growth rates until the economic crisis negatively

impacted the investment climate. In the past 15 years,

many new players emerged – especially in China and

Taiwan. Many of these new IPC suppliers now target

customers in mature economies. Even though the mar-

ket for industrial PCs changes less rapidly than that for

consumer electronics, the last few years have seen rapid

technology changes. Now, with the rise of Intel’s Atom

processor, the technological change continues, opening up a new battle-

ground in industrial applications that previously used non-PC based

technology due to power consumption and size constraints.

The industrial PC market structure is very fragmented, with no dominant

player on a regional or global level. While IPC technology itself has ma-

tured, new applications and requirements will enable differentiation

through hardware and software.

In 2009, the market

dropped by 19 percent.

Even though the recovery

will start quickly, the level

of the boom year 2008 will

not be reached again until

2012. A major factor

dampening the recovery

is the constant drop in

prices. This is not only

driven by user demand,

but also by a drop in in-

termediate goods like

panels.

Indicator Current State Trend

Market Maturity

Growing, technology still improving

Slowly aging

Revenue 2009 USD 1,804 8.8 % CAGR

Potential to 2014

USD 2,749

Prices 500 to 10.000 USD

price erosion and in-creasing capabilities

Competitors About 10 with global re-

levance Constant

Technical Change

Two directions: 1. Smaller & dedicated

2. More computing power

These directions will continue to drive the

market.

Figure 1-1: Industrial PCs – a Brief Market Overview



Scope

This study analyzes the industrial PC market. To provide a better under-

standing of future development and possibilities it also looks at various

product segments as well as other segments of the market.

IPCs in Manufacturing

IPCs are important in both manufacturing and many other industrial and

commercial applications, including marine, building automation, telecom-

munications, military, and infrastructure. This study focuses on the

manufacturing applications. The study also looks only at complete IPCs

sold as a product to machine builders and end users. Therefore, this study

excludes board PCs and any revenue resulting from business with PCI

cards sold separately.

Industrial PCs are ruggedized and built to meet specific industry standards.

Typically, this means that they can be run around the clock and handle

harsh industrial environments, including extreme temperature, humidity,

vibration, and a guaranteed long-term use in industrial environment.

Embedded vs. Standard

The definition of “embedded” varies from supplier to supplier and user to

user. While some only consider DIN rail-mountable PCs to be embedded,

other suppliers consider their pre-configured IPCs as embedded products.

ARC Advisory Group defines embedded IPCs as those that:

Have no rotating parts. We do not consider PCs with fans or conven-

tional hard drives to be embedded.

Have pre-configured hardware and software designed to fit together to

work on a specific, pre-defined application. The concept could be de-

scribed as “plug & produce.”

Embedded PCs are sometimes head-

less, and the plug & produce concept

with pre-installed software allows the

machine builder or end user to use this

PC without modifying the OS.

Study Structure

This study splits IPC hardware into

three categories: embedded PC, stan-

dard IPC, and peripheral hardware. Figure 1-2: Industrial PC Study Structure



Together, these three categories add up to 100 percent of the hardware

business. Some ruggedized PCs and IPCs are sold without any software.

IPCs with nonvolatile (NV) RAM have no rotating parts (fan, hard drive).

The peripheral hardware category includes all PC-based hardware sold in a

bundle with IPCs (mouse, keyboard, screen/monitor, mountings for panel

PCs, etc.). This study only includes hardware used with an IPC and sold

together with the IPC. Thin clients that includes devices that are bound to

work with a PC, such as Siemens’ thin client, are included in this study.

This study only covers software (operating system or application) sold in a

bundle with an IPC. While bundled application software only represents a

small percentage of the overall IPC market, we’ve attempted to further split

the bundled application software segment into specific application types

(control, HMI, etc.).

Form Factor and Housing

Hardware is further segmented by its physical packaging:

DIN Rail: A typical DIN rail-mounted IPC has modular design and mod-

ular I/O and can be used as a soft PLC.

Box PC: The typical box PC is compact and often headless. They are often

very rugged and can be used in widely varied applications. Universal de-

sign enables a box PC to be mounted either within or outside a machine.

Panel PC: A typical panel PC has a monitor directly mounted with the PC

in a common housing. ARC also considers IPCs that are connected to and

productized with a screen to be panel PCs (essentially a box PC connected

to a screen).

Rack Mount PC: Only IPCs designed to fit in industry-standard 19-inch

racks are included in this sub-category.

Market Size and Forecast

In the years 2008 and 2009, two factors characterized the market for indus-

trial PCs: the economic crisis and the ongoing penetration of the market by

Taiwanese suppliers.



Competitive Landscape

Although relatively mature, the market for industrial PCs remains frag-

mented, the companies in Figure 1-2 represent only 62 percent of the

market. In addition to IPC product specialists, such as

Noax or Stahl HMI, the market includes focused auto-

mation suppliers like Pepperl+Fuchs and Phoenix

Contact, full line automation suppliers like Siemens

and Rockwell Automation, and PC-based automation

suppliers like Beckhoff and B&R. Furthermore, hun-

dreds of Taiwanese companies supply IPC products

either directly to the market or to other IPC suppliers.

The IPC market is fragmented and unconsolidated,

with only one-sixth of the suppliers analyzed having a

market share above 2 percent. This fragmentation is

due in part to the attractiveness of the industrial PC

market for various companies. For automation suppli-

ers, IPCs offer the opportunity to build a scalable,

open, and flexible product that they can use to enter

new, non-manufacturing markets. For companies that supply PC cards and

boards, IPCs provide a logical stepping stone up the value chain.

One of the most important topics discussed in the market is the build vs.

buy decision. Depth of production varies greatly between suppliers and

touches all aspects of an IPC. Many companies use boards from Taiwan in

their IPCs. Many companies also brand label IPCs from other suppliers,

predominantly Taiwanese suppliers. Some companies design their own

boards, but have them

manufactured in Taiwan.

Others do it all.

The IPC market, which will

continue to grow over the

long run, will continue to

attract new competitors.

New entrants include both

PC or PC component sup-

pliers from Taiwan, and

automation suppliers seek-

ing to enlarge their PC

business. The unique prod-

Barriers to entry Factors that attract

new competitors

Difficulties to implement spe-cific industry requirements

Scalable product with easy to implement “buy” decision for

components

Price competition with Asian suppliers

Growth market

Lack of customer base Technological change offers the

chance to “get the next train”

Longevity and support of product

For one stop automation shop-ping much non-PC technology

is needed

Figure 1-4: Factors Determining Competitive Environment

Figure 1-3: Revenue of Top Suppliers



uct and long-term support requirements of some industries represent a bar-

rier to market entry.

In the fragmented and highly competitive IPC market, Asian suppliers are

driving down prices for these largely commodity products.

Full line automation suppliers: This

category refers to suppliers that offer the

complete range of automation products,

from sensors to planning software.

Full-line automation suppliers’ broad

portfolios and regional and industrial

spread is a double-edged sword. These

help to stabilize growth and enables

larger R&D expenditure, but their sheer

size makes these companies less flexible.

Their core strength results from their

size (large R&D investments, financial

position, worldwide network, economies of scale, and many in-house

products available), however, some opportunities remain largely unex-

ploited. For example, R&D expenditures are often relatively low, or focus

too much on hardware. Even though these large companies have the pos-

sibility to leverage economies of scale, operational excellence can suffer due

to organizational overhead. Though many offer a sufficient level of custo-

mization (front plate adjustment, choice of standard modules) large

suppliers are less open to new development requests from customers.

Focused automation suppliers: These companies are also rooted in the old

automation hierarchy, but do not have a complete portfolio. Focused au-

tomation suppliers represent perhaps the

most diverse group in this analysis.

They typically provide products and so-

lutions for certain layers in the

automation hierarchy. Notably, these

companies are nearly exclusively based

in North America, Europe, and Japan.

IPCs typically represent only a small

portion of their overall portfolio. How-

ever, the strength of focused automation

Full Line Automation Suppliers

Business Model

Offer complete set of automation products and solutions

IPC Portfolio Varies heavily, from complete to basic functionality

Regional Spread

Global

Industry Split All industries

Examples Rockwell Automation, Siemens

Market Share 19 percent

Figure 1-5: Full line Automation Suppliers

Focused Automation Suppliers

Business Model

Offer selected set products and solutions; rooted in the PLC archi-tecture

IPC Portfolio Not complete, only some IPCs in portfolio

Regional Spread

Global with strong regional focus

Industry Split Few focus industries

Examples Hitachi, Mitsubishi Electric, Omron, Phoenix Contact


Figure 1-6: Focused Automation Suppliers



suppliers in specific industries and/or regions makes it relatively easy for

them to expand into new markets. For many, investments have to be care-

fully planned, since financials are sometimes limited (many in this group

are small-to-medium-size enterprises). Many of those focused companies

gain experience from complete automation suppliers that enter these attrac-

tive niche markets as soon as they reach critical mass.

PC-based control suppliers: These companies focus on PC-based automa-

tion products, including companies that are already well-established in the

IPC market, like Beckhoff or B&R. The

companies in this segment experienced

tremendous growth during the last years.

Benefiting from the ongoing success of

PC-based control in general and individu-

al achievements in operation excellence,

many have successfully established their

brand in the market. PC-based control

suppliers can efficiently leverage the

modularity of their key product to offer

front office flexibility, with standardized

modules for manufacturing lines.

European companies dominate this group. The Taiwanese companies often

lack deep domain knowledge of the automation business in mature econo-

mies, and thus predominantly focus on their home market. Some

Taiwanese and Chinese PC companies are also trying to establish them-

selves as PC-based control suppliers.

Pure IPC supplier: This category includes companies that specialize in in-

dustrial PCs and primarily (though not exclusively) offer IPCs. While they

are often based in Taiwan, there are also

many European companies.

IPCs are the sole or main source of reve-

nue for pure IPC suppliers. This includes

both Advantech, a global, multi-million

dollar Taiwanese company, and BEG-

Bürkle, a specialized German IPC supplier.

While most of the Taiwanese companies in

this category leverage their low produc-

tion costs, small and specialized players

PC-based control Supplier

Business Model

Offer variety of PC-based products; rooted in the PAC/ PC architec-ture; solution business less developed

IPC Portfolio Mostly complete, large share of embedded PCs

Regional Spread

Global with regional focus

Industry Split Several focus industries

Examples B&R, Beckhoff, National Instru-ments


Figure 1-7: PC-based Control Suppliers

Pure IPC Suppliers

Business Model

Focused on product business; brand labeling as sales channel

IPC Portfolio Complete

Regional Spread

Global to regional

Industry Split Spezialists and generalists

Examples Aaeon, Advantech, BEG- Bürkle, Boser, Evoc, Noax, TCI


Figure 1-8: Pure IPC Suppliers



from mature economies focus on customer-centric innovations and devel-

oping a close relationship with their customers. Many have a product-

focused business and sales structures that directly connect them with OEMs

and end users. The capital-intensive sales structure represents a hurdle to

exploring new markets, and the small size and relatively high prices make

these companies unattractive for brand labeling agreements or other part-

nerships.

Specialized in Silicon: These players offer nearly everything that has to do

with silicon, including IPCs. While their silicon business is global, their IPC

business is still regionally focused. Often, they are not focused on a specific

industry.

This group largely consists of hundreds of

small to very small companies, mostly

based in Taiwan, that predominately pro-

duce chips and boards, but also have

some IPCs in their portfolios. Two com-

panies in this group are particularly

noteworthy: NEC and Kontron. Both

still make a large share of their revenue

with “silicon,” but also developed a well-

received product and system business.

One of the greatest advantages these

companies can and do offer is the ability

to customize boards for specific applications.

Competition in Regional Markets

The regional markets differ significantly in their size and in their competi-

tive landscape. Each geographical region has slightly different ways of

doing business and each region has different technological requirements

and attitude towards IPCs.

While Europe hosts several of the largest players (Siemens, B&R, Beckhoff,

Kontron), there are also many small, specialized IPC suppliers. Many non-

European companies have tried to get a foot in this market, but most have

not had great success to date. Many Asian silicon providers have lost mar-

ket share to Kontron during the last years and Asian IPC specialists have

had a hard time establishing business in Western Europe. Many therefore

concentrate on brand labeling agreements, manufacturing IPCs for compa-

nies like Beckhoff.

Specialized in Silicon

Business Model

Sell IPCs in order to participate more in the value chain; core busi-ness remains boards and cards

IPC Portfolio Mostly Complete

Regional Spread

Global in components, regional in IPCs

Industry Split No industry focus

Examples Axiomtek, ICP Electronics, Kon-tron, NEC


Figure 1-9: Specialized in Silicon



Figure 1-10 shows both complete Asia and Japan. In both cases, local com-

panies mainly serve the local market. While this is well known in Japan, it

is also true for the Chinese/Taiwanese market. While the Japanese market

displays moderate consolidation, other Asian markets (including Taiwan)

remain fragmented. The in-

dustrial PC market in Taiwan

is the one of the most dynamic

worldwide. In addition to

many PC and IPC suppliers,

many display manufacturers

and machine builders are lo-

cated here. The Chinese and

Indian markets are perhaps the

last markets that offer growth

potential without cutthroat competition.

What Siemens is in Europe, Rockwell Automation is in North America.

Rockwell’s Allen-Bradley control equipment dominates the discrete indus-

tries here and Rockwell Automation is making inroads in the process

industries, especially the hybrid industries such as food & beverage, phar-

maceutical, and some parts of chemical. Even with several pure IPC

suppliers, North America has the smallest number of IPC manufacturers of

any regional IPC market.

Market Forecast and Development

The current economic crisis hit the market for industrial PCs (IPCs) hard,

since overall demand for automation equipment has declined drastically.

Additionally, the traditional suppliers of industrial PCs face increasing

competition from low-cost Asian providers as

well as from operator panels, which are be-

coming more sophisticated. Boosting the

market for IPCs is the need for improved mon-

itoring and optimization of and increased

visibility into a wide range of manufacturing

production processes.

The global economy began a steadily accelerat-

ing decline in about mid-2008, the end of a

string of boom years. The bubble economy,

with massive consumption in many developed

and developing nations, simply could not be

Concentration

% of Top Player

% of Top 4 Player

Asia (incl. Japan) Fragmented 12% 42%

Japan

Moderate Con-

centration 27% 71%

EMEA Fragmented 19% 52%

North America Fragmented 18% 39%

Latin America Fragmented 14% 14%

Figure 1-10: Regional Markets and Market Concentration

Figure 1-11: Overall Market Development for

Industrial PCs



sustained. For four years through the summer of 2007, the global economy

boomed. The first phase of the economic crisis was the financial crisis,

which started in early 2007 with the first collapses on the subprime market

in the US. At first, this was not seen as an economy-wide crisis.

Currently many companies complain about complications when applying

for bank credit and, in mature economies, there are signs of a severe credit

crunch.

Industry Trends

Industrial PCs are already well-accepted and widely used in many indus-

tries and applications. Here, the markets are relatively mature and future

growth is increasingly dependent on the overall industry performance. In

other industries and applications, IPCs are just beginning to gain traction as

their hardware and software capabilities have expanded to be able to solve

new problems and fit into new market niches.

Industry % of IPC Market

Market Growth

Key Trends

Aerospace & Defense 1.3 % 5.0 % Consolidation of manufacturers – rising demand of solutions

Automotive 7.6 % 5.7 % Visualizations needs remain strong

Electronics & Semiconductors

10.7 % 7.8 % Falling prices, concentration on Asia, often use IPCs in manu-facturing

Machinery 12.9 % 6.0 % Consolidation, change in struc-ture

Chemical and Petrochemical

2.8 % 6.1 % Strong dependency on automo-tive, Panel PCs in ex-areas

Food & Beverage 10.9 % 9.2 % IPCs do fit the needs and de-mand is strong

Pharmaceutical & Cosmetics

4.5 % 7.9 % IPCs ideal for many applica-tions

Pulp & Paper 3.9 % 12.9 % Market shifting towards Latin America and Asia

Water & Wastewater 5.7 % 7.6 % Ongoing demand to include light SCADA functionality I pa-nels

Figure 1-12: Industry Growth and Market Shares

The automotive industry is volatile and depends heavily on the business

cycle, even though China already represents around 11 percent of the world

market. The current crisis overshadows many recent developments in the



automotive industry. US automotive manufacturers have struggled since

2006, while Japanese and Korean automakers continue to outperform the

Big Three in their domestic markets. Ongoing competition and cost pres-

sures have caused the tier 1 supplier market to consolidate considerably,

forcing industrial PC suppliers to deal with a shrinking number of custom-

ers.

The semiconductor industry has strongly adopted PC technology, using

the PC as a platform to integrate third-party I/O, motion control, and net-

working. Short product lifecycles, fast changing demand and price

fluctuations, and rapid technology development characterize the highly

cyclical semiconductor industry. Recent rumors point to a chip shortage in

2010. Since IPC suppliers consume relatively few chips compared to con-

sumer electronics IPC suppliers should watch the consumer electronics

market carefully, to be early adopters of technological trends from consum-

er electronics and to avoid shortages.

The market for industrial machinery suffered greatly from the current eco-

nomic crisis. This strong downturn has led to consolidation, especially in

the machine tool markets in North America and Europe. The OEM ma-

chine tool market in these regions faces increasing pressure to reduce

overall development costs for machinery. This forced some machine build-

ers to move production and development resources to Eastern Europe or

Asia. In the machinery sector, the most important thing for IPC suppliers is

the concept of embedded functionality. Another area where PC technology

is well accepted is in the machine tool market. CNC controls virtually all

use some sort of PC platform, often with a proprietary, UNIX-based operat-

ing system to include and integrate safety and other control functionality

and lower the operating system footprint. SoftServo made strong inroads

in the Japanese and Asian market in machine tool and metal forming appli-

cations. In the robotics market, Kuka has leveraged true PC-based control

for over a decade.

The hybrid manufacturing industries (food & beverage and pharmaceuti-

cals), where flexibility, openness, and the need to handle large amounts of

data for traceability and automation are all requirements, represent a more

classical area for IPCs. The demand for automation products in the hybrid

industries grows at a stable rate. Demographic changes in emerging econ-

omies lead to a steady growth in emerging economies. The food &

beverage and CPG industries are at the apex of adoption of high-

performance solutions. In recent years, food & beverage producers in-



vested heavily in their IT infrastructures, and many now have reliable sys-

tems in place. These investments support the automated information flow

necessary to meet the increasing regulatory requirements as well as the so-

phisticated product information tracking necessary to remain competitive.

Regional Economic Development

Every world region has its own peculiar business cycle and dynamics. The

following section looks at the overall investment climate within each region

and discusses the impact on the demand for industrial PCs.

In North America, industrial PCs have had limited acceptance due to per-

ceived complexity and hesitation based on questions relative to ruggedness,

durability, and reliability versus PLCs. The US entered the recession first:

will the US be the first country to exit? So far, capital investment in manu-

facturing remains low, capaci-

ty utilization has dipped

below 70 percent, and unem-

ployment rose to 9.8 percent

in September 2009. The

downturn impacted nearly

every sector in the US.

In Asia many (non-Japanese)

Asian companies still rely on

automation equipment from

Western supplier. Neverthe-

less, in emerging Asia,

Taiwanese IPC suppliers do-

minate this price-driven

market. For Western suppli-

ers, the movement of OEMs

towards emerging consumer markets represents a threat and a chance to

lose or enlarge business in these regions. The busing habits in emerging

Asia differ from those in Western economies and is more price driven and

less focused on long term partnerships. Forecasts from the third quarter of

2009 suggest growth in Asia slowing sharply along with the global econo-

my. Japan, Singapore, Hong Kong, Korea, and Taiwan are likely to record

negative economic growth in 2009. Average annual GDP growth in Asia is

projected to slow from 7.6 percent in 2007 to about 6 percent in 2008, and

just under 5 percent in 2009. The key financial risks for Asia stem from vo-

latile capital flows, tighter external financing, and disruptive spillovers to

Figure 1-13: Growth in Geographic Regions



domestic markets that could lead to a sharp credit squeeze and slower

growth.

ARC believes that China and India will not only demand more automation

equipment as wages rise, but will also shift towards more sophisticated sys-

tems with greater capabilities for achieving international quality standards.

For IPC suppliers, these emerging markets are increasingly interesting, not

only because they offer growth possibilities, but also because they them-

selves host a number of small specialized suppliers for industrial PCs. The

Taiwanese market is the most vibrant PC market worldwide. Even Europe

hosts many small, specialized PC players that offer solutions; the Taiwa-

nese market is the fastest growing. (Intel makes roughly one-fourth of its

revenue in Taiwan.)

The table below analyzes the Taiwanese companies in the study sample.

They account for 16 percent of the worldwide market and host a number of

different companies. These range from component-driven companies that

are moving up the supply chain, to established automation suppliers like

Advantech. Chapter 3 includes a more detailed competitive analysis.

Number of Companies

% Revenue in

USD % of World

Market

Taiwan 14 23% $ 293 19%

Number of Companies

% Revenue in

USD % of Taiwanese

Companies

Speciallized in IPCs 7 50% $ 233 80%

Specialized in Silicon Products 6 43% $ 49 17%

PC based automation Supplier 1 7% $ 10 3%

Focused Automation Company 0 0% - 0%

Full line Automation Supplier 0 0% - 0%

14 100% $ 293 100%

Number of Companies

% Revenue in

USD % of Taiwanese

Companies

Component Supplier 5 36% $ 32 11%

Product supplier 9 64% $ 261 89%

System provider 0 0% - 0%

Solution Provider 0 0% - 0%

14 100% $ 293 100%

Figure 1-14: Taiwanese IPC Companies



Some of the challenges industries face

today include the need to act quickly and

with agility to emerging market

opportunities, and increasing pressures to

improve financial performance.

For automation suppliers, the most important sub-regions in EMEA are

Eastern and Western Europe. Western Europe hosts not only many auto-

mation suppliers but also a large amount of machine builders and system

integrators. Germany, Austria, Switzerland, France, and Italy are the cen-

ters of automation and machine building. In emerging Europe, domestic

demand and exports to Western Europe have started to moderate during

the crisis but some countries even appreciated a slowdown to ease over-

heating pressures (Slovakia, Slovenia, Czech Republic, and Poland have all

performed comparably well in the crisis). However, many countries (Lat-

via, Belarus, Lithuania, Estonia, and Hungary) are not experiencing a

slowdown, but rather a free fall. All Eastern European countries will have a

large demand for IPCs in utility and infrastructure in the coming years.

The deepening global financial turmoil increasingly clouds the regional

outlook for Latin America. Growth is expected to slow markedly as the

global slowdown and tightening financial conditions take hold. Downside

risks to growth have also increased, given the uncertain outlook for world

commodity prices and the possibility of further spillovers from the strains

to global financial stability.

Automation and Industrial PC Trends

Industrial automation demand is primarily driven

by business issues and so is the market for IPCs.

That means that every IPC solution has to prove

its advantages compared to embedded control or

PLC solutions.

The classical automation topology has merged into flatter, a more inte-

grated architecture, where one device incorporates functionality like logic

and motion control as well as visualization. While programmable automa-

tion controllers (PACs) originally developed from PLCs, PACs also have

similarities with industrial PCs. Due to an open architecture and high

computing power, in some respects, IPCs represent the “perfect” PAC. One

difference is that while PACs often only deliver their complete capabilities

when part of a single-vendor automation solution, industrial PCs offer the

openness that enables users to avoid this single sourcing problem.

The continued merging of automation layers will boost sales of IPCs and

PACs, cutting into PLC sales to a certain extent.



The current economic situation resulted in consolidation among the com-

panies that buy IPCs. Customer consolidation has various implications for

suppliers. As the customer base gets smaller, the market power of the sur-

viving customers increases. These machines builders and end users also

have increasingly complex manufacturing processes, as more products are

manufactured in more locations. Increasingly, manufacturers prefer to

have broader solutions packages from suppliers or third-party system inte-

grators. This minimizes risks as interoperability and applicability

responsibility lies with the systems supplier. This trend eliminates the need

for specialists in manufacturers’ organizations, which minimizes operation-

al and maintenance training for the en-

tire system, as well providing other

significant cost savings.

There is a clear trend towards distri-

buted architecture in future automation

topologies. Distributed control needs

intensive cross-communication and inte-

raction between systems and their

dynamically changing environment. In

practice, distributed automation often

triggers the large number of different

connected systems and is often more

easily managed by a PLC/PAC than an

IPC. However, IPCs will benefit from

the increasing success of industrial

Ethernet and real-time industrial Ether-

net. Also, as the trend towards

distributed architecture continues, the

relative benefits of small PLCs with at-

tached I/O decreases in favor of PLCs or

IPCs with remote modular I/O.

Distributed automation is most power-

ful when combined with a powerful

network like industrial Ethernet. Ether-

net’s increasingly compelling value

proposition in the areas of technological

commonality, vertical integration, and

global ubiquity is one of the most signif-

icant changes in automation. Ethernet

Sustainable manufacturing

Demand for large data transfers

Measuring real time performance of manufacturing

operations

Increasing capital investments in automation equip-

ment as a result of globalization

Broad solutions, one stop shopping that aim to re-

duce Total Cost of Ownership (TCO)

Support during all lifecycle phases

Use of standards to promote choices, provide consis-

tency and simplicity, facilitate a common

environment, and drive down costs

Employing standard technologies and bridging the

gap between operations and IT

Demand for products that are easier to install and

use

Greater productivity though higher line speeds, bet-

ter performance

Compliance to worldwide electrical and safety regula-

tions

Local service and support all over the world

Reducing maintenance and spare parts costs

Networking technologies, fieldbus diversity, real-time

Ethernet communication

Having a broad range of scalability within a single

product family

Desire for optimal application form factor/customized

solutions

Figure 1-14: Industry Trends Impacting

Automation Equipment Demand



can greatly enhance data-gathering from the plant floor. This becomes es-

pecially useful if the data is effectively evaluated using applications such as

plant asset management (PAM).

Increased used of Ethernet on the plant floor is driven largely by manufac-

turers, who need to collect, manage, and store increasingly larger amounts

of data, rather than by suppliers. Sustainable manufacturing will only in-

crease these requirements. Industrial PCs will benefit from this

development, since they enable easy connectivity between the production

floor and office environments.

Panel PCs will benefit from the manufacturers’ requirements to increase

agility through better visualization of their production processes.

Various trends within the industrial PC market will affect future growth.

These include technology development such as Intel’s Atom processor,

price developments, and also less-plastic aspects like the increasing accep-

tance of IPCs in manufacturing.

The Atom processor provides 800 MHz to 2 GHz with a maximum thermal

design power (TDP) of 0.65W to 8W (the Z series also offer s 2GHz model

with 2.4W TDP). This offers various possibilities to end users and machine

builders. First, the low-cost, low-power Atom enables low-CPU power

IPCs at a low price and with low energy consumption and low heat. Size-

independent computing power, also offers makes new form factors possi-

ble. One development is flatter panel PCs that are more easily integrated

into machines. Wide screen panel PCs are also very popular and, in some

cases, upright wide screen panel PCs can replace a design with separate

screen and keyboard.

Many companies provide a high level of customization. This ranges from

hardware customs, to specific bundles of hardware and software. While

the percentage of custom products is very large in some companies (up to

40 percent) this depends on the batch size demanded from a customer.

While smaller players often tend to have a larger overall share of customi-

zation, extreme small batch sizes and even custom board development are

mostly found with suppliers that also sell chips (see Kontron, Advantech,

etc.).



Strategies for Success

Industrial PC suppliers have to react to increasing competition and tech-

nological developments and apply different strategies to cope with

competition, plus price and margin erosion.

Industrial PC Market Strategies

There are two ways that we can systematically look at the strategies. Chap-

ter 3 and looks at the product portfolios and the offerings of the different

suppliers. The other is to look at the supplier’s two main strategic issues:

strategy towards customers and strategy towards competitors. Figure 1-16

explains the methodology and the way the suppliers were clustered.

Figure 1-15: Segmentation by Strategic Position

The analysis shows that aggressive visionaries are by far the largest suppli-

er group in terms of IPC revenue per company. Cash miners follow. Safe

players are the smallest group, but those companies usually have only a

low percentage of their total revenue in IPCs. This group is relatively small

because it includes a lot of smaller Taiwan-based companies that compete

on price with their IPCs, but nevertheless address a clearly defined market

that grows so fast that further expansion is not necessary.



Revenue Analysis # Analysis

Average IPC revenue

Revenue in USD

% of total market

# of companies

% of sample

Aggressive

Visionaries $ 618 39% 11 18% 56

Safe Players $ 206 13% 23 38% 9

Cash Miner $ 473 30% 11 18% 43

Product Suppliers $ 283 18% 15 25% 19

Figure 4–16: Analysis of Strategy Groups

Recommended Strategies for Success

During interviews with experts and leading industrial PC suppliers, ARC

obtained insight into their strategies and worked out some common deno-

minators and best practices for the industrial PC market.

Positioning within the Portfolio and Solution Business

The supplier strategies figures indicate that a solution-driven business ap-

proach helps suppliers perform better in the market for industrial PCs.

This includes customization, industry domain expertise, and demands a

well-developed product portfolio of the supplier.

While some suppliers leverage their own size to enable economies of scale

with industry- and application-specific solutions, other supplier concen-

trate on their ability to leverage a modular hardware platform in

combination with specific software. Both strategies enable a supplier to

stay cost effective.

While, solutions-based offerings are widely applied in developed econo-

mies, this is much less the case in emerging markets. ARC expects that the

success of a solution-based business approach in emerging markets will rise

as the economic growth continues to slow down and end users have to fo-

cus more on KPIs (such as overall equipment effectiveness) and will

therefore start to use more and more intelligent automation equipment.

Use a Flexible Approach to your Value Chain

While several (predominately German) suppliers emphasize that they not

only design their own boards and other hardware products, but also build

them. Other suppliers have a more flexible approach to the build vs. buy

decision.



Automation suppliers often use Taiwanese companies as a source for in-

termediate goods such as chips, RAM, and motherboards. Several

European and US-based companies also brand lable Taiwanese PCs. Beijer

Electronics took another path and bought Taiwan-based Hitec.

While it could make sense for some suppliers to use the “not made in Tai-

wan” strategy for sales and quality management, ARC is convinced that a

well-monitored supply chain could bring together the benefits of both

worlds to ensure sustainable business success. This is especially true since

displays and other parts in panel computers usually already purchased

from a third-party supplier.

Exploit Increasing High End Automation Requirements in Emerging

Markets

Emerging markets are moving ahead technically, as well as economically.

Production technology has moved forward and is starting to catch up to

Western standards. Even though many suppliers have developed specially

designed operator panels to fit the demand in emerging markets, this is not

the case for industrial PCs.

One of the main differences between production approaches in established

vs. emerging economies is that machines in emerging economies are typi-

cally less connected. As the success of Advantech and other Taiwan- and

China-based companies demonstrates, demand for industrial PCs in emerg-

ing markets is high and still rising.

Search Out New Markets

The flexible nature of IPCs enables use

within a wide array of applications other

than manufacturing. ARC estimates that

the market for IPCs for other than manu-

facturing use is roughly USD 2.3 billion.

This includes mobile PCs (such as Pana-

sonic’s Toughbook) and also box PCs used

in trains or infrastructure. The market size

studied only includes those companies

that are also active in the area of automa-

tion and thus represent only a small

fraction of the overall market for indu-

strialized PCs and embedded systems. Figure 1-17: Current Markets for IPCs besides

Manufacturing



While some markets, such as military or marine, demand specific certifica-

tions and technical features, other markets are easier to enter. The market

for infrastructure systems in particular is booming in merging markets and

also represents a relatively stable stream of revenue.

Standardize Hardware and Differentiate through Software

Hardware is becoming commoditized. Suppliers should increasingly em-

phasize the value of software that differentiates them from their

competitors. Not only does hardware design offering limited possibilities

for differentiation, it also consumes considerable R&D expenditures. On

the other hand, economies of scale could be realized by using one hardware

platform for many products that are largely differentiated only though

software.

Monitor Consumer Electronic Markets

Consumer electronics markets are important to IPC suppliers for many rea-

sons. First, many technological advances, like multi-touch for panel PCs,

originate in consumer electronics markets. Consumer electronics markets

also provide an indication of which products will be built en masse in the

future. The latter is a double edged sword, since it could mean cheaper in-

termediate goods due to increased production capacities, but it could also

create chip shortages in 2010, when and if the economy recovers.

In addition to the markets for netbook and notebook computers, which

have many similar requirements with industrial PCs, other interesting con-

sumer electronics markets to monitor include digital picture frames, which

can alter the demand and supply situation for panels.

Industrial PCs Worldwide Outlook • Scope


Chapter 2

Scope

This study can serve as an effective planning guide for both current suppli-

ers and new entrants to the market, as well as for technology users seeking

to gain a better understanding of the marketplace. By providing strategic

market information for internal use by our clients, ARC studies aim to help

suppliers develop business plans for marketing and product development

and help technology users make better-informed decisions. The informa-

tion contained in the study is “client confidential” and should not be used

externally or republished without express written consent from ARC.

In addition to our traditional “hard copy” outlook reports, ARC now offers

two new products that provide the market intelligence suppliers need to

gain a deeper understanding for allocating resources across countries and

industries. These are Market Intelligence Service (MIS) and Regional Stu-

dies with Country & Industry Forecasts.

ARC’s Market Intelligence Service is a business knowledge base containing

market data on manufacturing automation and software solutions. Build-

ing on ARC’s traditional market studies, MIS puts ARC data into a

powerful relational database supporting more than 50 product categories in

over 20 vertical markets in all regions of the world. The Market Intelligence

Service provides you with instant access to market intelligence right at your

own computer. This means the data is available when and where you need

it. You can export statistics to PDF format or directly into an Excel spread-

sheet to combine with your own facts and figures and analyze and perform

“what-if” scenarios for the specific markets in which you’re interested. The

web-enabled application ensures that you have instant access to the most

up-to-date information from ARC.

ARC now also offers Regional Studies with Country & Industry Forecasts

for all key automation and software solutions. These studies provide both

regional market shares of the leading suppliers and market forecasts by

country and industry. You can purchase these market studies in several

different formats, including On-Demand License, Excel Report, PDF Re-

port, or Hard Copy. The On-Demand License offers unique features not

available in other formats. Regional studies include country and industry

forecasts.



Please visit our website at www.arcweb.com for more information on these

products.

Key Issues Researched

This study looks at industrial PCs (IPCs), including both hardware and

bundled software. The study answers a number of relevant questions for

automation suppliers, in particular:

How large is the market for IPCs and its sub-segments? Who are

the main suppliers and what are their respective strategies and

product portfolios?

How large is the market for embedded IPCs?

What is the growth potential for the next five years and how will

the market react to the economic downturn?

What portions of the overall market for IPCs have the greatest

growth potential?

How does the growing popularity of programmable automation

controllers (PACs) impact the IPC market? Are IPC’s compatible

with PACs?

Manufacturing and Non-Manufacturing Applications

IPCs are important in both manufacturing and many other industrial and

commercial applications, including marine, building automation, telecom-

munications, military, and infrastructure. While this study focuses on the

manufacturing applications, since these non-

manufacturing applications provide excellent poten-

tial for automation suppliers to expand beyond their

traditional markets, the study also covers them to a

certain extent.

This study excludes board PCs and any revenue re-

sulting from business with PCI cards that are sold

separately. Manufactucturing and Non-Manufacturing

http://www.arcweb.com/



Study Structure

This study splits IPC hardware into

three categories: embedded PC, stan-

dard IPC, and peripheral hardware.

Together, these three categories add

up to 100 percent of the hardware

business. Some ruggedized PCs and

IPCs are sold without any software.

IPCs with nonvolatile (NV) RAM have

no rotating parts (fan, hard drive). The

peripheral hardware category includes

all PC-based hardware sold in a bun-

dle with IPCs (mouse, keyboard, screen/monitor, mountings for panel PCs,

etc.). This study only includes hardware used with an IPC and sold togeth-

er with the IPC. Thin clients that includes devices that are bound to work

with a PC, e.g. Siemens’ thin client, are included in this study.

IPCs without software could be part of embedded or standard IPCs. Spe-

cial ruggedized PCs are typically embedded.

Embedded and standard IPCs are further split into hardware categories

(see graphic). Since box, panel, and rack mount IPCs could be used as ei-

ther an embedded system or a standard IPC, they appear in both categories.

Embedded rack-mounted IPCs are primarily

used in electric power plants.

This study only covers software (operating

system or application) sold in a bundle with

an IPC. While bundled application software

only represents a small percentage of the

overall IPC market, we’ve attempted to fur-

ther split the bundled application software

segment into specific application types (control, HMI, etc.).

The market researched in this study only includes software provided by

automation suppliers that also offer IPCs and which is sold in a bundle

with an IPC. Other software, including software provided by suppliers that

exclusively sell software, is covered in other ARC market outlook studies.

Structure of IPCs for Manucfacturing

Split of Embedded and Standard IPCs



Market Size and Forecast Definitions

ARC derives market size figures from its extensive in-house databases and

in-depth interviews with leading suppliers. ARC defines the base year

market size in terms of shipments by industry participants, not by bookings

or orders. Margins earned by distributors and other sales channels are ex-

cluded. Average selling price (ASP) reflects factory-level pricing.

A combination of factors, including user projections of future demand and

ARC’s assessment of the growth potential for each segment form the basis

of ARC market size and forecasts estimates. Five-year forecasts in this

study show long-term trends. The outlook for any business, however, can

dramatically change due to the rapidly changing technology and global

economic environment. ARC recommends clients obtain the latest updates

from ARC before making any important decisions.

Hardware

Industrial PCs are ruggedized and built to meet specific industry standards.

Typically, this means that they can be run around the clock and handle

harsh industrial environments, including the following operating condi-

tions:

Temperature: Minimum range of between 5 to 50 degree Celsius during

operation

Humidity: depends on application; embedded systems are sometimes

built to handle up to 95 percent humidity without condensation

Vibration: minimum 0.2g and shocks at minimum 1g

Guaranteed long term load: ≥ 2 years

Embedded vs. Standard

The definition of “embedded” varies from supplier to supplier and user to

user. While some only consider DIN rail-mountable PCs to be embedded,

other suppliers consider their pre-configured IPCs as embedded products.

ARC Advisory Group defines embedded IPCs as those that:

Have no rotating parts. We do not consider PCs with fans or a conven-

tional hard drive to be embedded.

Have pre-configured hardware and software designed to fit together to

work on a specific, pre-defined application. The concept could be de-

scribed as “plug & produce.”



Embedded PCs are sometimes headless, and the plug & produce concept

with pre-installed software allows the machine builder or end user to use

this PC without modifying the OS.

Embedded PCs require more customization since they typically have a

modular design to build the PC for a dedicated application. Please note

that a “pre-defined” application is not the same as a “pre-configured” ap-

plication, as many PCs are often delivered without software.

Form Factor and Housing

Hardware is further segmented by its physical packaging:

DIN Rail: A typical DIN rail-mounted IPC has modular design and mod-

ular I/O and can be used as a soft PLC. Examples include the Think IO

(Kontron) and Beckhoff’s embedded PCs.

Box PC: The typical box PC is compact and often headless. They are often

very rugged and can be used in widely varied applications. Universal de-

sign enables a box PC to be mounted either within or outside a machine.

Examples include Siemens’ BOX PCs and BEG Bürkle’s Box Line.

Panel PC: A typical panel PC has a monitor directly mounted with the PC

in a common housing. ARC also considers IPCs that are connected to and

productized with a screen to be panel PCs (essentially a box PC connected

to a screen). However, box PCs sold with a screen as a bundle are not con-

sidered panel PCs. In these cases, the screen is listed under peripheral

hardware, as long as it is able to handle industrial environment.

Rack Mount PC: Only IPCs designed to fit in industry-standard 19-inch

racks are included in this sub-category.

Software

This sub-category only includes software sold by industrial PC providers.

Other Software

This segment includes application software that is specifically programmed

to fit a certain automation requirement. Non-productized, software, cus-

tom-programmed by suppliers as part of service/solution business, is not

counted here.



Operating System

Operating systems include any proprietary or open source (e.g., Linux)

software necessary to run an industrial PC. Proprietary OS are part of the

other category. Real-time operating systems (RTOS) represent only a small

part of the market since ARC does not include third-party software suppli-

ers. Windows software includes all versions: 95, NT, 98, ME, 2000, XP, and

Vista.

Application

While embedded application software only represents a small percentage of

the overall industrial PC market, ARC has further segmented application

software provided by the IPC supplier into the following applications:

HMI

Vision

Logic control

Distributed control

Motion control

CNC

Robotics

Data acquisition

Communication gateway

It is important to mention that, like PACs (but unlike PLCs), many IPCs run

more than one application. This provides benefits relative to traditional

PLCs.

Industries

This study includes market data for IPCs sold into the discrete, process, and

hybrid manufacturing industries, as well as for building automation. While

ARC also asked suppliers to provide revenue data from naval and military

applications (which represent potential new markets for many of our

clients), this request specifically pertained to data on IPCs, rather than gen-

eral-purpose PCs. In the aerospace and defense industry, we’ve only

included data for IPCs used to manufacture these products, rather than in

the products themselves.

Sales Channel, Distribution, and Customer Segmentation

ARC analyzes market share by entities involved in the sale and purchase of

an automation product. ARC groups these entities into two sets: those that



sell or resell the product (”distribution channels”), and those that purchase

the product (“customer types”). This definition ensures total unit ship-

ments are the same for both sets and eliminates the possibility of “double

counting” units shipped. Distribution channels do not use, change, or

modify the product, though they may package it with other products or

brand label it. Customer types either use the product as is, or modify it and

add value, either by using it as a component in another product, or by con-

figuring it into a system along with other products.

Distribution channels (or sales channels) primarily include the suppliers’

sales staff, referred to as the “direct sales” channel; “distributors” that

stock, sell, and support products; and “independent representatives” that

do not stock products, but sell on commission. All customer types pur-

chase IPCs through one or more of these channels.

Distributors are well aware of the market demands in their regions as well

as of the market structure and competitive environment. Distributors that

stock IPCs can reduce delivery times for customers, while helping reduce

inventory and storage costs for the IPC manufacturers.

The customer types (or purchasers) that make up a market are the consum-

ers or “end users” of the product, original equipment manufacturers

(OEMs), and system integrators (SIs). OEMs incorporate the product as a

part of the equipment they produce and sell, while system integrators add

value by integrating the product with other components, software, wiring

application engineering, and domain knowledge to create systems for their

clients.

OEMs, end users, and system integrators have different criteria for selecting

suppliers. ARC includes shipments to OEMs within a region but does not

track imports and exports of IPCs contained within machinery. System in-

tegrators leverage their application expertise, knowledge about integrating

disparate technologies, and the value they provide to end users by taking

single point responsibility for overall system performance. Suppliers also

depend on SIs to smooth out fluctuations in demand for project services.

These factors ensure that SIs have a role to play, and more so when applica-

tions are complex or when products need programming or configuring to

suit an application.

Brand labeling is an important issue in the IPC market. Beside well-known

partnerships, many suppliers buy a part of their IPC assortment to com-



plete the offered product line. While this makes perfect sense in terms of

sales strategy, we do not include revenues earned through reselling in this

study.

Key Regional Segments

Geographically, ARC has divided the marketplace into four major segmen-

tations: North America, Latin America, EMEA, and Asia. North America

consists of the United States and Canada. Latin America is comprised of

Central America, Mexico, and South America. EMEA consists of Western

Europe, Eastern Europe, CIS, Africa, and the Middle East. Asia consists of

Japan, China, India, Taiwan, South East Asia, Korea, and Australia.

Geographic Segmentations

Key Currency Factors

To eliminate changes in market size due to ongoing currency variations,

ARC uses average exchange rates over a 12-month period running from

October 1 to September 30 for the leading currencies. Each year, ARC up-

dates the exchange rates used in our market analysis and forecasts to

portray the most realistic picture of the market possible. When comparing

ARC reports from different years, customers must take into account the on-

going changes in exchange rates that occur from year to year and use the

exchange rates given in each study to convert back to local currencies. All

ARC forecasts are prepared in current US dollars and are based on the as-

Latin

America

North America Europe

Asia



sumption that the current inflation rate of approximately 3 percent will con-

tinue throughout the period covered by this report.

Country

National Currency

(Abbreviation)

Exchange Rate National Currency

units per US Dollar ($)

European Union Euro (€) 0.68

Japan Yen (¥) 103.39

Swiss Franc CHF 0.68

New Taiwan Dollar TWD 31.52

Average Currency Exchange Rates Used In ARC Market Studies

Forecasts

The forecast includes a combination of various factors addressed to forecast

the future market for IPCs. The factors, as presented in Chapter 4, derive

from, 1) the economy and the business cycle, 2) the development of other

automation markets, and 3) trends in the IPC market itself. ARC analyzed

the identified factors in terms of the dynamics of their impact and their in-

terrelatedness. From a statistical point of view, this represents a previously

filtered time series to extract trends and cycles. The trend is considered to

be of a function that characterizes a random walk with drift (constant and

different from zero in the first difference), showing the typical Granger

shape. This allows the methodological combination of advanced time series

analysis and standard scenario techniques.

The threefold data basis represents the structure of the factors. ARC de-

termined trends in the IPC market and the impact of other trends on the

IPC market by a combination of interviews with IPC suppliers and primary

market research. ARC’s in-house database and expertise were used to fore-

cast the relevant automation markets and to assess of the growth potential

for each segment. Five-year forecasts in this study show long-term trends

as well as major business cycle influence. Forecasts of the market the busi-

ness cycle were based on careful observation and analysis of major national

and international organizations (e.g., IMF, WTO, OECD, World Bank).

The outlook for any business, however, can dramatically change due to the

rapidly changing technology and global economic environment. ARC re-

commends clients obtain the latest updates from ARC before making any

important decisions.



Figure 2-1

Standard Industry Code Classifications - Process Industries

Process Industries SIC Code NAICS Code NACE Code

Cement & Glass 32 327 26.1-26.8

Chemical & Petrochemicals 28 (except 283

& 284)

325 (except 3254 and

3256)

24.1, 24.2, 24.3, 24.5, 24.6, 24.7

Electric Power (Generation , T&D)

491, 4931 2211 40.1

Food & Beverage 20, 21 311, 312 15.1-15.9,

16.0

Metals (Primary Production) 33 331 27.1-27.5,

37.1

Mining 10, 12, 14 212 10.1-10.3, 12,

13.1-13.2

Oil & Gas (Exploration, Pro-

duction) 13

211, 213111,

213112 11.1, 11.2

Oil & Gas (Pipelines) 46, 492 486, 2212 40.2, 60.3

Oil & Gas (Refining) 29 324 23.1, 23.2

Pharmaceutical & Biotech 283, 284 3254, 3256 24.4, 24.5

Pulp & Paper 26 322 21.1, 21.2

Textiles 22 313, 314 17.1-17.7

Water & Wastewater 494, 495 2213 41, 90



Figure 2-2

Standard Industry Code Classifications - Discrete Industries

Discrete Industries SIC Code NAICS Code NACE Code

Aerospace & Defense 372 & 376 3364 35.3

Apparel, Footwear & leather products

23, 31 315, 316 18.1-18.3, 19.2-19.3

Automotive 371, 375, 379 336 34.1-34.3, 35.4-35.5

Building Automation 15, 3534, 3564 3339, 3334 45.3

Electronics & Electrical 36 (except

3674)

335, 3341, 3342, 3343,

3346

30.0, 32.1-32.3, 31.1-31.6

Semiconductors 3674 3344 24.61

Fabricated Metal Products 34 332 28.1-28.7

Furniture & Wood Products 24, 25 3219, 3371,

3372 20.1-20.5,

36.1

*Machinery 35 (except 357) 333 29.1-29.7

Medical Products 384, 385 3391 33.1

Plastic & Rubber Products 30 326 25.1, 25.2

Printing & Publishing 27 511, 323 22.1-22.3

Other Discrete 381, 382, 386,

387, 39 3345, 3399

33.2-33.5, 36.2-36.6

*"While most machinery manufacturers fall under this segment, there is also a large quantity

of OEM equipment that ARC accounts for within the respective end user industries, which is

excluded from the Machinery Industry. For example, controllers purchased as OEM

components for food processing or food packaging machinery is included in the figure for the

food & beverage industry and is not included in Machinery."



Figure 2-3

Standard Industry Code Classifications - Service Industries

Service Industries SIC Code NAICS Code NACE Code

Retail - Food & Beverage 54 445 52.2

Retail – Other 52, 53, 55, 56,

57, 58, 59 44 (except

445), 45 52 (except

52.2)

Wholesale/Distributor - Food & Beverage

514 4224, 4228 51.3

Wholesale/Distributor - Oth-er

50, 51 (except 514)

42 (except 4224, 4228)

51 (except 51.3)

Transportation & logistics 42, 44, 45, 47 481, 482, 483, 484,

488, 492, 493

60.2, 61.1-61.2, 62.1-62.2, 63.1-63.4, 64.1

Industrial PC Worldwide Outlook • Market Shares


Chapter 3

Market Shares

Although relatively mature, the market for industrial PCs (IPCs) remains

fragmented, with many companies still able to position themselves as niche

players and as generalists. This includes well-known companies like Stahl

HMI, but also lesser-known companies like Noax. In addition to IPC prod-

uct specialists such as these, the market includes focused automation

suppliers like Pepperl+Fuchs and Phoenix Contact, full line automation

suppliers like Siemens and Rockwell Automation, and PC-based automa-

tion suppliers like Beckhoff and B&R. Furthermore,

hundreds of Taiwanese companies supply IPC products

either directly to the market or to other IPC suppliers.

Market Overview

A large number of different players characterize the

market for industrial PCs. The main differentiator be-

tween players is whether they also supply “classical”

automation equipment, such as PLCs or proximity sen-

sors, or focus exclusively on PC-based products. The

latter category includes many Asian companies. How-

ever, other important characteristics also determine the

strategy and the success of a particular supplier.

The fragmented, unconsolidated nature of the IPC mar-

ket, with only one-sixth of the suppliers analyzed

having a market share above 2 percent, made it imposs-

ible for ARC to segment different players into any

particular market size group.

This fragmentation is due in part to the attractiveness of

the industrial PC market for various companies. For

automation suppliers, IPCs offer the opportunity to

build a scalable, open, and flexible product that they can

use to enter new, non-manufacturing markets. For

companies that supply PC cards and boards, IPCs pro-

vide a logical stepping stone up the value chain.

Figure 3-1: Market of IPCs by

Competitor

Industrial PCs Worldwide Outlook • Market Shares


One of the most important topics discussed in the market is the build vs.

buy decision. Depth of production varies greatly between suppliers and

touches all aspects of an IPC. Many companies use boards from Taiwan in

their IPCs. Many companies also brand label IPCs from other suppliers,

predominantly Taiwanese suppliers. Some companies design their own

boards, but have them manufactured in Taiwan. Others do it all. The last

topic even extends to the operating system, where some companies use

proprietary software (primarily Unix-based), while others use Microsoft

Windows. The current trend is towards the “buy” (brand label) rather than

the “make” strategy, since IPC technology is relatively mature and numer-

ous manufacturers offer “plain vanilla” products suitable for brand

labeling.

Number of

Companies

Companies

in %

Revenue in

USD

Market

Share in %


Product Supplier 29 48% $ 711 45%

System Provider 17 28% $ 367 23%

Solution Provider 8 13% $ 455 29%

Figure 3-2: Segmentation by Strategic Position

We’ve described the main technology and application trends in Chapter 4.

While customer needs trigger most of the trends, suppliers also drive some

trends to position themselves in the market.

Solutions providers typically have in-depth knowledge of their customer’s

(machine builders or end users) requirements and provide a package of

hardware, software, and services tailored to those needs. Many solution

providers have modular, standardized products ready to customize to a

customer’s specific needs. This strict definition of solution providers ex-

cludes most of the providers in the industrial PC market, since these are

either product or system providers. The number of solutions providers is

only 13 percent of all companies, but these 13 percent generate about 29

percent of worldwide revenue. The largest market share is made up by

product suppliers that often tailor their products to dedicated applications.

Component suppliers still primarily doing component business as compo-



nents (such as boards) only make up 3 percent of the market. Kontron, for

example, is segmented as a product supplier.

The IPC market,

which will continue to

grow over the long

run, will continue to

attract new competi-

tors. New entrants

include both PC or PC

component suppliers

from Taiwan, and au-

tomation suppliers

seeking to enlarge

their PC business.

The unique product

and long-term sup-

port requirements of

some industries

represent a barrier to

market entry.

In the fragmented and

highly competitive

IPC market, Asian

suppliers are driving down prices for these largely commodity products.

The market dominance by system or solution providers that can offer sin-

gle-source supply represents another barrier to entry; companies that also

offer automation equipment have captured roughly 50 percent of the mar-

ket. The pressure to be able to provide one-stop shopping increases the

attractiveness of brand labeling. B&R, Beckhoff, Baumüller, Eaton, Kon-

tron, Mitsubishi, Schneider Electric, and Siemens all use brand labeling or

sales/technical partnerships to expand their product portfolios in one way

or the other.

Indicator Current State Trend

Market Maturity Growing, technology

still improving Slowly aging

Revenue 2009 USD 1,804 8,8 % CAGR

Potential to 2014 & CAGR

USD 2,749

Prices 500 to 10000 USD

Slow price erosion and increasing capa-

bilities

Competitors About 10 with global

relevance Constant

Technical Change

Technology is devel-oping in two ways: 1.

Smaller more dedi-cated to have PAC

functionality 2. More computing power

These two direction will continue to drive

the market.

Figure 3-3: Operator Panels – a Brief Market Overview



In Asia, price plays a larger role than in Europe. This is largely due to the

demand for products, instead of systems or solutions. As a result, barriers

to entry are lower in emerging economies than in Europe or North Ameri-

ca. Typical new entrants to

Asian market are display or

panel PC providers.

Competitive Analysis

The next section clusters and

analyzes players that are active

in the market for industrial PCs.

Table 3-2 already clustered the

players by sales strategy. This

table shows that solution pro-

viders have secured the second

largest market shares and is the

only group that revenues ex-

ceeded the market average I revenue by company. Component suppliers

are less competitive and even though they are 10 percent of the analyzed

market, they are only responsible for 3 percent of the revenue made. It is

important to stress that these companies have the highest percentage of

brand labeling revenue from all sales strategy groups and their actual mar-

ket share is therefore larger than 3 percent.

Segmentation of Industrial PC Vendors

The old automation hierarchy, with strictly segregated layers for controllers

and operator panels, is slowly fading away.

On the one hand, suppliers that are rooted in this old hierarchy are moving

towards common architectures, such as PACs, and are merging automation

layers. On the other hand, new suppliers, rooted in PC-based automation,

are also penetrating the market for operator panels using open architec-

tures. Both solutions, whether PAC- or IPC-based, are complementary in

some areas, and thus do not yet face product cannibalization on a large

scale.

Barriers to entry Factors that attract

new competitors

Difficulties to implement spe-cific industry requirements

Scalable product with easy to implement “buy” decision for

components

Price competition with Asian suppliers

Growth market

Lack of customer base Technological change offers the

chance to “get the next train”

Longivity and support of product

For one stop automation shop-ping much non-PC technology

is needed

Figure 3-4: Factors determining the competitive environment



Full Line Automation Sup-

pliers

Focused Automation

Suppliers

PC-based control

Supplier

Pure IPC Supplier

Specialized in Silicon

Business Model

Offer complete set of automation products and solu-tions

Offer selected set products and solu-tions; rooted in the PLC architecture

Offer variety of PC-based products; rooted in the PAC/ PC architecture; solution business less developed

Focused on prod-uct business; brand labeling as sales channel

Sell IPCs in order to participate more in the value chain; core business re-mains boards and cards

IPC Port-folio

Varies heavily, from complete to basic functionality

Not complete, only some IPCs in port-folio

Mostly complete, large share of em-bedded PCs

Complete Mostly Complete

Regional Spread

Global Global with strong regional focus

Global with re-gional focus

Global to regional Global in compo-nents, regional in IPCs

Industry Split

All industries Few focus indus-tries

Several focus in-dustries

Spezialists and Generalists

No industry focus

Examples Rockwell Automa-tion, Siemens

Hitachi, Mitsubishi Electric, Omron, Phoenix Contact

B&R, Beckhoff, National Instru-ments

Aaeon, Advantech, BEG- Bürkle, Boser, Evoc, Noax, TCI

Axiomtek, ICP Electronics, Kon-torn, NEC

Market Share

19 percent 16 percent 23 percent 25 percent 17percent

Figure 3-5: Supplier Segmentation by Business Model

Full line automation suppliers: This category refers to suppliers that offer

the complete range of automation products, from sensors to planning soft-

ware. Although each player has a certain focus in this hierarchy, they share

similar business models. Examples are GE Fanuc, Siemens, Rockwell, and

Schneider.

Focused automation suppliers: These companies are also rooted in the old

automation hierarchy, but do not have a complete portfolio. This category

includes companies that are specialized, such as Stahl HMI, and companies

that have a strong focus, like Kuhnke, as well companies that have a wide

portfolio, like Omron or Mitsubishi.

PC-based control suppliers: These companies focus on PC-based automa-

tion products, including companies that are already well-established in the

IPC market, like Beckhoff or B&R.



Pure IPC supplier: This category includes companies that specialize in in-

dustrial PCs and are primarily (though not exclusively) offer IPCs. While

they are often based in Taiwan (Aaoen, Boser, etc.), there are also many Eu-

ropean companies (Noax, BEG-Bürkle, etc.).

Specialized in Silicon: These players offer nearly everything that has to do

with silicon, including IPCs. While their silicon business is global, their IPC

business is still regionally focused (see NEC). Often, they are not focused

on a specific industry.

Taiwanese Suppliers

Intel makes nearly one fourth of its revenue in Taiwan, which helps explain

the importance of Taiwanese IPC suppliers and the need for further com-

petitive analysis.

Figure 3-6: The Case of Taiwan

We’ve analyzed 13 Taiwanese companies that supply IPCs to the global

market. Many more companies are not visible. Our analysis does not re-

flect the total revenue generated by these Taiwanese firms, since many

specialize in board-level or other intermediate products, or in brand-labeled

Number of Companies

% of WW market

Revenue in Mio. USD

% of WW market

Taiwan 14 23% $ 335 17%

Number of Companies

% of Tw market

Revenue in Mio. USD

% of Tw market

Speciallized in IPCs 7 50% $ 265 79%


PC based automation Supplier 1 7% $ 12 4%

Focused Automation Company /

Full line Automation Supplier /

14 100% $ 335 100%

Number of Companies

% of Tw market

Revenue in Mio. USD

% of Tw market



System provider /

Solution Provider /

14 100% $ 335 100%



IPCs (see chart). There are no system or solution providers in Taiwan, and

all companies have a focused portfolio.

Though many Taiwanese companies are now trying to establish themselves

as solution and system providers to the European market, this is often an

uphill battle, both from a portfolio perspective and because Taiwanese

companies as a whole do not have a great image in Europe.

The Case of Embedded

ARC defines “embedded” PCs as those with no moving parts and that are

designed and built for a specific, pre-defined application. This strict defini-

tion excludes many products that the suppliers identify as embedded PCs,

since these often have

rotating parts or are not

designed to fit a pre-

defined application.

Figure 3-7 shows that

there is a structure to the

number of embedded

PCs by strategic position-

ing. Solution providers

offer embedded PCs in

their portfolios to be able

to complete their solu-

tions. System providers have the lowest level of embedded PCs. Compo-

nent and product suppliers offer a large range of embedded PCs, since a

pre-defined hardware is a sales argument.

Business Models and Sales Channels

Sales channels can differentiate an IPC supplier and help avoid harmful

price competition to provide a strategic advantage. Figure 3-7 shows the

different sales channels for different business models. The two companies

rooted in the PLC world (focused automation suppliers and full line auto-

mation suppliers) show a general trend: the larger the portfolio (and the

company), the larger the share of direct sales. Looking at PC-rooted sup-

pliers (not highlighted) the opposite seems to be true. This is because the

more component-oriented businesses of both silicon specialists and pure

IPC suppliers require a high degree of customization.

USD Embedded PC

% of total in IPCs

% of revenue in Group

Component Supplier

$9 3% 19%

Product supplier $148 56% 21%

System provider $48 18% 13%

Solution Provider $59 22% 13%

Figure 3-7: Embedded PCs in the IPC Market



Figure 3-8: Sales Channel by Supplier Type

The difference in sales channels also emphasizes the problem many Taiwa-

nese supplier encounter: successfully selling solutions or products in

Europe require both a large sales/service force and a different business

model. European suppliers, however, have similar difficulties in Asia.

SWOT Analysis of Business Models

Each business model in the segmentation above has its own strengths,

weaknesses, opportunities, and threats (SWOT). Please note that the busi-

ness models described are an ideal representation. Even though we list

company names as examples, the segmentation is only a best fit. For exam-

ple, B&R could also be segmented as a focused automation company.

ARC looks at the business models with certain indicators. These include:

Expansion refers to how aggressively companies are searching for new

markets and whether they are doing so with aggressive price competi-

tion or innovation.

Innovation is evaluated in terms of speed, customer focus, speed to

market, and gained value-to-price propositions.



Technology and assets create barriers to entry in the form of know-

how (technological, customer needs), and tailored solutions.

Operational excellence reflects a company’s ability to operate with low

costs, maintain price leadership, and offer global services.

Customer intimacy considers brand loyalty, customer knowledge and

cooperation, and price positions.

SWOT: Full-Line Automation Suppliers

Full-line automation suppliers’ broad portfolios and regional and industrial

spread is a double-edged sword. These help to stabilize growth and

enables larger R&D expenditure, but their sheer size makes these compa-

nies less flexible.

Strength No need push either PLC or PC technology

Large R&D investments are possible

Solution business on the basis of standard in-house products

Strong financial position

Economies of scale in production

Market Power through installed base

One worldwide service network

Weakness Organization overhead

Lack of customization that exceeds standard products

Industrial PCs are often not the core business

Late market entrance in growing niches

Legacy costs (technological, etc.)

Opportunities Two-way strategy (product and solution) Regional price discrimination with solution business

Acquisitions

Fast supply of solutions in identified growth markets

Large R&D expenditures

Trend towards complete solutions for OEMs (including mechatronics)

Support OEM services with leverage of installed base

Threats Asian suppliers for product business

Established markets maturing

Figure 3-9: SWOT for Full-Line Automation Suppliers

Their core strength results from their size (large R&D investments, financial

position, worldwide network, economies of scale, and many in-house



products available), however, some opportunities remain largely unex-

ploited. For example, R&D expenditures are often relatively low, or focus

too much on hardware. Even though these large companies have the pos-

sibility to leverage economies of scale, operational excellence can suffer due

to organizational overhead. Though many offer a sufficient level of custo-

mization (adjustment of front plate, chose among the various standard

modules) large suppliers are less open to new development from custom-

ers.

The rise and the growing importance of Asian suppliers represent the most

important threat. Products typically represent a large percentage of the

full-line automation suppliers’ overall business. This often places them in

direct competition with Asian IPC product suppliers, who up to now, could

only compete on price.

Certainly, this group is successful in the market, making up 9 percent of our

sample in the market research and accounting for nearly 20 percent of all

revenue. Obviously, Siemens’ sheer bulk bias’ the results here to a certain

extent.

SWOT: Focused Automation Suppliers

Focused automation suppliers represent perhaps the most diverse group in

this analysis. They typically provide products and solutions for certain lay-

ers in the automation hierarchy. Their IPC-specific focus is relatively small

and even though those companies make up 30 percent of the study sample,

they account for only 16 percent of the revenue. Notably, these companies

are nearly exclusively based in North America, Europe, and Japan.

IPCs typically represent only a small portion of their overall portfolio.

However, the strength of focused automation suppliers in specific indus-

tries and/or regions makes it relatively easy for them to expand into new

markets. For many, investments have to be carefully planned, since finan-

cials are sometimes limited (many in this group are small-to-medium-size

enterprises). Many of those focused companies gain experience from com-

plete automation suppliers that enter these attractive niche markets as soon

as they reach critical mass.



Strength Either solution or operational excellence driven

Clear position of company

Very strong in core markets (price / technology)

Strong participation in core market growth

Weakness Often not complete IPC portfolio

Rooted in the old automation world – strong position is a double edged sword

Lack of network (sales/services) in not-core markets

Investments in R&D and Infrastructure is often not possible – decision needed

Sometimes not enough in-house products to be solution provider or one-stop shopping provider

Opportunities Markets with similar needs of the core market offer growth possibilities

Growth through regional spread or technological enlargement is possible

Acquisitions create less redundancies

Customer centric innovation in saturated markets

Specialists move into new regional markets with existing solutions

Threats Total dependency on one or a small number of core markets (industries and regions)

heritage costs of old products could be large

Broad automation suppliers that penetrate niche market

Product business in mature markets will decline

Price competition

Figure 4-10: SWOT for Focused Automation suppliers

SWOT: PC-Based Control Suppliers

The companies in this segment experienced tremendous growth during the

last years. Benefiting from the ongoing success of PC-based control in gen-

eral and individual achievements in operation excellence, many have

successfully established their brand in the market. PC-based control sup-

pliers can efficiently leverage the modularity of their key product to offer

front office flexibility, with standardized modules for manufacturing lines.

This group represents 12 percent of the study sample and makes up 22 per-

cent of the revenue.

European companies dominate this group, but some companies from Asia,

the United States, and Taiwan are also represented. The Taiwanese com-

panies often lack deep domain knowledge of the automation business in

mature economies, and thus predominantly focus on their home market.

Some Taiwanese and Chinese PC companies are also trying to establish

themselves as PC-based control suppliers.



Strength Leverage of modular, scalable and adjustable core product

PC technology in automation is a boom market

industrial PC is the core of business

high speed of innovation

Often technology and/or price leaders

Focused on industries gives clear market position

Weakness Some companies (especially from Taiwan) lack automation knowledge

PC focus sometimes needs missionaries - costly

Lack of network (sales/services) in not-core markets

Investments in R&D and Infrastructure is often not possible – decision needed

Solutions need non PC-based technology

Opportunities Growth through regional spread or technological enlargement is possible

Open and scalable technology is easy to adjust to new requirements


Pressure towards operational excellence in Asian markets

As Taiwanese suppliers of boards and mezzanines move to industrial make/buy decisions could be reconsidered and leveraged

Threats Larger suppliers increasingly enter the market for IPCs

Asian suppliers move up the value chain

Differentiation in product business is hardly possible

Broad automation suppliers that penetrate niche market

Price competition

Figure 3-11: SWOT for PC-based Control Suppliers

SWOT: Pure IPC Supplier

IPCs are the sole or main source of revenue for pure IPC suppliers. This

includes both Advantech, a global, multi-million dollar Taiwanese compa-

ny, and BEG-Bürkle, a specialized German IPC supplier with roughly 14

million USD revenue. While most of the Taiwanese companies in this cate-

gory leverage their low production costs, small and specialized players

from mature economies focus on customer-centric innovations and devel-

oping a close relationship with their customers. Many have a product-

focused business and sales structures that directly connect them with OEMs

and end users (a strength that quickly becomes a liability when core mar-

kets suffer). The capital-intensive sales structure represents a hurdle to

exploring new markets, and the small size and relatively high prices make

these companies unattractive for brand labeling agreements or other part-

nerships. For this type of business Taiwanese IPC suppliers are much

better-positioned for this type of business than are those from mature econ-

omies.



Strength Leverage of modular, scalable and adjustable core product

PC technology in automation is a boom market

Technological leader for IPC hardware (European/US based suppliers)

Price leaders for IPCs (Asian suppliers)

customer centric innovations

Brand labeling business (Taiwanese suppliers)

Weakness Lack of network (sales/services) in not-core markets

Less visible for end users

Small niche players offer not enough benefits for a collaboration with large suppliers

Investments in R&D and Infrastructure is not possible for small companies

Solution business (need of non PC-based technology)

Lack of operational excellence (IPC suppliers based in US/Europe)

Some companies (especially from Taiwan) lack automation knowledge

Opportunities Growth through regional spread or technological enlargement is possible

Open and scalable technology is easy to adjust to new requirements


Benefit from brand labeling pressure of larger suppliers (especially Taiwanese)

High quality product business fin emerging markets

Threats Larger suppliers increasingly enter the market for IPCs

Asian suppliers move up the value chain and increase competition

Differentiation in product business will disappear

Price competition

Figure 3-12: SWOT for Pure IPC Suppliers

SWOT: Specialized in Silicon

This group of companies is perhaps the most diverse and heterogeneous. It

largely consists of hundreds of small to very small companies, mostly based

in Taiwan, that predominately produce chips and boards, but also have

some IPCs in their portfolios. Two companies in this group are particularly

noteworthy: NEC and Kontron. Both are still making large share of their

revenue with “silicon” but they developed a product and system business

that is well received in the market.

One of the greatest advantages these companies can and do offer is the abil-

ity to customize boards for specific applications. One of their best

opportunities is to collaborate with automation suppliers to bundle the dif-

ferent product in order to create systems/Solutions, or new automation

focused products. The strategic partnerships between Wago and Kontron is

one example.



Strength Modularity/scalability on a very deep technological level – ease of developing new products

customization of boards

PC technology in automation rising

Scale effects in board manufacturing

Cross over with consumer electronics

Buying power

Partnerships with Intel/Microsoft

Operational Excellence

Weakness Lack of automation knowledge in many cases

Automation specific trends are recognized late

IPCs in manufacturing are not core business

Solutions for OEMs and End Users

Service network is often present but not automation focused

Opportunities Brand labeling with other suppliers

Partnerships with automation suppliers

New markets could be entered easily

Threats Own products are offered by competitors in an automation bundle

Competition is large

Price pressure is ever increasing

Small value add with final assembly of PCs since the boards etc. are already made

Figure 3-13: SWOT for Silicon Specialists

Competitive Drivers

Competitive drivers for IPC suppliers can be organized into four areas:

bargaining power of suppliers, bargaining

power of customers, new competitors,

and new substitute products. This is illu-

strated in Figure 3-13.

New Competitors

The threat of new competitors entering

the market for industrial PCs is present

and significant. There are several reasons

for this.

The first group of candidates likely to en-

ter the market consists of suppliers from

the automation market. While nearly all

PLC suppliers already offer IPCs, most do

not view them as strategic products. In addition, mid-sized automation

Figure 3-14: Competitive Drivers

(Source: Michael Porter)



suppliers such as Turck, ifm, and Sick, are less likely to enter the market

since they already have well–defined, well-positioned product portfolios.

However, some suppliers still may enlarge their product portfolio when

they see strategic opportunities, either through acquisitions (Phoenix Con-

tact acquired Sütron, Pepperl+Fuch acquired Extec), strategic cooperation

(Wago and Kontron for industrial PCs), or through internal development.

New Product Substitutes

This is a major driver for competition in the IPC market. High-end opera-

tor panels directly compete with embedded industrial panel PCs since they

offer similar functionality and competitive pricing. While embedded panel

PCs offer the dedicated operating and monitoring tasks favored by many

machine builders, automation panels still offer some distinct advantages,

including fewer security issues and shorter implementation times.

Currently, the “worlds” of operator panels and industrial PCs are separate

but complementary. However, the rapidly growing automation panel sub-

set of the operator panel market will increasingly compete with IPCs.

Customer Bargaining Power

Typically, the larger a customer, the greater the bargaining power it has to

negotiate lower prices. After the 2009 recession, this bargaining power of

IPC customers will get only increase as the OEM machinery market further

consolidates, especially in Europe. The remaining machine builders will

not only have more bargaining power, but will also insist on more solu-

tions, rather than just products.

Supplier Bargaining Power

The most expensive single intermediate component for an IPC is the dis-

play. The display market is highly fragmented and will remain so as

consumer and industrial markets fan the flames of growth, creating oppor-

tunities for new entrants, especially in Asia. In terms of processor units, the

number of ARM chips (used in many automation devices, including IPCs),

is large, but Intel is making advances into this market with the ATOM pro-

cessor. So far, automation suppliers have been optimistic but not

enthusiastic about the ATOM and many are still waiting until volume pric-

es reach the level of about EUR 25 (USD 35) per chip.



Regional Markets

The regional markets differ significantly in their size and in their competi-

tive landscape. Each geographical region has slightly different ways of

doing business and each region has different technological requirements

and attitude towards IPCs. Many factors determine buying behavior.

These include cultural differences, differences in production processes, leg-

acy issues, and various other business issues.

Company Origin

Origin Sales

Concen-tration

% of Top Player

% of Top 2 Player

% of Top 4 Player

Asia

(Including Japan) $ 633 $ 592 Unconcentrated 12% 24% 42%

Japan $ 254 $ 208

Moderate

Concentration 27% 44% 71%

EMEA $ 824 $ 769 Unconcentrated 19% 34% 52%

North America $ 123 $ 229 Unconcentrated 18% 26% 39%

Latin America $ - $ 14 Unconcentrated 14% 26% 14%

Figure 3-15: Regional Markets and Market Concentration

Europe, Middle East, and Africa

While Europe hosts several of the largest players (Siemens, B&R, Beckhoff,

Kontron), there are also many small, specialized IPC suppliers. Many non-

European companies have tried to get a foot in this market, but most have

not had great success to date. Many Asian silicon providers have lost mar-

ket share to Kontron during the last years and Asian IPC specialists have

had a hard time establishing business in Western Europe. Many therefore

concentrate on brand labeling agreements, manufacturing IPCs for compa-

nies like Beckhoff.

For Western solution providers, the latest downturn forced some manufac-

turers to rethink their business models and to drive their production

facilities towards greater productivity and efficiency.

Companies from EMEA earn more than USD 824 in revenue. Most operate

globally, with subsidiaries across the world.



Asia

Figure 3-15 shows both complete Asia and Japan. The company origin and

origin sales numbers show how focused are the Asian and the Japanese

companies. In both cases, local companies mainly serve the local market.

While this is well-known in Japan, it is also true for the Chinese/Taiwanese

market. While the Japanese market displays moderate consolidation, other

Asian markets (including Taiwan) remain fragmented.

The buying habits of Asian machines builders and end users differ from

those of their European counterparts. In general, customers are less loyal,

which poses new challenges to automation suppliers. For this reason,

Asian markets could be better served by a product business approach that

stresses basic functionality and price. This also affects the sales channel,

and most Japanese and Asian suppliers depend heavily on independent

distributors, while many German IPC suppliers build up their own sales

channels, even for product business.

The industrial PC market in Taiwan is the one of the most dynamic world-

wide. In addition to many PC and IPC suppliers, many display

manufacturers and machine builders are located here. The Chinese and

Indian markets are perhaps the last markets that offer growth potential

without cutthroat competition.

The main barrier to entry in these markets is not only the strong price com-

petition, but also the Asian way of doing business.

The Americas

What Siemens is in Europe, Rockwell Automation is in North America.

Rockwell’s Allen-Bradley control equipment dominates the discrete indus-

tries here and Rockwell Automation is making inroads in the process

industries, especially the hybrid industries such as food & beverage, phar-

maceutical, and some parts of chemical.

Even with several pure IPC suppliers, North America has with the smallest

number of IPC manufacturers of any IPC market. Also, IPCs have not yet

caught on in North America to the extend they have in other regions.



Figure 3-16: Product Segmentation for Selected Suppliers

Embedded PCs

by Type

Standard IPCs

by Type

DIN Rail Box PC Panel PC Rack Mount 19" Rack Mount Box PC Panel PC

Aaeon AEC series AOP series, APC series

Adlink

Technology

DPAC, milsystem,

ruffsystem, readysystem

series

Advantech

UNO-1000 and

UNO-1100.

ARK-1300 & ARK-3300

series; ARK-3400

expansible compact

series, and the ARK-4000

Series PC

TPC 120H, TPC

660G, TPC 662G,

TPC 66SN, TPC

66T, and the TPC

30 series. UNO 4000

ARK 5280

series,UNO-2000

series, and the

UNO-3000 series

TPC 870 H, TPC 660E, TPC 1261H, TPC

1270 H, TPC 1770H , and TPC 1750 H;

AWS and IPPL

Aplex

ASEM

SMARTBOX, PB1300,

PB1200, PB1000, PB800

OT600, OT800,

OT1000, OT1200,

OT1300

eDOMO and

DOMO1000 (both

designed for

Building

Automation) PR90xx, PR40xx

PB500, PB600,

PB70xx

HMI600, RV500

WS500, WS500, WS500-TE, WS600,

WS600-TE, FT500, FT500-TE , FT600,

FT600-TE

AXIOMTEK

eBOX series, ICO-200 and

ICO-100

VTA Series,

PANEL2000 Slim

Client Panel

Computer

IPC121, IPC423,

IPC421, IPC221,

IPC220, IPC120

Vertical Purpose

Embedded

System PANEL1000 Series

B&R PC 620

Powerpanel 100

and 300 Bios;

Panel PC 300

APROL

Computers

PC 820

PC 620

Panel PC 400,Panel PC 700

Beckhoff CX series C51xx

IPC C61xx to IPC

C66xx

CP series; C33 Xx seres with 19"; C36xx

series

BEG -

Bürkle

FemtoBox

PicoBox

NanoBox*

CompactBox

ECOline and

PROline series

FemtoBox

PicoBox

NanoBox*

CompactBox

Boser

BBS 2xxx and BBS 3xxx

series BPF series BBS 1xxx series BBS 4xxx series BPC series

Contec

BX-100n Series, IPC-BX

950 Series, IPC-BX 840

Series, IPC-BX 800

Series, IPC-BX 720

Series, IPC-BX 701

Series, IPC-BX 360

Series, IPC-BX 10 Series IPC-PT 030 Series

IPC-BX 700

Series, PC-BX

900 Series

IPC-PT 020 Series, IPC-PT LS10 Series,

IPC-PT MV10 Series, IPC-PT SV10

Series, IPC-PT 700 Series

Eurotech

VIPER ICE, the Pegasus

ICE, and the Bx-400F-

N270 ICE-VIEW

GEMINI ICE 1U,

APOLLO ICE

1U,vAdRC-EXP1,

and APC-

INDUSTRIAL PC

VULCAN ICE, the

BX-400F, and the

BX-400P VX series

EVOC

Group

MEC-4004, MEC-8641,

TEP-DCU2001, MEC-

0031, MEC-1001, MEC-

3001, MEC-3002, MEC-

3003, MEC-4001, MEC-

4002, MEC-5002, MEC-

5003, MEC-5004

MEC-91011U,

MEC-91021U,

MEC-92012U,

MEC-94014U,

MEC-94024U

MEC-9403, MEC-

7001, MEC-8821,

MEC-8822, MEC-

8823(C), MEC-

3002, MEC-3003,

MEC-4001, MEC-

4002, MEC-9001,

MEC-9002, MEC-

9003 PPC series and EWS series, WPC-1201

ICP

Electronics Provided Provided

Kontron

ThinkIO (ThinkIO

Duo and ThinkIO

P)

CB 751, V Box, V Box

Express II, Jrex

Micro and Nano

Clients

1U, 2U and 4U;

3U CompactPCI

Systems

Concept Box, KIM

series and the V

Box Express V Panel and V Panel Express

Nematron

Corporation RM1400

nPC200 Series,

SB600/800 Series ePC-Series, ePC-Plus Series

Pepperl+Fu

chs

VisuNet GMP, VisuNet, IPC-Ex. Panel

PC VISUEX

Phoenix

Contact

IPC series (blind

nodes) PPC Line, Valueline, VMT series

Rockwell

Automation

6155R/F (200R), 6177R

(650 and 750R), 6181H

Hazardous Location

6180P Integrated

Keypad; 6181 P/F

— Performance 6177R (1450R)

Siemens

IPC427C, Microbox PC

427B IPC 477 C

IPC547C, Rack

PC 647B, and

Rack PC 847 B

Box PC 627B,

Box PC 827B Panel PC 577 AND 677 series



Leading Suppliers of Industrial PCs

All leading suppliers of industrial PCs have their unique strategies, making

it worth taking a closer look.

Siemens

Siemens remains the top player in this market with its comprehensive

range of products and services. As a complete automation supplier, Sie-

mens emphasizes the integration of its products with its key concepts of

Totally Integrated Automation (TIA) and Totally Integrated Power (TIP).

For the customer, an integrated product line means easier and shorter start-

up times, common configuration tools, and open communication between

devices. For Siemens, offering integrated products means that customers

are likely to purchase more components (one-stop shopping) rather than

having to integrate best-of-breed products from multiple suppliers.

Siemens positions itself as a system and solution provider. This strategy

requires an industrial PC portfolio that covers each segment and comple-

ments each product line.

Siemens is the only suppliers that offer a TÜV certified industrial Wireless

LAN for its Wireless products. In addition Siemens is the only company

that offers failsafe soft PLCs, which creates unique selling proposition.

Siemens is the largest automation provider in Europe. This forces other

suppliers to offer compatibility with the Simatic S7-series PLC. While Sie-

mens is also the market leader in industrial PCs, the distance to competitors

is much smaller in this market. With extensive IPC and PLC lines, Siemens

does not need to push one technology over the other and distributes both

through the company’s worldwide sales network.

While Siemens is traditionally strong in China, Taiwanese suppliers domi-

nate the Chinese IPC market.

There are some other companies are bigger industrial PC suppliers than

Siemens, since companies like Advantech or Kontron also focus heavily on

POS/POD, Kiosk, gaming, or military. Siemens strictly focus on manufac-

turing.

In Q3 2009, Siemens’ companywide revenue was down 4 percent, while

factory automation incoming orders dropped by 42 percent on a year-to

year-basis. Siemens Industry’s revenue through the first three quarters of



2009 dropped by 13 percent to EUR 8.1 billion. Siemens benefits from its

energy and healthcare sectors, which cushioned the drop in revenue from

Siemens Industry.

Advantech

Advantech is the only Taiwanese company accepted as a global IPC suppli-

er. Advantech focused on automation from the start, which differentiates it

from other Taiwanese suppliers. One of Advantech’s first products were

IO modules.

Advantech is also strong in brand labeling, with between 20 to 40 percent of

its revenue gained from brand labeling. However, the company mainly

brand labels products for non-manufacturing applications.

Advantech also focuses on growth markets like energy production and

building automation, and on key applications, like energy monitoring. Ad-

vantech benefits from its regional strength in China and emerging Asia and

from the large number of greenfield projects in this region. China is Ad-

vantech’s biggest market. Advantech also benefits from the strong demand

from infrastructure projects in emerging economies.

With IPCs as its core product, Advantech offers a degree of customization

that very few other suppliers can match. Advantech also builds boards

and other intermediate products for specialized applications that require

specific form factors, connectivity, IO modules, industrial Ethernet, etc.

B&R

B&R stands out as a fast-growing company with a strategy of engaging

high-level technical personnel and developing leading-edge, scalable, and

customizable products. B&R is growing fast by capturing OEM customers

with proven solutions -- a business model that focuses on providing

project-oriented, broad-level solutions for machine builders. B&R leverages

it modular product design to keep development keep costs low, while re-

investing approximately 18 percent of sales in R&D.

Even though 2009 was also a tough year for B&R in terms of revenue. The

company continues to acquire new customers. B&R continues to expand

globally and has opened many new offices worldwide, primarily in growth

regions such as China, India, and Eastern Europe. The company’s strategy

is to gain market share by convincing its customer base of the high value



proposition of its solutions, accompanied by project services with attention

to detail.

In the industrial PC market, B&R is one of the top players in terms of reve-

nue and technology. B&R’s embedded IPC product line focuses on panel

(PC620) and box IPCs (Powerpanel 100 and 300 Bios; Panel PC 300). The

standard IPC line also focus’ on these areas (Box: PC 820 and PC 620, and

Panel: Panel PC 400,Panel PC 700). One B&R strength is modular design, a

key feature in any product line. For example, panel PCs could be pur-

chased with the PC 620 series core. Modular design is a key strength that

gives the customer a great variety of choices. B&R also leverages PC tech-

nology in other products, such as PACs.

Beckhoff

While most companies emphasize their PC technology, nearly every prod-

uct that Beckhoff offers is based on PC technology. Beckhoff is well-known

for its DIN rail PCs, a segment in which it is a clear market leader. Beckhoff

experienced double-digit growth rates prior to the crisis.

The core of Beckhoff’s strategy is an open automation system based on PC-

based control technology. The product range covers industrial PCs, IO

modules, and fieldbus components, drive technology, and automation

software. Beckoff designs its products to able to be used as separate com-

ponents, or integrated into a control system. The Beckhoff “New

Automation Technology” philosophy stands for universal and open control

and automation solutions for a wide variety of applications.

Beckhoff supplies industrial PCs for control requirements and has a strong

focus on building automation. Like all industrial PC suppliers, Beckhoff

leverages the modularity of the product, but the company still has some

holes to fill in its portfolio (such as embedded panel PCs).

Conceived as a pure software PLC, TwinCAT PLC allows up to four virtual

“PLC CPUs”, each running up to four user tasks on one PC. The embedded

PC line only includes the CX models, which are DIN rail embedded PCs - a

product for which Beckhoff is well known. The IPC lines C61xx to IPC

C66xx include box PCs that are primarily designed to be mounted in a con-

trol cabinet. Many offer modular design to include an individual number

of PCI cards. Nineteen-inch rack mount industrial PCs consist of one series,

the C51xx. Beckhoff’s control panels are not operator panels in the classical

sense, but touch/function key monitors for industrial PCs.



To enable an aggressive growth strategy, Beckhoff also brand labels part of

its portfolio.

Kontron

German-based Kontron has succeeded in doing what many Taiwanese

companies are still trying to achieve: to develop a complete IPC portfolio

for nearly all industries as well as a well-established and well-known busi-

ness in parts and intermediate products.

For Kontron, industrial automation is a relatively small part of its overall

business, enabling the company to do well through 2009, largely due to its

business in telecommunications and infrastructure.

As a global supplier of boards and cards, Kontron competes with many ris-

ing companies in Germany and is also a recognized player in China and

other emerging markets. Certainly, Kontron offers many features that oth-

er, automation-based IPC suppliers cannot. This includes custom board

design in small lots. Kontron backs its products with a standard three-year

warranty and guarantees that its products will be available for seven years.

Kontron Elektronik sells its industrial computers directly, as well as

through leading partners, system houses, and the company's own sales

forces. The Think IO is collaboration with Wago, which contributed IO

modules and other hardware.

While Kontron has managed to stay ahead of many of its competitors based

largely on the strict quality standards applied and the “made in Germany”

logo, Kontron will surely have to re-think its business model over the long

term.

EVOC Group

China-based IPC supplier, EVOC, provides embedded products and sys-

tem-integrated solutions for various applications, such as traffic systems,

electric power, telecom, sports, banking, gaming, medical care, energy,

manufacturing, and networking. The solutions business remains focused

on the embedded side – including custom board development for OEMs or

end users.

EVOC experienced 15 years of strong growth, benefitting from the general

growth in the Chinese home market. Now, EVOC is penetrating emerging

economies and trying to break into the industrial automation market.



EVOC has had only limited success establishing itself as an important play-

er outside of China and emerging Asia. This is partly due to its late market

entrance, partly to a lack of knowledge about the European machine manu-

facturing market, and partly due to its less developed product portfolio.

Rather than focusing purely on price competition, EVOC also invests heavi-

ly in R&D to enlarge its revenue share from higher margin segments of the

industrial PC market.

NEC

Japan-based NEC Corporation was founded in 1899. The poor overall eco-

nomic performance of its home market in 2008 and 2009 heavily affected

NEC. Even though NEC is a globally oriented company, it’s IPC business

focuses primarily on the Japanese manufacturing industry.

Outside of Japan, NEC is well-known in the automation community as a

supplier of silicon products for IO link, Microcontrollers, Memory, ASIC,

Digital AV, Display Driver, and so on. In this regard, NEC is a silicon-

focused manufacturer with all the associated challenges, namely the price

drop and competition with Taiwanese suppliers.

Schneider Electric

Schneider Electric, a global automation supplier with headquarters in

France, focuses primarily on power and control. However, the company

also serves the residential, building, data center and networks, industry,

and energy and infrastructure markets. Schneider Electric continues to in-

vest actively to grow its automation business, including the acquisition of

Digital Electronics, the owner of Pro-face. Recently, Schneider launched its

“ONE company” program, an initiative to integrate the many brands it has

acquired over the years.

Schneider Electric has been hit hard by the economic crisis, with revenue

and orders falling by 29 percent and 30 percent respectively in Q3 on a

year- to-year basis.

The Magelis IPC series from Schneider has been reduced to some core

products, especially panel PCs. Schneider Electric also offers a box PC

(Control box 102 and 402) that could be used as a standalone PC, or com-

bined with a screen to create a modular panel PC. The Smart Box is an

embedded box PC. The Flex PC BOX, which can accommodate PCI cards,

is also available in a heavy-duty model. Schneider Electric’s IPC offering is



less developed than many of its other product lines, as well as than many

competitor’s IPC product lines.

Copyright 2010 © ARC Advisory Group - For Internal Use Only - www.ARCweb.com

Market Shares Group Figure 3-1

Leading Suppliers of Industrial Personal Computers

Other = 37.5 %

2009 = 1,803.8 Million US Dollars



Leading Suppliers of Industrial Personal Computers for North America

Other = 30.3 %

2009 = 265.0 Million US Dollars



Leading Suppliers of Industrial Personal Computers for EMEA

Other = 32.5 %




Leading Suppliers of Industrial Personal Computers for Asia

Other = 32.3 %




Leading Suppliers of Industrial Personal Computers for Latin America

Other = 20.9 %




Leading Suppliers of Industrial Personal Computers for Chemical

Other = 30.2 %




Leading Suppliers of Industrial Personal Computers for Oil & Gas

Other = 26.8 %




Leading Suppliers of Industrial Personal Computers for Food & Beverage

Other = 35.6 %




Leading Suppliers of Industrial Personal Computers for Pharmaceutical & Biotech

Other = 22.2 %




Leading Suppliers of Industrial Personal Computers for Pulp & Paper

Other = 32.1 %




Leading Suppliers of Industrial Personal Computers for Electric Power

Other = 26.5 %




Leading Suppliers of Industrial Personal Computers for Water & Wastewater

Other = 34.3 %




Leading Suppliers of Industrial Personal Computers for Cement & Glass

Other = 17.0 %




Leading Suppliers of Industrial Personal Computers for Automotive

Other = 35.5 %




Leading Suppliers of Industrial Personal Computers for Aerospace & Defense

Other = 14.6 %




Leading Suppliers of Industrial Personal Computers for Semiconductors

Other = 32.3 %




Leading Suppliers of Industrial Personal Computers for Building Automation

Other = 31.7 %




Leading Suppliers of Industrial Personal Computers for Machinery Manufacturing

Other = 31.1 %




Leading Suppliers of Industrial Personal Computers for Electronics & Electrical

Other = 23.4 %




Leading Suppliers of Industrial Personal Computers for Robotics

Other = 21.5 %




Leading Suppliers of Industrial Personal Computers for HMI

Other = 40.6 %




Leading Suppliers of Industrial Personal Computers for Vision

Other = 7.1 %




Leading Suppliers of Industrial Personal Computers for Logic (Soft PLC)

Other = 22.1 %




Leading Suppliers of Industrial Personal Computers for Distributed Control (Soft DCS)

Other = 14.8 %




Leading Suppliers of Industrial Personal Computers for Motion

Other = 16.2 %




Leading Suppliers of Industrial Personal Computers for CNC

Other = 16.9 %




Leading Suppliers of Industrial Personal Computers for Data Acqisition

Other = 33.3 %




Leading Suppliers of Industrial Personal Computers for Communication Gateway

Other = 39.4 %


Industrial PCs Worldwide Outlook • Market Analysis & Forecast


The traditional suppliers of

industrial PCs suppliers face

increasing competition from low-

cost Asian IPC providers as well

as from operator panels that are

becoming more sophisticated.

Chapter 4

Market Analysis and Forecast

The current economic crisis hit the market for industrial PCs (IPCs) hard,

since overall demand for automation equipment has declined drastically.

Additionally, the traditional suppliers of industrial PCs face

increasing competition from low-cost Asian IPC providers as

well as from operator panels, which are becoming more sophis-

ticated. On the other hand, the need for improved monitoring

of and increased visibility into a wide range of manufacturing

production processes work to boost the market for IPCs.

We’ve divided this chapter into five main sections that identify important

trends for future market development. The first section summarizes recent

global economic trends affecting the industrial automation market. The

second describes different industries and the affects of the economic crisis.

The third discusses the major geographical regions. The fourth section

looks at PLCs and other automation markets. Finally, the fifth section de-

scribes developments within the market for industrial PCs.

The Global Economy and the Market for Industrial PCs

In adverse economic climates, a company’s capital investments tend to be

much more volatile than its actual production output. In the current eco-

nomic crisis, a drop in capital expenditures negatively affected the market

for industrial PCs after years of good growth above average.

Global Economic Development

The global economy began a steadily accelerating decline in about mid-

2008, the end of a string of boom years. The bubble economy, with massive

consumption in many developed and developing nations, simply could not

be sustained. Emerging markets had been growing steadily at 7 to 10 per-

cent for years and property and stock market booms translated into

remarkable growth in North America and Europe. Huge investment fueled

economic development further in Eastern Europe and the Middle East. Ja-

pan was recovering from its deflationary ―Lost Decade.‖ For four years

through the summer of 2007, the global economy boomed. Global GDP

rose at an average of about 5 percent per year - its highest sustained rate

since the early 1970s. Then things began to change.



As early as 2007, the global economy began to contract because of uncer-

tainties in financial markets. This severely impacted the global automation

market, with automotive and machinery market caving in during the latter

part of 2008 and first half of 2009. Certainly, the discrete industries took the

brunt of the economic downturn, particularly industries that serve markets

with high income elasticity like the automotive industry. But spill-over ef-

fects have also affected process industries such as bulk and specialty

chemicals and reduced capacity utilization significantly.

The Economic Crisis – An Overview

The first phase of the economic crisis was the financial crisis, which started

in early 2007 with the first collapses on the subprime market in the US. At

first, this was not seen as an economy-wide crisis. Until the end of 2008,

there were no signs of an industry-wide ―credit crunch.‖ The situation then

changed abruptly.

Figure 4-1 Timeline of the Economic Crisis



Figure 4-2 German Stimulus Packages

While bank loans for capital investments have to be available at reasonable

interest rates, this alone does not necessarily trigger expenditures in auto-

mation equipment. Future spending in automation equipment depends not

only on the ability of companies to get loans to invest in new capital

equipment, but also on their willingness to borrow money.

Economic Stimulus Packages Around the World

Economic stimulus packages will have a clear impact on automation mar-

kets. In the US, infrastructure sectors such as power and water should

benefit greatly, in addition to markets for advanced building automation

solutions and alternate energy sources. Other countries have their own

stimulus packages, some that more directly aim at industrial markets. Chi-

na, for example, will speed the development of 40 petrochemical projects in

that country from 2009 to 2011. Half are already under construction, while

others are in the planning stage. Industries include oil refining, ethylene,

other chemicals, and fertilizer. According to the plan, the petrochemical

sector should see industrial added value growth of 15 percent from 2009 to

2011. A challenge will be that many industrial PC suppliers have only mi-

nimally developed sales and

service channels for these mar-

kets.

In Germany, two stimulus

packages aim to boost private

consumption and raise gov-

ernment spending in

infrastructure. Most of the

programs simply enlarge the

budget of existing programs

and also try to push a structur-

al change towards innovation

and R&D-intensive invest-

ments.

Impact of Natural Resource Prices

From 2006 until the start of the financial crisis, skyrocketing prices of natu-

ral resources concerned economists, investors, and automation suppliers

alike. While the prices of natural resources rose sharply (see Figure 4-3),

the prices for industrial PCs and other automation equipment have re-

mained relatively stable and even declined due to ongoing

commoditization. As such, a rise in the costs of input goods did not heavily



To get a better grip on the

production process and to better

control the materials consumed –

plant operators increasingly

visualize and further connect their

production process.

influence selling prices. However, this trend will further erode margins if

companies resort to securing market

share through dumping strategies. Re-

garding production costs, the industrial

PC market also benefits from decreas-

ing prices for semiconductor inter-

mediate products.

Commodity prices are crucial for food

& beverage, chemical, petrochemical,

and pharmaceutical industries, since

these sectors often require stainless

steel housings. Rising steel prices di-

rectly impact production costs.

The price development will have a sus-

tainable effect since, unlike during the

oil crises of 1973 and 1980, the commodity price shock was not induced by a

supply shortage, but rather by rising demand. In the long run, prices will

rise again (see Figure 4-3). This resource-effective pro-

duction aligns well with the current emphasis on

sustainable manufacturing - a topic of concern among ex-

ecutives at an increasing number of companies around

the world. One element of sustainability is conservation

of energy consumption and raw materials throughout the

production process and the supply chain in order to gain

a persistent competitive advantage.

Capital Investment and its Dependency on the Business Cycle

Manufacturers typically borrow money from banks to invest in automation

capital equipment. As such, real long-term interest rates directly influence

the total cost of ownership for automation equipment. The central banks

(such as the US Federal Reserve, the European Central Bank, and the Bank

of England) establish the target interest rates. Individual commercial banks

then incorporate economic risks when analyzing the rates they charge to

manufacturers, thus these interest rates are above the central banks’ target

rates. The lower interest rates, the less cash flow is needed to service the

loan.

Figure 4-3 Commodity Prices (Copper and

Crude Oil)

Source: Fed and HWWA



Figure 4-4 Development of Interest Rates

Industry Trends

Every industry has its own changing visualization requirements and in-

vestment dynamics. Even though high-end automation equipment that

allows flexible production partly decouples investment and production,

consumer demand fundamentally drives both investment and production

and thus the two are still connected.

Industrial PCs are already well-accepted and widely used in many indus-

tries and applications. Here, the markets are relatively mature. In other

industries and applications, IPCs are just beginning to gain traction as their

hardware and software capabilities have expanded to be able to solve new

problems and fit into new market niches. These represent growth markets

for IPC suppliers. Unlike more traditional industrial automation technolo-

gy, which often involves a steep learning curve for users, IPCs tend to be

more familiar and easy to learn.

Figure 4-3 Volatility of Investments and Production



In addition to consumer demand, additional global factors play a role:

Equipment and plant lifecycles: The longer the lifecycle of a machine,

the smoother the annual investment over time

Product lifecycles: Shortening of product lifecycles began in the 1980s

in automotive and pharmaceutical industries. Shorter lifecycles lead to

a higher volatility in investments, but also drive more flexible produc-

tion

Production flexibility: A trend since the 1980s (just-in-time, Kanban,

etc.), flexible production de-couples production from investments.

Intensity of service maintenance: The greater the investment in service

and maintenance, the more stable the associated automation equipment

spending, since service and maintenance depend on installed base.

Length of contracts and planning: The longer the contracts and the

planning, the smoother the production and capacity utilization.

Regulatory framework: Regulatory changes increase investment vola-

tility and tend to decrease overall investment.

Aerospace & Defense

The aerospace industry has grown at about twice the rate of world GDP for

the last 30 years. Aerospace manufacturers employ advanced automation

software and hardware to maximize planning accuracy and minimize

waste. This increases demand for visualization in both the factory and the

office. Here, visualization and open communication are key success factors

for industrial PCs and PC technology in general. Currently, capital spend-

ing in aerospace is stable since military and commercial contracts are

planned years in advance, but the industry faces order cancellations, cus-

tomer failure to exercise options on orders, and fewer new orders in 2009.

Many airlines are still in bankruptcy and simply cannot get loans for large

orders.

In the long run, a possible carbon tax and higher flight prices could dimi-

nish the demand for both airplanes and, ultimately, demand for IPCs in this

industry.

Automotive

The regional revenue percentages of automotive manufacturers worldwide

(Japan: 17 percent, US: 17 percent, China: 11 percent, Germany: 9 percent)

highlight China’s potential to stabilize the market, but the market neverthe-

less is volatile and depends heavily on the business cycle.



The current crisis overshadows many recent developments in the automo-

tive industry. US automotive manufacturers have struggled since 2006,

while Japanese and Korean automakers continue to outperform the Big

Three in their domestic markets. Ongoing competition and cost pressures

caused the tier 1 supplier market to consolidate considerably, forcing indus-

trial PC suppliers to deal with a shrinking number of customers. The

remaining customers search for solutions from system integrators and ma-

chine builders, which in turn, demand solutions from automation

suppliers. Examples include single-source supply for automation products

or existing combinations of mechatronics and automation equipment. In

North America, two of Detroit’s Big Three automakers filed for bankruptcy

in 2009. While both emerged from Chapter 11 by midyear, the North

American car industry still has a long way to go if it is to survive in the long

term. In the past, profits for Detroit’s Big Three automakers were almost

entirely attributable to the companies’ auto financing departments.

IPCs were never successful in penetrating US car manufacturing and are

predominantly used by automakers in Europe and Asia.

The automotive industry is moving towards emerging economies, which

offer consumer markets and low wages. General Motors, Toyota, BMW,

and Ford have increased output in China. However, all this capacity buil-

dup intended to win market share brings the risk of creating over-capacity

(as recently experienced in the Chinese electronics industry). European

carmakers continue to invest in Central and Eastern Europe by developing

―clusters‖ of suppliers in the Czech Republic, Slovakia, and Hungary. The

European automobile industry continues to suffer from over-capacity and

high costs, resulting in difficult wage agreement renegotiations with labor

unions.

Semiconductor

The semiconductor industry has strongly adopted PC technology, using the

PC as a platform to integrate third-party I/O, motion control, and network-

ing. Short product lifecycles, fast changing demand and price fluctuations,

and rapid technology development characterize the highly cyclical semi-

conductor industry. The semiconductor industry follows three markets:

consumer electronics, telecommunications, and personal computers. This

industry is of interest to industrial PC producers as both a customer and a

supplier, since it provides the chip sets and displays used in IPCs. Recent-



ly, tremendous growth in flat panel display production reduced component

prices for IPC producers.

However, IPC suppliers consume relatively few chips compared to con-

sumer electronics and large movements in the consumer electronic market

could ultimately lead to chip shortages. IPC suppliers should watch the

consumer electronics market carefully, both to be early adopters of technol-

ogical trends from consumer electronics and to avoid shortages.

Machinery

The market for industrial machinery suffered greatly from the current eco-

nomic crisis. In Germany, 30 percent of machine tools are sold to

carmakers and their suppliers. For the machinery sector, the situation since

October 2008 has steadily worsened. VDMA, an association of German ma-

chine builders, reported a steady and rapid decline in new orders compared

to the month of the previous year. From December 2008 to August 2009,

the VDMA reported a decline of roughly 40 percent each month, but the

end of the downward trend appears to have been reached in the third quar-

ter of 2009. The German Machine Tool Association, VDW, reported an even

larger, 67 percent decline in orders for the first half of 2009, with capacity

utilization sinking to 66 percent in the same period of time. Italy recently

reported a 49 percent drop in new machinery orders in Q4 2008 compared

to the previous year and the downward trend continued after this collapse.

Switzerland experienced a drop of 41.8 percent in incoming orders in the

machinery sector in the first quarter of 2009, while revenues declined only

15.1 percent, due to a lack of time. Industry associations in the UK esti-

mated negative growth for 2008 (down 5 percent) and continue to forecast

negative growth (down 15 and 10 percent respectively for 2009 and 2010).

Compared to those European numbers, the Indian machinery market for

NC controlled machines is a bright spot; in the middle of 2009, the market

contracted by ―only‖ 25 percent. In Japan, machine tool orders in April

2009 dropped by 80.4 percent from a year ago, but Japanese machine build-

ers hope to benefit from Chinese demand.

This strong downturn led to consolidation, especially in the machine tool

markets in North America and Europe. The OEM machine tool market in

these regions continues to be under increasing pressure to reduce the over-

all development costs for machinery. This forced some machine builders to

move production and development resources to Eastern Europe or Asia.

Beside reducing their own costs, machine builders in North America and



Europe can improve their competitive positions through continuing inno-

vation. On the other side of the world, the Asian market continues to

flourish as local machine builders gain sophistication and demand from

China and India continues to increase. The operator skill level in Asia,

however, poses a challenge, requiring ongoing training and localized hu-

man-machine interfaces.

In the machinery sector, the most important thing for IPC suppliers is the

concept of embedded functionality. Companies like B&R and Beckhoff

have had large success in this area. Rather than promoting PC technology

per se, the two companies leverage low-cost COTS technology, configure it,

and bury it into applications.

PC technology is also well accepted is in the machine tool market. CNC

controls virtually all use some sort of PC platform, often with a proprietary,

UNIX-based operating system to lower the OS footprint. In discrete manu-

facturing, rubber and plastic products manufacturers often use IPCs,

especially in injection molding systems. As PLCs evolve into multi-

function PACs, they adopt IPC-like capabilities. However, currently, IPCs

and PACs remain largely complementary technologies.

SoftServo has made strong inroads in the Japanese and Asian market in

machine tool and metal forming applications. In the robotics market, Kuka

has leveraged true PC-based control for over a decade.

Schneider Automation Packaging Systems (Elau) has always used a PC-

based system (using the VRTX real-time OS) in its Packaging Automation

Controller, although this is not necessarily a point of differentiation.

Metal Working

Metal working and forming uses primarily low-cost automation solutions

with relatively low performance requirements. The market for metal cut-

ting machine tools is mature with a large concentration of the machine

builders located in Japan, Germany, Switzerland, and Italy. Asian markets

in China, Korea, and Taiwan create opportunities for new entrants in ma-

chine controls. The markets are primarily price-driven, particularly in

Korea, where the catalog machine market pushes down the overall market

price point. IPCs are less popular here than in other markets, since their

key characteristics are not required. This could change in the future if and

when energy consumption must be measured, tracked, and stored.



Food & Beverage and Consumer Packaged Goods (CPG)

In the hybrid industries, flexibility, openness, and the need to handle large

amounts of data for traceability and automation are all requirements. This

represents a more classical area for IPCs. This is particularly true in smaller

companies that might not have full-scale automation systems in place but

have to handle large amount of data to meet the traceability demands.

The demand for automation products in the food & beverage industry is

growing at a stable rate. The economic concept of ―income elasticity‖ ex-

plains this. Consumers typically have low income elasticity for food, which

means that demand for processed food products hardly changes – regard-

less whether incomes rise or decline. As a result, in difficult economic

times when real incomes fall, demand for basic necessities remains con-

stant. This behavior is also typical for the consumption of pharmaceuticals.

Demographic changes in emerging economies help explain the steady

growth. In Europe, packaged food is often cheaper than fresh ―market‖

food — a counter-cyclical effect.

The food & beverage and CPG industries are leaders in adopting high-

performance solutions. While the major industrial automation suppliers

dominate the market, the large players are now losing some opportunities

to specialized suppliers as performance demands increase. In recent years,

food & beverage producers invested heavily in their IT infrastructures, and

many now have reliable systems in place. These investments support the

automated information flow necessary to meet the increasing regulatory

requirements as well as the sophisticated product information tracking ne-

cessary to remain competitive. Concerns over food safety have increased

dramatically in recent years, driving ―power‖ retailers to invest in supply

chain visibility to increase safety and efficiency. This further drives the

market for IPCs.

Environmental consciousness in the food & beverage industry increased

rapidly in recent years. One result is that producers now invest in energy

management, emissions monitoring, and carbon footprint-reducing initia-

tives to influence consumer buying behavior. This has a direct effect on

investments in packaging equipment, energy management solutions, and

variable speed drives.

Pharmaceutical

Changing consumption habits in packaged goods and food and beverages

trigger business opportunities in another field: pharmaceuticals. In China,



consumption of consumer packaged goods and food increased by approx-

imately 50 percent from 1998 to 2005. Chinese consumers now turn to

packaged goods that offer convenience and suggest a Western lifestyle.

This change does not portend well for the health of the nation, but offers a

huge market for pharmaceuticals: more than 20 million Chinese have di-

abetes, more than 160 million have high cholesterol levels, and as many

have high blood pressure. In Chinese cities, around 30 percent of the popu-

lation is overweight.

Automation suppliers should recognize that India and China are not only

growing markets for end products, but also for their important role on the

supply side. The requirements in this market are similar to those in the

food & beverage industry. In contrast, however, the pharmaceutical indus-

try has higher fixed costs for R&D and, unlike food & beverage, is

dominated by large players.

Chemical

During the current economic crisis, the full extent of the chemical industry’s

dependence on the automobile industry became apparent. In October 2008,

demand for chemical- and petrochemical-based goods plummeted as a di-

rect result of the crisis in the automobile industry. Basic chemical

production (inorganic basic chemicals, petrochemicals, and polymers) were

hit hardest, while fine and specialty chemicals faired only slightly better.

In the chemical industry, industrial PCs often have to withstand harsh cor-

rosive environments, and not all suppliers offer products that meet these

rigorous requirements. In hazardous (explosive) plant areas, IPCs from a

small number of specialists, including Stahl HMI and Pepperl+Fuchs are

widely used. ARC also sees opportunities for IPC suppliers in mobile IPCs,

whether in the form of laptops (like the Pansonic Roughbook) or mobile

panel PCs, both which could be used in asset management and similar ap-

plications.

Electricity Production and Other Utilities

The electric power industry continues to experience growth due to long-

term project commitments based on increased demand for more power in

all parts of the world.

Power generation & transmission, water & wastewater, and other infra-

structure industries will benefit from stimulus packages enacted in the US,

China, and other countries around the world.



In the electric power sector, industrial PCs play an important role, especial-

ly high-performance rack-mount PCs that control applications like the grid.

Regional or nationwide grids use IPCs to help stabilize the system.

Oil & Gas and Petrochemicals

The oil & gas industry did not slow down much in 2008, with oil-related

companies taking in a tremendous amount of cash, especially during the

high oil price period in mid-2008. Here, the backlogs of EPCs and automa-

tion suppliers (which can be up to 18 months) helps stabilize demand.

Upstream oil & gas will provide opportunities for automation suppliers in

the near future. Capital spending plans for oil & gas companies remain

strong since service activities drive the overall market.

In these industries, IPCs are used as panel PCs and as a DCS. However, in

many critical applications end users prefer not to use PC technology to

avoid potential security problems. Since PC capabilities are needed in the

process industries, a failsafe IPC would have high potential in this industry.

As in the chemical industry, wireless applications and the ability to work in

harsh environments are crucial requirements.

Pulp & Paper

Pulp & paper is a low-margin industry with relatively little innovation and a

low rate of capital spending. In recent years, the traditionally strong Nordic

countries and Canada saw job cuts and mill closures, while new production

centers emerged in China and Brazil. Since pulp and paper products are an

essential part of everyday life, in general, the paper and paperboard industry

is largely linked to an economy’s GDP.

In the energy- and water-intensive pulp & paper manufacturing industry, it

is crucial to control and monitor each part of the process to optimize energy

and water consumption. While the control of emissions and water usage

increased during the last 20 years, visualization requirements have also in-

creased, providing some additional opportunities for IPC suppliers.

Building Automation

The building automation market is becoming more and more attractive to

automation suppliers as automation components move into the territory of

classical building controls. Products include industrial PCs, drives, sensors,

intelligent pumps, and operator panels.



In this market, industrial PCs and operator panels compete directly, especial-

ly since the less demanding, vibration-free environment lowers the

technological requirements – and thereby the price of the needed IPCs. Fur-

thermore, customers are familiar and comfortable with the PC architecture.

Industry % of Panel Market

CapEx Growth

Key Trends

Automotive

2.3% Consolidation of manu-facturers – rising demand of solutions

Aerospace & Defense

3.8% Visualizations needs re-main strong

Electronics & Semi-conductors

4.2%

Falling prices, concen-tration on Asia, often use IPCs in manufactur-ing

Machinery

8.1% Consolidation, change in structure

Chemical and Petro-chemical

3.5% Strong dependency on automotive, Panel PCs in ex-areas

Food & Beverage

4.2% IPCs do fit the needs and demand is strong

Pharmaceutical & Cosmetics

8.0% IPCs ideal for many ap-plications

Pulp & Paper

1.4% Market shifting towards Latin America and Asia

Mining & Metals

0.5% Hardly IPCs in this in-dustry

Water & Wastewater

1.6% Ongoing demand to in-clude light SCADA functionality I panels

Consumer Packaged Goods

5.1% Demand for PACs and IPC rise as tracing re-

quirements increase

Other

4.2%

Figure 4-3 Industry Growth and Market Shares

Source for CapEx: OECD, Average Growth in Volume (1970 to 2007)



Regional Economic and IPC Trends

Every world region has its own peculiar business cycle and dynamics. The

following section looks at the overall investment climate within each region

and discusses the impact on the demand for industrial PCs.

North America – Limited Acceptance of IPCs, Limited

Economic Growth

In North America, industrial PCs have had limited acceptance due to per-

ceived complexity and hesitation based on questions relative to ruggedness,

durability, and reliability versus PLCs. Another issue is the relative short

lifecycle of Microsoft OS components (approximately five years) versus the

20+ years for PLCs, which do not have a Microsoft OS front end.

The US entered the recession first: will the US be the first country to exit?

So far, capital investment in manufacturing remains low, capacity utiliza-

tion has dipped below 70 percent, and unemployment rose to 9.8 percent in

September 2009. The downturn impacted nearly every sector in the US.

The collapse of the domestic automobile industry caused profound uncer-

tainty in American industries even though the chapter 11 restructuring of

bankrupt automakers went remarkably fast (Chrysler in 42 days and Gen-

eral Motors in 40 days). However, Chrysler’s, and to a lesser degree,

Ford’s, futures remain uncertain. In addition, the situation of the many

companies that supply the auto industry is unclear. The knock-on effects of

an auto industry shakeup are widespread and profound.

Economic activity in Canada suffered a setback, as slower growth in the US

and the effects of past real currency appreciation sharply slowed net ex-

ports. Domestic demand growth—initially boosted by commodity-price

gains—continued but softened to more modest levels, and the housing

market has been cooling from the highs reached in 2006–07. The recent de-

cline in commodity prices weakened the Canadian dollar, bringing it back

to the level of Spring 2007. Overall, vulnerabilities remain given Canada’s

financial and economic ties with the US. Four-quarter growth is projected

to decelerate to 0.3 percent in 2008—largely reflecting the negative outturn

in the first half of the year—and recover to 1.7 percent in 2009, as the drag

from net exports wears off. Average growth was estimated at 0.7 percent in

2008 and 1.2 percent in 2009.



The installed base of CNC machinery

in China and India is insignificantly

small compared to other developed

regions. As such, typical buying

habits in other regions are not

transferred to this region.

Asia: Diverse Economies, Same Outlook?

Until recently, many (non-Japanese) Asian companies relied on automation

equipment from Western suppliers because export-driven business de-

mands high quality standards, which in turn demand high-quality

production equipment. Therefore, Western suppliers for automation prod-

ucts, including IPCs, still dominate Asian markets. Certainly, Advantech is

the largest domestic supplier in the region. Bottom line: the Asian indus-

trial PC market is all about price. Examples are in the motion control

world, where Bosch (Nyquist), ACS Motion, and Power Automation have

concentrated on Asian markets and developed servo drives based on cost

reduction where they leverage the PC platform.

Many IPC suppliers seek closeness to their customers. This helps explain

why many machine OEMs have relocated their business to Asian consumer

markets. With increased concentration of OEMs and customers in emerg-

ing Asian economies, solutions providers follow. For automation suppliers,

it’s important to be close to customers to better understand the changing

requirements of tier one OEMs.

While the installed base of machinery and the

degree of automation in Asia have grown during

the last years, the installed capacity has increased

considerably. Demand for automation equip-

ment is still at the low end of the segment

(simpler, less solution-based, automation tech-

nology) and price is often the most important

buying criterion. This leads to different buying habits compared to devel-

oped economies where long-term partnerships are formed to secure supply.

Price competition opens opportunities for alternative automation brands.

Large automation suppliers, like Omron and Siemens, have been estab-

lished in emerging Asia for quite some time. They have both invested in

product lines specifically for emerging markets, but profitability in these

regions remains a challenge.

Forecasts from the third quarter of 2009 suggest growth in Asia slowing

sharply along with the global economy. Japan, Singapore, Hong Kong, Ko-

rea, and Taiwan are likely to record negative economic growth in 2009.

Average annual GDP growth in Asia is projected to slow from 7.6 percent

in 2007 to about 6 percent in 2008, and just under 5 percent in 2009. The key

financial risks for Asia stem from volatile capital flows, tighter external fi-



Despite aggressive measures, global

uncertainty, a general bleak outlook,

and lack of liquidity between financial

institutions will drag China’s growth

figures.

nancing, and disruptive spillovers to domestic markets that could lead to a

sharp credit squeeze and slower growth.

In Australia, growth is slowing below potential because of tighter credit

conditions and the easing in commodity prices. In New Zealand, growth is

expected to begin to recover in response to an easing in monetary and fiscal

policies but to remain below trend as the reduced availability of credit con-

strains spending.

China: Communists Saving Capitalism?

PC technology offers comparably low hardware prices, but requires inte-

gration. In addition, it differs from the classical PLC architecture and

therefore needs different training for those who apply IPCs in manufactur-

ing or integrate IPCs into their machines. For these reasons, Eastern

Europe, Korea, Taiwan, India, and China are more likely to adopt this type

of platform.

China, with an overall GDP of $ 3.4 trillion, a labor force of nearly 800 mil-

lion workers and even more consumers, has enjoyed GDP growth rates of

around 9.5 percent for years, making the country an

important market for automation suppliers. China

has a good business environment for manufactur-

ing, and lucrative consumer markets. Many

Chinese companies quickly adopt Western technol-

ogy and seek to achieve Western productivity

benchmarks. Growth forecasts for China have been revised downward re-

cently, with an estimated two million jobs on the line. In 2009, exports will

likely fall sharply while the property sector weakens. Much will depend on

the effectiveness of the policy response, including the large fiscal stimulus

package.

Many machine builders and automation suppliers are establishing subsidi-

aries in this region -- not simple distribution centers, but rather full-fledged

assembly and manufacturing operations capable of producing machines

and automation equipment for the local market. Many sales that would

have originated in regions such as North America, Japan, or Europe now

take place directly in China. While many non-PC-based automation

equipment product lines are tailored to fit Chinese requirements, IPC sup-

pliers usually leverage the modularity of their products to offer

customization. Some machine builders, on the other hand, have reserva-



tions about establishing a business in China due to concern about loss of

intellectual property.

ARC believes that China will not only demand more automation equip-

ment as wages rise, but will also shift towards more sophisticated systems

with greater capabilities for achieving international quality standards.

Japan: Recession - Not Again!

As occurred during the downturn of 2001, Japan’s economy has been hit

hard by the current economic downturn and may contract as much as in the

periods of 1996 to 1998 or 2000 and 2001. The Bank of Japan, the country’s

central bank, is likely to keep interest rates near zero and may have to ex-

pand its policy of quantitative easing if the recession continues. GDP will

shrink by almost 7 percent in 2009, due to a collapse of investment world-

wide - Japan is one of the largest machine tool markets. The recovery in

2010 will be modest, with GDP growth forecast to average 1 percent.

One reason why Japan suffers harder from recession than other countries is

the so-called convoy system that led to a sclerotic market in many areas and

has annulled creative destruction for decades. [Creative destruction is the

process under which new innovative companies rise and prosper (creative),

and older companies fail and disappear (destruction)]. In growth periods,

everyone benefits from the good market development and, in downtimes,

the government often bails out poorly performing companies. This leads to

slow recovery phases and costly recessions. For example, a plan approved

in May allocated $21 billion to prop up troubled companies. Pioneer Elec-

tronics, Elipda (a chipmaker), and Japan Airlines were among the first

applicants.

Unlike in earlier cycles, domestic consumption has been a driver of GDP

growth since 2005 and many Japanese companies have improved their bal-

ance sheets since 2003, in spite of deflationary and low interest rates. Now,

companies are holding back expenditures. The world’s second-largest

economy reported a 0.1 percent drop in GDP in its third quarter, after a 0.3

percent fall in its second quarter of 2008. Japan’s GDP dropped by almost

half a percent in 2008.

India: Strong Like a Hungry Elephant

During the last decade, the Indian economy became much more integrated

into the world economy, resulting in robust growth. Still, India depends on

the inflow of foreign capital to finance this development. Experts expect



growth in India to decline to about 6 percent in 2009, as tighter financial

conditions weigh on domestic activity, particularly investment.

For automation suppliers and machine builders India is becoming an in-

creasingly interesting destination thanks to the country’ low wages and

good access to engineering skills. Machine builders tell ARC that they are

more comfortable conducting business in India than in China, due to the

increased protection of intellectual property. In addition, rising transporta-

tion costs due to commodity prices and the uncertainty of currency effects

force companies to produce close to large consumer markets like India.

Walmart, JC Penny, Target, and Carrefour are examples. Many manufac-

turers in the visualization-intensive food & beverage and fast-paced

consumer goods sectors produce locally, making this market especially at-

tractive for HMI software and IPCs.

With an eye toward improving productivity, many companies selectively

look at areas where they can replace manpower with robots. This will

make India one of the main growth markets for mobile panels in the next

five to ten years.

Still, it’s important to remember that India is an emerging country, where

the monsoon has significant impact on GDP (roughly 30 percent is pro-

duced in agricultural sector).

Asia’s Tiger States: Taiwan, Singapore, Hong Kong, South

Korea

For IPC suppliers, these emerging markets are increasingly interesting, not

only because they offer growth possibilities, but also because they them-

selves host a number of small, specialized suppliers for industrial PCs.

Western competitors should not ignore the Taiwanese and Korean machine

builders. These countries mirror Japan’s market entry strategy over 20

years ago, with the exception that they largely depend upon the Japanese

CNC providers, Fanuc and Mitsubishi, to equip their machines. While the

Koreans strengthened their automotive production capacity, they also

strengthened the machine tool infrastructure to support this industry. Ko-

reans and Taiwanese machine builders were primarily responsible for the

large influx of low-price catalog machine tools that severely depressed

prices in 2000. While establishing new price points for milling and grinding

applications in the low-end machine tool business, these machines also

brought credibility to this new class of producers.



Both Korea and Taiwan are experiencing high growth because of their rela-

tive position to China and their own burgeoning automotive industries.

Many low-end and midrange machine tool builders outsourced production

to these countries and enjoy a skilled, low-wage workforce. Furthermore,

production in these countries enables end users to respond quickly to sales

orders coming out of Asia. In addition, machine OEMs benefit from rela-

tively good intellectual property protection.

The Taiwanese market is the most vibrant PC market worldwide. Even Eu-

rope hosts many small, specialized PC players that offer solutions; the

Taiwanese market is the fastest growing. (Intel earns roughly one-fourth of

its revenue in Taiwan.)

The table below analyzes the Taiwanese companies of the study sample.

They account for 16 percent of the worldwide market and host a number of

different companies. These range from component-driven companies that

are moving up the supply chain, to established automation suppliers like

Advantech. Chapter 3 includes a more detailed competitive analysis.

Taiwanese Copmanies Number of Companies

% Million of USD %

Taiwan 14 23% $ 310 16%

Number of Companies

% Million of USD %

Specialized in IPCs 7 50% $ 240 77%


PC based Automation Supplier 1 7% $ 12 4%

Focused Automation Company /

Full line automation Supplier /

Total Taiwanese Market 14 100% $ 310 100%

Number of Companies

% Million of USD %



System provider /

Solution Provider /

Total Taiwanese Market 14 100% $ 310 100%

Figure 4-3: The Taiwanese IPC Market



Taiwanese suppliers have the benefits that industrial PCs are well-accepted

in emerging Asia, there is less of a PLC legacy, and more young people are

trained on PCs than PLCs. In addition, they could easily deliver to the

booming emerging markets nearby. Around 50 percent of the revenue of

Taiwanese companies comes from China (not counting exports of IPCs in

machines).

Western Europe: Epicenter of Machine Builders & Automation

Suppliers

For automation suppliers, the most important sub-regions in EMEA are

Eastern and Western Europe. Western Europe hosts not only many auto-

mation suppliers but also a large amount of machine builders and system

integrators. Germany, Austria, Switzerland, France, and Italy are the cen-

ters of automation and machine building.

With the adjustment in the financial system likely to be arduous and pro-

tracted, experts don’t expect a modest recovery until later in 2009. This

long crisis affects the automation/machine building clusters since they fo-

cus on the discrete industries. Various factors cushion the current

downturn: 1) the European

Union is a diversified re-

gion and many influences

balance out each other, 2)

the housing crisis in France,

Spain, Denmark, was less

severe than in the United

States, 3) European states

have well-developed social

systems that sponsor pri-

vate consumption and

stabilize the economy, 4)

not every country’s banks

were heavily invested in

subprime markets, and, 5) financing of companies is more independent of

capital markets. These five factors are the most relevant for automation

markets.

Machine builders continue to design some element of the automation for

their machinery, such as custom servo drives in an embedded automation

solution. However, the European OEM market is moving toward an out-

Figure 4-7: Economic Development in Western Europe

(EU-15). Source: Eurostat



sourcing model in which increasingly more automation components and

sub-systems are purchased from automation suppliers. This is because

many machine OEMs can no longer afford to retain an engineering staff.

Instead, they look for integrated automation solutions. In general, automa-

tion markets are growing faster than machinery markets. The current crisis

will foster this development.

The German machine builders suffered heavily from the crisis and many

companies reacted by applying Kurzarbeit (short work weeks subsidized

with government funding) to reduce operating costs. Even though many

companies are financially well positioned, ARC predicts that between 15

and 25 percent of the German machine builders will face financial problems

and eventually file for bankruptcy.

Both Northern Italy, where PC technology is traditionally strongly used in

the packaging industry, and France are also important markets for IPC

suppliers.

Eastern Europe and Russia: The Wild East

Like in the emerging Asian markets, industrial PCs are well-accepted in

emerging Europe, where there are fewer legacy systems in use. Following a

prolonged expansion starting in the mid nineties, domestic demand and

exports to Western Europe have started to moderate. Some countries even

appreciated a slowdown to ease overheating pressures. However, many

countries (Latvia, Belarus, Lithuania, Estonia, and Hungary) are experienc-

ing not a slowdown, but rather a free fall. During the crisis it became

evident that there is, in fact, not ―one‖ Eastern Europe region. In contrast to

the struggling countries mentioned above, some economies have developed

well. These include Slovakia, Slovenia, Czech Republic, and Poland.

Until the crisis began, Hungary and Slovakia suffered from a lack of skilled

labor, driving production processes to become more automated and sophis-

ticated. One reason for this development was the inflow of foreign direct

investment (FDI), attracted by low corporate taxes, low wages, and a stable

investment climate. A combination of dependency on FDI, a heavily ex-

posed banking system, and large government debt resulted in financing

problems that forced a bail out by the IMF, the European Union, and the

World Bank.

All Eastern European countries will have a large demand for IPCs in utility

and infrastructure in the coming years.



Poland and the Czech Republic have also attracted huge FDI inflows since

1995. Both economies boomed after 2001, resulting in low unemployment,

rising wages, and increased productivity. Rising wages have already

forced companies, such as Leoni, to move its wiring harness production to

Belarus, a neighboring country with even lower wages for labor-intensive

production. Ex-emigrants returning from abroad partially cushioned the

labor shortage, but also led to increasing automation of production. The

Czech Republic was less affected by the financial crisis since it hosts con-

servative banks, but has faced an appreciation of the Czech Crown. Poland,

in contrast, had to apply for a US$ 20.5 billion IMF loan to stabilize the

economy.

In general, Eastern Europe will drive growth of low-end CNC applications

into Europe as the region continues to modernize. The modernization is

driven by Western Europe outsourcing a tremendous amount of produc-

tion across their neighbor’s borders. Some machine tool builders actually

predict growth rates as high as 25 percent in this region.

Forecasts indicate that Russia’s economy will contract strongly in 2009 due

to lower commodity prices combined with increasing problems accessing

global capital markets. The recovery is expected to happen in 2010, but at a

low rate. The state already provides general help to avoid a repetition of

the 2008 bail out, but Russian companies are already due to repay US$ 117

billion to foreign creditors. During the peak of the crisis, the central bank

managed a gradual depreciation of the ruble, which is likely to continue its

downward trend. This supports exports, but makes foreign debt more ex-

pensive. Russia has the ―Dutch Disease‖ – it is heavily dependent on the

export of commodities. The symptoms are large trade volumes, a strong

dependency on exchange rates, inflationary pressure, and tightening of in-

vestments in unproductive sectors. In this case, it also results in political

tension. Russia’s process industries are important for automation suppli-

ers. Oil is often produced in Siberia and the long pipelines needed to

convey the oil to Western markets require pumps, valves, SCADA systems,

and, ultimately, custody transfer systems.

Europe is looking for alternative energy sources and large projects are like-

ly to emerge in the future. These can include pipelines from the Caspian

Sea or solar thermal generated electricity from the North African desert.



Middle East and Africa: Oil and the Forgotten Continent

The Middle East has continued to experience strong growth in 2008, out-

pacing global growth for the ninth year in a row. High commodity prices,

strong domestic demand, and credibility of policy frameworks support this

growth. A strong financial situation and little exposure to US credit mar-

kets has so far left the Middle East untouched by the international credit

crisis, but the economic situation worsened since oil prices declined.

The steady rise in oil prices since 2003 contributed to booming gross FDI

inflows to the region, from US$ 18 billion in 2002 to US$ 94 billion in 2008.

The largest share of these inflows is directed toward the oil sector in oil-

exporting countries. As oil prices rose, so did food prices, which created

large risk for the entire region. Another interesting sector is building auto-

mation. While oil states seek new business opportunities, they invest in

tourism and the related infrastructure.

Outside of South Africa, Africa is nearly irrelevant for automation suppli-

ers. However, possibilities exist in the Maghreb region of Africa if the

countries can provide stability and manage to stabilize inflation and ex-

change rates.

Latin America

Global financial turmoil increasingly clouds the Latin American regional

outlook. Growth is expected to slow markedly as the global slowdown and

tightening financial conditions take hold. Downside risks to growth have

also increased, given the uncertain outlook for world commodity prices and

the possibility of further spillovers from the strains to global financial sta-

bility.

For Latin America, the ongoing global turmoil represents a confluence of

negative shocks: the freeze in global credit markets, weaker external de-

mand, and lower commodity prices. These shocks can have strong negative

impact on financing conditions. But the region is not yet at that point and

recent scenarios point to growth of around 3 percent next year, close to the

average for emerging market countries. The region is expected to deal with

the current global shocks better than in previous crises. This reflects the

progress many countries in the region have made in improving their ma-

croeconomic fundamentals over the past decade.

It is also questionable if Latin American states will react to the crisis with

protectionism (e.g., Argentina) or liberalism (e.g., Brazil). Some states (e.g.,



Venezuela) now suffer from a drop in oil prices, whereas other states close

to the US (e.g., Mexico) could benefit from US companies lowering their

costs and shifting production to Mexico.

Trends in the Automation Market

Industrial automation demand is primarily driven by business issues and

so is the market for IPCs. That means that every IPC solution has to prove

its advantages compared to embedded control solutions, or a PLC solution.

Merge of Layers and Functions

The classical automation topology has

merged into a flatter, more integrated ar-

chitecture, where one device incorporates

functionality like logic, motion control, and

visualization.

While today’s IPCs and programmable

automation controllers (PACs) share many

similarities, the intentionally closed (PLC-

like) nature of PACs tend to limit their use

to single-vendor automation solutions. In

contrast, the open (PC-like) architecture of

IPCs supports more open, multi-vendor

solutions and enables greater flexibility.

The continued merging of automation lay-

ers will boost sales of both IPCs and PACs,

cutting into sales of classical PLCs.

Ever-Increasing Global Competition

Global competition in the automation

market will continue to increase, driving

price pressure, the need for product diffe-

rentiation, and pressure for suppliers to

achieve operational excellence. This will

have negative influence on the prices of

industrial PCs and also on the prices of the

intermediate goods like displays. Automa-

tion markets, in general, benefit from the

increasing competition felt by their cus-

Sustainable manufacturing

Demand for large data transfers

Measuring real time performance of manufac-turing operations

Increasing capital investments in automation equipment as a result of globalization

Broad solutions, one stop shopping that aim to reduce Total Cost of Ownership (TCO)

Support during all lifecycle phases

Use of standards to promote choices, provide consistency and simplicity, facilitate a common environment, and drive down costs

Employing standard technologies and bridging the gap between operations and IT

Demand for products that are easier to install and use

Greater productivity though higher line speeds, better performance

Compliance to worldwide electrical and safety regulations

Local service and support all over the world

Reducing maintenance and spare parts costs

Networking technologies, fieldbus diversity, real-time Ethernet communication

Having a broad range of scalability within a sin-gle product family

Desire for optimal application form fac-tor/customized solutions

RFID integration in some production machinery

Industry Trends Impacting Automation

Equipment Demand



tomers, which have to automate larger parts of their production to stay

competitive. Even though the market for IPCs will face a downward price

trend, it is not likely that the prices for the end product ―IPC‖ will decline

as rapidly as the prices for intermediate products. In this case, the market

will benefit through competition in general.

Customer Consolidation and Movements - Demand for

Solutions

The current economic situation resulted in consolidation among the com-

panies buying IPCs. For example, in 1988 there were roughly 30,000 OEMs,

machine builder, and system integrators delivering intermediate products

to automotive manufacturers. In 1998, only 8,000 were left. By 2000, there

were just 5,600 suppliers and one forecast predicts 2,800 remaining by 2015.

Customer consolidation has various implications for suppliers. As the cus-

tomer base gets smaller, the market power of the surviving customers

increases. These machine builders and end users also have increasingly

complex manufacturing processes, as more products are manufactured in

more locations. Also, these customers are on the forefront to move produc-

tion into regions representing the point of sale, which also creates

advantages of component pricing and eliminates import taxes and any ex-

change rate fluctuations. In addition to these transplants from

industrialized nations, local builders are trying to capitalize on the surge in

demand.

Increasingly, manufacturers prefer to have broader solutions packages from

suppliers or third-party system integrators. This minimizes risks as intero-

perability and applicability responsibility lies with the systems supplier.

This trend eliminates the need for specialists in manufacturers’ organiza-

tions, which minimizes operational and maintenance training requirements

for the entire system, as well as other significant cost savings. Many sup-

pliers look to expand their offerings from components-only to a solutions

business in markets such as steel processing, pulp & paper, and automo-

tive. Components-only business provides lower value and consequently

brings smaller margins and profitability, thus driving many suppliers to

expand towards a solutions business.

IPCs and HMI Software – Soft Solutions

HMI software continues to replace proprietary software embedded in de-

vices such as operator panels. Increasingly, CE-based HMI software



deployed on numerous types of wireless devices, such as PDAs, tablet PCs,

and mobile phones, replaces proprietary solutions. As a result, Windows

CE is now the HMI software operating system in roughly a quarter of units

sold. The trend towards increased production visualization benefits panel

PCs that include control functionality, since automation tasks with high

demand for visualization could be implemented cost efficiently with panel

PCs.

Distributed Automation

There is a clear trend towards a distributed architecture in future automa-

tion topologies. Distributed control needs intensive cross-communication

and interaction between systems and their dynamically changing environ-

ment. In practice, distributed automation often triggers the large number

of different connected systems and is often more easily managed by a

PLC/PAC than an IPC. However, IPCs will benefit from the increasing

success of industrial Ethernet and real-time industrial Ethernet. Also, as the

trend towards distributed architecture continues, the relative benefits of

small PLCs with attached I/O decreases in favor of PLCs or IPCs with re-

mote modular I/O.

Networks in Manufacturing Automation

Distributed automation is most powerful when combined with a powerful

network like industrial Ethernet. Ethernet’s increasingly compelling value

proposition in the areas of technological commonality, vertical integration,

and global ubiquity is one of the most significant changes in automation.

Ethernet can greatly enhance the data gathering from the plant floor. This

becomes especially useful if the data is effectively evaluated using applica-

tions such as plant asset management (PAM). In the past, the benefits of

physical layer commonality were often overwhelmed by Ethernet’s lack of

real-time performance and determinism, use of a non bus-based architec-

ture, higher incremental costs, and overall complexity when used in

machine control and other device network applications. Many of these

shortcomings have since been overcome.

Device- or I/O-level networks can accommodate a broad spectrum of

products ranging from low-end sensors to high-end, data-intensive devices

such as IPCs. Ethernet’s penetration at this level is still in its early stages.

The is due to the ongoing price premium associated with Ethernet-

compatible I/O and devices, the continued use of multiple divergent indus-

trial Ethernet protocols, and the inability to cost-effectively extend down to



The food & beverage

manufacturing industry, the largest

HMI software vertical, is one of the

largest consumers of energy and

water, and one of the largest

producers of waste product.

the highest-volume items at the device level: low-cost sensors and actua-

tors. Consequently, ARC expects industrial Ethernet to rapidly penetrate

the markets for vision systems/cameras, automatic identification/RFID,

and similarly data-intensive products. Remote I/O and motion control

products will account for a majority of total nodes shipped. Recognizing

the twin value propositions of commonality and ease of vertical integration,

I/O manufacturers are already migrating their products to Ethernet.

But while the business drivers are in place, the lag in technology and stan-

dardization development suitable to address discrete industry

requirements results in a slower adoption rate compared to the process in-

dustries.

Ongoing Demand for More Information – Handle, Store, and

Use Data

Companies are increasingly interested in handling information, since this

enables them to optimize their production process and accommodate regu-

latory requirements. Organizations will require even more information to

make optimized business decisions. Sustainability will be part of all

discussions and implementations. One example is the

movement towards sustainable manufacturing to drive

new growth and margin while responding to new retailer,

regulatory, and ―green‖ demands. For example, the food

& beverage industry is one of the largest consumers of

energy and water, and one of the largest producers of en-

vironmental waste product.

Industrial PCs also enable easy connectivity between the production floor

and office environments.

Increased Operational Visualization – More Transparency

Manufacturers increase their operational agility by accessing and visualiz-

ing real-time information and applying it to speed up and improve

operations, integrating business, manufacturing, and production. This fo-

cus is on continuous performance and agility improvement, visualization

and control of production equipment, digitized manufacturing operations,

and unified and standardized plant IT infrastructure. These manufacturers

deploy information technology that serves their business and operations

needs and is based on industry standards, securely managing and standar-

dizing visualization and IT infrastructure across multiple facilities. The

movement in this direction benefits automation panels and panel PCs that



are able to satisfy control and visualization needs with low investment and

in one device.

Serving the Installed Base

Maintenance replacements and revamps, rather than greenfield projects,

dominate the overall automation business. New projects, for example, only

account for about a third of the DCS market. Suppliers need to continue to

serve and evolve their installed base. Many end users may also take the

opportunity of a quieter business environment, when there is not so much

pressure on production, to reevaluate their overall automation and control

system migration and evolution strategies.

A steady demand for services from the installed

base cushions the impact of the economic down-

turn to a certain extent.

Deciding Between IPCs and PLCs/PACs

For the most part, the market accepts IPCs as an

alternative to PLCs or PACs. The decision be-

tween a PLC and a PC is in many cases only

determined by economic aspects.

IPCs are valued for their flexibility and the possi-

bility to leverage existing technologies that IT can

more easily support. Negatives are ruggedness,

durability, and reliability versus PLCs or PACs;

plus the typically short life cycles time of PC-based components and Micro-

soft-based operating systems. Automation users in some world regions

also still resist using PC technology in mission-critical applications.

Trends in the Industrial PC Market

Various trends within the industrial PC market will affect future growth.

These include the Atom processor, price development, and less-plastic as-

pects like the increasing acceptance of IPCs in manufacturing.

The Atom

The Intel Atom processor provides 800 MHz to 2 GHz performance with a

maximum thermal design power (TDP) of 0.65W to 8W (the Z series also

offer s 2GHz model with 2.4W TDP). This development offers various pos-

Figure 4-6: Automation Topology and IPC vs. PACs



sibilities to end users and machine builders. First, the low-cost, low-power

Atom enables low-CPU power IPCs at a low price, low energy consump-

tion, and low heat. In this regard, Atom-based IPCs directly compete with

operator panels. Still, some suppliers are reluctant to use the Atom, since

other products offer similar capabilities, especially if the motherboard is

specifically designed for one IPC. In the long run, the Atom will be suc-

cessful with small and large IPC suppliers.

Computing Power – Gets Larger and Size-Independent

Many suppliers now put more CPU power in one PC and offer dual- or

quad-core IPCs. More computing power enables an industrial PC to be

used in additional applications, especially in visualization. However, since

by our definition, embedded IPCs have fanless designs, high heat can be a

problem. While in the general-purpose PC world, computing power no

longer represents a constraint to compute-intensive software, this is not

necessarily a given with small, fanless IPCs that must conform to environ-

mentally hardened IP65 standards. The Atom processor now makes

standard IPC computing power available in small fanless IPCs at low cost.

With computing power increasingly becoming size and form factor-

independent, new markets and applications will open up for industrial

PCs, boosting demand.

Size-independent computing power also offers new form factors. One de-

velopment is flatter panel PCs that are more easily integrated into

machines. Wide screen panel PCs are also very popular and, in some cases,

upright wide screen panel PCs can replace a design with separate screen

and keyboard.

High Level of Customization

Many companies provide a high level of customization. This ranges from

hardware customs, to specific bundles of hardware and software. While

the percentage of custom products is very large in some companies (up to

40 percent) this depends on the batch size demanded from a customer.

While smaller players often tend to have a larger overall share of customi-

zation, extremely small batch sizes and even custom board development

are mostly found with suppliers that also sell chips (see Kontron, Advan-

tech, etc.).



Increased Openness and Functionality

There is a clear trend towards letting the controller become the ―industrial

blade server,‖ combining both control and production management func-

tions (historian, quality, OEE, downtime analysis) on the same platform

and connected to distributed I/O. The IPC market clearly benefits from

this development, since openness and commuting power are core advan-

tages of industrial PCs.

Success of Microsoft Windows

For HMI software, Windows XP was the fastest growing operating system

in terms of revenue, accounting for roughly 60 percent of the total HMI

market. However, while Windows has had large success in the HMI area,

many suppliers hesitate to use the Windows OS for control applications,

due to Windows’ relatively large footprint and non-real time, non-

deterministic nature.

In many industrial applications, Linux is the number one operating system.

This is especially true in the machine tool segment, where speed and accu-

racy are required.

PC-Based Safety Functionality

While safety is often an important issue, unlike PLC suppliers, many IPC

suppliers do not offer safety functionality. Those suppliers that do, tend to

integrate the safety as deeply as possible. Suppliers will increasingly ex-

plore development of failsafe IPCs that would enable an IPC to be used in

some safety applications, predominantly in discrete industries.

More Real-time Applications

Real-time applications represent a rising market area. This goes hand in

hand with the success of real-time Ethernet implementations, such as

EtherCat, Powerlink, ProfiNet, and EthernetIP.

DIN Rail PCs

Beckhoff experienced strong growth in recent years, especially for its first-

to-market DIN Rail PCs. Certainly, this segment will remain strong, but

over the long run, the trend towards distributed control is likely to decrease

the benefit of having I/O mounted on the PC.



Hardware/Software Bundles to Address Specific Industry

Requirements

While most European suppliers either already provide solution packages or

position themselves with high-quality custom IPCs, most Asian suppliers

have been more successful offering IPCs from large-scale production.

However, the trend toward hardware commoditization drives more suppli-

ers – European and Asian alike – to offer more software with their IPCs.

Suppliers also see both software and services as a means to improve hard-

ware sales.

Summary

This chapter attempted to unravel some of the mechanisms that drive the

market for IPCs. A brief overview of the factors contributing to and inhibit-

ing growth follows, while the previous paragraphs looked at a wide range

of factors.

Factors Contributing to Growth

Numerous factors impact the future market size as well as the market po-

tential. The factors contributing to growth presented here are limited to

those that affect the market as a whole.

Economic Recovery and Economic Stimulus Packages

The economic crisis severely impacted the global automation market. Now,

economic outlooks for 2010 have been corrected upwards. Economic stimu-

lus packages will have a clear impact on automation markets. Around the

world, governments launched stimulus packages that predominately

pushed utilities and other infrastructure-related industries.

Impact of Natural Resource Prices

The prices of commodities will rise again and will push end users towards

sustainable manufacturing that increase the amount of data needed and the

need for automation equipment such as IPCs.

Hybrid Industries

The hybrid industries represent a classical area for IPCs and also an area of

stable demand for automation products. Especially in emerging economies,

the demand constantly grows.



Building Automation

The booming building automation market increasingly incorporates more

classical automation technology. IPCs will increasingly be deployed, since

customers are familiar and comfortable with the PC architecture and func-

tionality.

India and China

ARC believes that China will not only demand more automation equip-

ment as wages rise, but will also shift towards more sophisticated systems

with greater capabilities for achieving international quality standards. Al-

so, India became much more integrated into the world economy. With an

eye towards improving productivity, many are selectively looking at areas

where they can replace manpower with automated processes.

Eastern Europe and Russia: The Wild East

Many Eastern European countries (Poland, Czech Republic, Slovenia, and

Slovakia) have done well during the crisis and will further drive IPC mar-

ket growth as they develop towards a higher and more extensive degree of

automation.

Merging of Layers and Functions

The classical automation topology has merged into a flatter, more inte-

grated architecture, where one device incorporates functionality like logic,

motion control, and also visualization. This is especially the case in food &

beverage, oil & gas, electric power, and water & wastewater industries.

This will drive the demand of IPCs.

Ever-Increasing Global Competition

This will have negative influence on the prices of industrial PCs, but even

stronger on intermediate goods like displays. Automation markets, in gen-

eral, benefit from the increasing competition felt by their customers, who

have to automate larger parts of their production to stay competitive.

The Atom

The low-cost, low-power Atom processor provides enabling technology for

low-CPU power IPCs at a low price, low energy consumption, and low

heat. In the long run, the Atom will open new field of application, since it

helps to decouple computing power from physical size.



Factors Inhibiting Growth

Several factors can inhibit future market growth. In particular, a credit

crunch could impact the market heavily. Current questions regarding an

upcoming chip shortage could also inhibit growth.

Capital Investment and Structural Effects

Even though central banks (such as the US Federal Reserve, the European

Central Bank, and the Bank of England) lowered target interest rates, inter-

est rates for industry remain high and loans often remain difficult to obtain,

creating a credit crunch. A sharpened credit crunch and possible structural

effects in manufacturing could lengthen the crisis for IPC suppliers.

Competition with PAC/PLCs

While IPCs become increasingly more capable, so do PACs. As a result,

IPCs face continuing competition from both PLCs and PACs in certain in-

dustries and global markets.

Maturing Market

As the market in general matures, market growth will constantly slow

down, due to dropping prices and saturated markets. Especially a drop in

display price will dampen the growth in revenue.

Chip Shortage

Beginning in late 2009 there are rumors about a possible chip shortage in

2010, when economy recovers. This could affect the market of IPCs badly,

but the impact depends also on the extend of a shortage, if it happens at all.


Figures in Millions of US Dollars, Total Market CAGR = 8.8%

Total Shipments of Industrial Personal Computers

Market Forecast Group Figure 4-1



Total Shipments of Industrial Personal Computers for North America




Total Shipments of Industrial Personal Computers for EMEA




Total Shipments of Industrial Personal Computers for Asia




Total Shipments of Industrial Personal Computers for Latin America



8.8%2,748.92,422.02,141.71,938.41,810.01,803.8

6.5%22.120.218.417.116.216.1

9.0%1,036.8915.0809.4730.1675.5672.4

9.1%1,312.91,150.61,014.2916.6855.1850.2

7.3%377.1336.3299.7274.6263.2265.0

Total

Latin America

Asia

EMEA

North America

CAGR201420132012201120102009World Region

Figures in Millions of US Dollars

Total Shipments of Industrial Personal Computers by World Region




Total Shipments of Industrial Personal Computers by World Region


8.8%100.0%2,748.9100.0%1,803.8

6.5%0.8%22.10.9%16.1

9.0%37.7%1,036.837.3%672.4

9.1%47.8%1,312.947.1%850.2

7.3%13.7%377.114.7%265.0

Total

Latin America

Asia

EMEA

North America

CAGR2014 Revenues%2014 Revenues2009 Revenues%2009 RevenuesWorld Region


8.8%2,748.92,422.02,141.71,938.41,810.01,803.8

12.7%212.6183.9158.0138.9125.5116.9

8.5%2,536.32,238.21,983.71,799.51,684.51,686.8

Total

Software Revenues

Hardware Revenues

CAGR201420132012201120102009Revenue Category


Total Shipments of Industrial Personal Computers by Revenue Category



8.5%2,536.32,238.21,983.71,799.51,684.51,686.8

9.1%176.5152.6131.2116.6111.5114.3

8.5%2,359.72,085.61,852.51,682.91,572.91,572.5

Total

Peripheral Hardware Revenue

PC Hardware Revenue

CAGR201420132012201120102009


Total Shipments of Industrial Personal Computers for Hardware Revenue by Type



12.7%212.6183.9158.0138.9125.5116.9

12.2%26.022.018.416.114.614.6

14.1%33.028.223.920.718.517.1

12.5%153.6133.7115.7102.192.485.2

Total

Other (Application Software)

Real Time Operating Systems

Operating System

CAGR201420132012201120102009


Total Shipments of Industrial Personal Computers for Software Revenues By Type




Total Shipments of Industrial Personal Computers for Chemical




Total Shipments of Industrial Personal Computers for Oil & Gas




Total Shipments of Industrial Personal Computers for Food & Beverage




Total Shipments of Industrial Personal Computers for Pharmaceutical & Biotech




Total Shipments of Industrial Personal Computers for Pulp & Paper




Total Shipments of Industrial Personal Computers for Electric Power




Total Shipments of Industrial Personal Computers for Water & Wastewater




Total Shipments of Industrial Personal Computers for Cement & Glass




Total Shipments of Industrial Personal Computers for Automotive




Total Shipments of Industrial Personal Computers for Aerospace & Defense




Total Shipments of Industrial Personal Computers for Semiconductors




Total Shipments of Industrial Personal Computers for Building Automation




Total Shipments of Industrial Personal Computers for Machinery Manufacturing




Total Shipments of Industrial Personal Computers for Electronics & Electrical



8.8%2,748.92,422.02,141.71,938.41,810.01,803.8

13.8%361.6312.2269.2237.2214.3189.4

9.9%187.6163.8143.8127.8116.9117.0

6.2%345.3301.5264.0235.9217.3255.2

9.8%220.8196.3175.1159.8150.2138.6

6.3%241.1215.9194.1177.6167.8177.5

5.0%30.527.224.322.221.023.9

5.7%180.5156.1137.1125.1119.2136.7

6.0%11.910.69.68.88.38.9

7.6%147.7133.1120.5111.8106.9102.5

10.4%277.0248.0222.4204.6192.7168.7

12.9%127.3111.698.588.882.469.5

7.9%119.7105.893.885.381.281.7

9.2%305.3269.2238.5217.0205.0196.2

7.9%90.279.770.463.558.461.7

6.1%102.390.880.573.068.676.2

Total

Other

Electronics & Electrical

Machinery Manufacturing

Building Automation

Semiconductors

Aerospace & Defense

Automotive

Cement & Glass

Water & Wastewater

Electric Power

Pulp & Paper

Pharmaceutical & Biotech

Food & Beverage

Oil & Gas

Chemical

CAGR201420132012201120102009Industry


Total Shipments of Industrial Personal Computers by Industry




Total Shipments of Industrial Personal Computers by Industry


8.8%100.0%2,748.9100.0%1,803.8

13.8%13.2%361.610.5%189.4

9.9%6.8%187.66.5%117.0

6.2%12.6%345.314.1%255.2

9.8%8.0%220.87.7%138.6

6.3%8.8%241.19.8%177.5

5.0%1.1%30.51.3%23.9

5.7%6.6%180.57.6%136.7

6.0%0.4%11.90.5%8.9

7.6%5.4%147.75.7%102.5

10.4%10.1%277.09.4%168.7

12.9%4.6%127.33.9%69.5

7.9%4.4%119.74.5%81.7

9.2%11.1%305.310.9%196.2

7.9%3.3%90.23.4%61.7

6.1%3.7%102.34.2%76.2

Total

Other

Electronics & Electrical

Machinery Manufacturing

Building Automation

Semiconductors

Aerospace & Defense

Automotive

Cement & Glass

Water & Wastewater

Electric Power

Pulp & Paper

Pharmaceutical & Biotech

Food & Beverage

Oil & Gas

Chemical

CAGR2014 Revenues%2014 Revenues2009 Revenues%2009 RevenuesIndustry


8.8%2,748.92,422.02,141.71,938.41,810.01,803.8

8.5%245.8216.5191.2173.5162.8163.5

4.8%19.318.116.815.915.215.3

7.2%971.3881.8802.7743.1697.4686.5

10.0%1,512.51,305.71,131.01,005.9934.7938.5

Total

Systems Integrators/Value Added Resellers

Internet

Independent Reps/Distributors

Direct Sales

CAGR201420132012201120102009Sales Channel


Total Shipments of Industrial Personal Computers by Sales Channel



8.8%2,748.92,422.02,141.71,938.41,810.01,803.8

7.5%486.3438.6396.8367.4350.2339.2

7.3%1,341.41,185.41,051.1953.8899.9941.5

12.0%921.2798.1693.8617.2560.0523.1

Total

Systems Integrators

Original Equipment Manufacturers

End Users

CAGR201420132012201120102009Customer Type


Total Shipments of Industrial Personal Computers by Customer Type




Total Shipments of Industrial Personal Computers for Robotics




Total Shipments of Industrial Personal Computers for HMI




Total Shipments of Industrial Personal Computers for Vision




Total Shipments of Industrial Personal Computers for Logic (Soft PLC)




Total Shipments of Industrial Personal Computers for Distributed Control (Soft DCS)




Total Shipments of Industrial Personal Computers for Motion




Total Shipments of Industrial Personal Computers for CNC




Total Shipments of Industrial Personal Computers for Data Acqisition




Total Shipments of Industrial Personal Computers for Communication Gateway



8.8%2,748.92,422.02,141.71,938.41,810.01,803.8

7.3%225.0198.8176.2160.8153.2157.8

9.7%265.2227.5196.4178.2167.0166.9

6.4%450.5417.0384.7359.2343.4330.1

6.3%98.984.973.365.863.672.9

5.8%82.671.562.356.555.762.5

6.6%128.1117.4107.3100.294.892.9

7.8%281.6246.1214.4194.5187.8193.4

8.5%96.986.276.669.465.164.4

11.8%1,046.0905.4789.0695.8621.9598.0

2.8%74.167.361.558.057.764.7

Total

Other

Communication Gateway

Data Acqisition

CNC

Motion

Distributed Control (Soft DCS)

Logic (Soft PLC)

Vision

HMI

Robotics

CAGR201420132012201120102009Application


Total Shipments of Industrial Personal Computers by Application



Figures in Thousands of Units, Total Market CAGR = 7.8%

Total Shipments of Industrial Personal Computers for 19" Rack Mount




Total Shipments of Industrial Personal Computers for Box PC




Total Shipments of Industrial Personal Computers for DIN Rail




Total Shipments of Industrial Personal Computers for Panel PC



9.6%1,445.31,270.41,122.41,010.7929.8914.1

8.7%46.041.036.733.531.030.3

13.5%577.1495.9427.0375.2337.3306.4

4.8%65.257.950.744.641.551.4

7.4%488.7426.8375.0335.5309.6341.5

7.8%268.4248.8232.9221.9210.3184.5

Total

Other

Panel PC

DIN Rail

Box PC

19" Rack Mount

CAGR201420132012201120102009Type

Figures in Thousands of Units

Total Shipments of Industrial Personal Computers by Type




Shipments of Standard 19” Rack Mount Industrial PCs




Shipments of Standard Box Industrial PCs




Shipments of Standard Panel Industrial PCs

Figures in Millions of US Dollars, Total Market CAGR = 10.6 %



Shipments of Standard Industrial PCs by Type


2009 2010 2011 2012 2013 2014 CAGR

19" Rack Mount 276,7 269,5 280,1 292,4 310,6 332,8 3,8%

Box PC 350,6 344,8 369,2 408,8 460,3 523,0 8,3%

Panel PC 590,2 608,6 664,3 742,5 851,8 977,2 10,6%

Other 41,1 41,0 43,7 47,7 53,0 59,3 7,6%

Total 1.258,6 1.263,9 1.357,4 1.491,3 1.675,7 1.892,3 8,5%

2009 2014 CAGR

Millions of

Dollars

Percent Millions of

Dollars

Percent

19" Rack Mount 276,7 22,0% 332,8 17,6% 3,8%

Box PC 350,6 27,9% 523,0 27,6% 8,3%

Panel PC 590,2 46,9% 977,2 51,6% 10,6%

Other 41,1 3,3% 59,3 3,1% 7,6%

Total 1258,6 100,0% 1892,3 100,0% 8,5%



Shipments of Embedded Industrial Din Rail PCs




Shipments of Embedded Industrial Box PCs




Shipments of Embedded Industrial Panel PCs




Shipments of Embedded Industrial 19” Rack Mount PCs




Shipments of Embedded Industrial PCs by Type


2009 2010 2011 2012 2013 2014 CAGR

DIN Rail 36,1 34,2 35,8 40,1 45,7 52,2 7,6%

Box PC 133,4 127,4 132,2 145,3 164,1 185,3 6,8%

Panel PC 100,1 103,3 111,4 126,0 145,1 168,6 11,0%

Rack Mount

31,2 31,2 32,4 34,6 37,9 42,0 6,2%

Other 13,2 13,0 13,7 15,1 17,0 19,3 7,9%

Total 313,9 309,1 325,5 361,1 409,8 467,4 8,3%

2009 2014 CAGR

Millions of Dollars

Percent Millions of Dollars

Percent

DIN Rail 36,1 11,5% 52,2 11,2% 7,6%

Box PC 133,4 42,5% 185,3 39,6% 6,8%

Panel PC 100,1 31,9% 168,6 36,1% 11,0%

Rack Mount 31,2 9,9% 42,0 9,0% 6,2%

Other 13,2 4,2% 19,3 4,1% 7,9%

Total 313,9 100,0% 467,4 100,0% 8,3%



Shipments of Industrial PC Subcategories


2009 2010 2011 2012 2013 2014 CAGR

IPCs without Rotating Parts and NV Ram

200,5 191,7 203,3 227,8 261,1 300,7 8,4%

Other 1.372,0 1.381,2 1.479,5 1.624,6 1.824,5 2.059,1 8,5%

Total 1.572,5 1.572,9 1.682,9 1.852,5 2.085,6 2.359,7 8,5%

2009 2010 2011 2012 2013 2014 CAGR

IPCs without Software 680,1 646,9 684,0 744,1 827,9 925,5 6,4%

Other 892,4 926,1 998,8 1.108,3 1.257,7 1.434,2 10,0%

Total 1.572,5 1.572,9 1.682,9 1.852,5 2.085,6 2.359,7 8,5%

Industrial PCs Worldwide Outlook • Supplier Profiles


Chapter 5

Supplier Profiles

The following pages provide profiles of the leading suppliers of Industrial

PCs (IPCs) to the worldwide market. These profiles analyze the total busi-

ness of each company as well as the IPC-related portion. Information is

provided regarding current model numbers, associated components, com-

munication protocols, and system-level offerings. Information on served

markets and alliances is also provided where appropriate. This information

was derived from company annual reports and in-depth discussions with

senior company officials.


5-2 • Copyright 2010 © ARC Advisory Group• ARCweb.com • For Internal Use Only

Company: Aaeon

Web: http://www.aaeon.eu/

Key Products

AEC series (embedded box), AOP series (embedded panel), and APC se-

ries(panel PC); Embedded Single Board Computer, Fanless Embedded

Controller, Panel PCs

Regions

North America; Europe, Middle East & Africa; Asia; China;

Description

Aaeon was established in 1992 in Taiwan and first focused on single board

solutions, before they converted the product lines to Compact Boards, Half-

Size CPU cards, and Full-Size CPU cards. In 1996 Aaeon already employed

over 100 employees and opened an office in New Jersey. 1998 a Chinese

and European Sales office were established. 1999 AAEON introduced new

the SMT series and was the first Taiwanese IPC manufacturer that went

public. In 2000 Aaeon began to complete the IPC and Opertor Terminal

Line offering to Industrial Workstations, Panel PCs, Display Monitors and

LCD PCs. Since 2004 an engineering group for industrial systems was es-

tablished and made industrial applications one of their key vertical

markets. In 2008 Aaeon opened an office in Germany.

Aaeon‟s key product still remains embedded single board products, so far,

but continuously broadens their portfolio. Fanless Box, Panel, and Rack

Mount Industrial PCs. In terms of industriel PCs there are three series that

are relevant for this study: The AEC series, which is a embedded Box PC,

the AOP series, which are embedded Panel PCs, and the APC series, which

are Panel PCs. The AOP-8070 is excluded, since it is an Operator Panel.

Partnerships and Acquisitions

Key Partnerships: Kontron, Aaeon, Advantech, Adlink worked in the na-

noETXexpress form factor (84 mm x 55 mm) to improve transparency, Blue

Chip Technology

Key Acquisitions: In 2000, AAEON acquired Astech Inc., a leading Panel

PC manufacturer.

http://www.aaeon.eu/



Strengths and Challenges

Top strengths: Fast growing and clear development into industrial enviro-

nemnt, based in Taiwan, already internationalized

Top challenges: become accepted in as a supplier for operator panes and

IPCs for manufacturing in Europe



Company: Adlink

Web: http://www.ad.siemens.com

Key Products

Industrial PCs, PC components, PCI Cards, Motherboards

Regions

Asia; China;

Description

Adlink was founded in August 1995 in Taipei, Taiwan and has operations

in America, Singapore, Beijing, Shanghai, and Shenzhen (China). Adlink

currently has 600 employees and was able to nearly double ots revenue

from US$ 57.5 million in 2006 to US$ 93.7 million in January 2009. One rea-

son was the acquisition of Ampro Computers, Inc. in 2008.

The development during the last years was to move up the value chain in

IPC production, which included the acquisition of Ampro Computer, Inc.,

the development of the DPAC and the opening of offices in Europe (2008 in

France and 2005 in Germany).

The majority of ADlinks business is selling IPC cards and components dor

Industrial PCs. Those components range from small cards, to mother-

boards to IPC housings. Only recently the DPAC was launched and

Adlinked entered the area of “finished” IPCs. Adlink also offers PC cards

for motion control, logic control, or SCADA applications.

If Adlink pushes further in the direction they started with the DPAC, they

will be a strong competitor to the established IPC suppliers in Europe.

Adlink is only represented in this study with a small number of their prod-

ucts. Namely the DPAC, milsystem, ruffsystem, and readysystem series

that are all embedded box PCs.


Key Partnerships: joint-venture with ITX-EG in Japan, Toshiba Teli Corpo-

ration to provide vision platform solutions, with Kontron to Deliver New

microETXexpress platform

Key Acquisitions: Ampro Computer, Inc.

http://www.ad.siemens.com/




Top strengths: Large portfolio of Components for industrial PCs, modular

design to fit user needs, low prices

Top challenges: get established as reliable supplier for automation outside

of Asia, find the right balance between finished product business and com-

ponent business, established a service business



Company: Advantech

Web: http://www.advantech.de/eautomation/

Key Products

Automation Software, Panel PCs, Box PCs, Din-Rail Mounted PCs, PC

based controllers, Rackmount PCs, Industrial communication equipment

Variety of no-industrial products

Regions

North America; Europe, Middle East & Africa; Asia

Description

Advantech was founded in 1983 by three former Hewlett Packard engi-

neers in Taiwan. Advantech expended rapidly and focused more than

most other Taiwanese IPC suppliers on automation and industrial needs.

Advantech is a Premier Member of the Intel® Embedded and Communica-

tions Alliance, a community of embedded and communications developers

and solution providers. Advantech covers a wide array of applications in

diverse industries, offering products and solutions in three business catego-

ries: Embedded ePlatform, eServices & Applied Computing, and Industrial

Automation groups. In 2008 Advantech had 3731 employees thereof 1330

are located in Taiwan. In 2008 the annual revenue was USD 523 million.

Thereof 31 percent were earned in China and Taiwan and 46 in Europe and

North America. The industrial Automation revenue was USD 115 million,

the embedded and industrial computing revenue was the largest section of

Advantech with USD 184 million.

Advantech‟s strength is certainly the rapid expansion to Europe and the

US, where it is already an established brand, a status many other Taiwanese

suppliers till have to work on.

Advantech offers system integration hardware, software, design services,

global logistics support, and a front and back office e-business infrastruc-

ture. For continued growth, Advantech is reorganizing into two major

businesses: One focused on its embedded, "design-in" activities, and the

other on its branded products and solutions activities. Regarding solutions

activities, Advantech will put investments on several high-growth sectors,

http://www.advantech.de/eautomation/



such as: Medical, Power & Energy, Intelligent Transportation; Intelligent

Life, Factory and Machine Automation, and Telecom & Network Security.

Embedded Box IPCs are the ARK-1300 ultra-compact series, the ARK-3300

Compact Box Series, the ARK-3400 expansible compact series, and the

ARK-4000 Series PC. Industrial Box PCs include the ARK 5280 series,

which offers PCI slots for expansions, the compact fanless Box UNO-2000

series, the high performance fanless Box PCs UNO-3000 series.

Rackmout industrial PCs are the UNO-4000 series, which is also available

as an embedded version.

Din Rail: UNO-1000 and UNO-1100. The Din-rail models also consist of

several industrial controllers: The Micro Pac and the ADAM-5000 series are

logic controllers. Advantech offers centralized and decentralized motion

control solutions. Centralized solutions include the PEC-3240 and offer the

capability to control up to 4 axis. The AMAX series are decentralized mo-

tion controllers, that are also able to handle up to four axis. In addition to

the classical motion controller housing and design, Advantech also offers

motion controllers as PCI cards. These are excluded in this study, since PCI

cards are excluded in General

Advantech offers a large range of Panel IPCs, including a number of touch

panel computers. Embedded Panels are the following models: TPC 120H,

TPC 660G, TPC 662G, TPC 66SN, TPC 66T, and the TPC 30 series. Industri-

al Panel PCs are: TPC 870 H, TPC 660E, TPC 1261H, TPC 1270 H, TPC

1770H , and TPC 1750 H. The AWS and IPPL series are also Industrial Pan-

el PCs. The PWS series is a rugged portal industrial PC.


Key Partnerships: Advansus/Taiwan/Motherboard design & Manufactur-

ing

Key Acquisitions: None to report


Top strengths: Branding, broad product range, global presence, Estab-

lished provider for Panel and Box PCs, well present in emerging economies,

combining western quality standards with Asian production costs



Top challenges: Dealing with increasing labor costs in Asia, increasing

competition from commercial vendors in Taiwan, core regional markets

begin to mature, get established as a provider for logic and motion control.



Company: ASEM

Web: http://www.asem.it

Key Products

Industrial PCs

Regions

Europe, Middle East & Africa

Description

ASEM was founded in 1979 in Buia (UD). Since ASEM. designs and manu-

factures its own Industrial PCs, around 30 percent of the total staff (120) is

employed in technical and R&D departments. ASEM is dedicated to the

design, production and marketing of solutions and systems based on the

open and standard architecture of PCs and of embedded technologies for

the application sectors of industrial automation and professional IT.

ASEM S.p.A. portfolio is basically divided into 4 product lines: Embedded

& industrial PCs, professional computers, POS & retail systems, and cus-

tom-oriented solutions.

In contrary to many IPC suppliers in Europe ASEM S.p.A. does not total

rely on motherboards from Taiwan, and is therefore offering 100 percent

industrial components.

ASEM offers the CoDeSys„ soft PLC runtime system for Windows XP (Co-

DeSys SP RTE) and Windows CE (CoDeSys SP)

Embedded Box (SMARTBOX, PB1300, PB1200, PB1000, and PB800), em-

bedded Panel PCs (OT600, OT800, OT1000, OT1200, OT1300) the embedded

Panel PCs eDOMO and DOMO1000 are specifically designed for building

Automation. Standard IPCs are available as Rackmount IPCs (PR90xx and

PR40xx), as Panel PCs (PB500, PB600, PB70xx, HMI600, and RV500), and as

Box PCs (WS500, WS500, WS500-TE, WS600, WS600-TE, FT500, FT500-TE ,

FT600, FT600-TE).


Key Partnerships: CoDeSys


http://www.asem.it/




Top strengths: All is designed and manufactured of one company.

Top challenges: Limited global presence



Company: Axiomtek

Web: http://www.axiomtek.com/

Key Products

Embedded PCs and embedded computing products

Regions

North America; Europe, Middle East & Africa; Asia; China

Description

Axiomtek was founded 1990 in Taipei , Taiwan and first positioned itself as

an automatic test system integrator. In 2008 Axiomtek already had 570 em-

ployees and USD 53.8 million revenue. Around 30 percent of the

employees are located outside of Taiwan.

The company‟s portfolio now includes single board computers, industrial &

embedded PCs, industrial automation products, touch panel computers,

network technologies, and display solutions. Axiomtek also offers Software

for industrial PCs (e.g. SCADA).

Embedded box PC (eBOX series, ICO-200 and ICO-100), embedded panel

PC (VTA Series, GOT Series,PANEL2000 Slim Client Panel Computer ),

standard rack mount IPC (IPC423, IPC421, IPC221, IPC220, IPC121, and

IPC120),standard Box IPC (Vertical Purpose Embedded System), standard

panel IPC (PANEL1000 Series).


Key Partnerships: None to report



Top strengths: already started to develop solutions out of hard- and soft-

ware

Top challenges: develop solution business

http://www.axiomtek.com/



Company: Beckhoff Automation

web: http://www.beckhoff.de

Key Products

CX series (Din Rail embedded PCs), standard Industrial PCs (19”Rack:

C51xx, Box: C61xx to C66xx, and Panel PCs: CP series, C33xx and C36xx

series), TwinCAT PLC, Bus Terminal Controllers (mini PLCs)

Regions


Description

Beckhoff is a USD 400 million company that is based in Verl, Germany.

Beckhoff implements open automation systems based on PC Control tech-

nology. The product range covers industrial PCs, I/O and fieldbus

components, drive technology, and automation software. Products are de-

signed to be used as separate components or can be integrated into a

control system. The Beckhoff “New Automation Technology” philosophy

stands for universal and open control and automation solutions for a wide

variety of applications.

Beckhoff supplies industrial PCs for control requirements and has a strong

focus on building automation. Like all industrial PC suppliers Beckhoff

leverages the modularity of the product, but there are still some holes to fill

like embedded panel PCs. The concept of a black box through software

eliminates the advantages of the modularity offered by the technology.

Beckhoff offers system solutions in different performance classes, enabled

through scalable technology. TwinCAT automation software integrates

real-time control with PLC, NC, and CNC functions in a single package.

All Beckhoff controllers are programmed using TwinCAT in accordance

with the IEC 61131-3 programming standard. TwinCAT PLC running un-

der the Windows NT/2000/XP/Vista operating systems includes both the

programming environment and the run-time system, so that an additional

programming device is not required.

Conceived as a pure software PLC, TwinCAT PLC allows up to four virtual

“PLC CPUs”, each running up to four user tasks on one PC. The PLC pro-

http://www.beckhoff.de/



gram can be written in one or more of the languages provided for in the

IEC 61131-3 standard.

The embedded PC line only includes the CX models, which are Din rail

embedded PCs - a product Beckhoff is famous well known for. The IPC

lines C61xx to IPC C66xx include box PCs that are primarily designed to be

mounted in a control cabinet. Many offer modular design to include a in-

dividual number of PCI cards. 19”Rack Mount industrial PCs consist of

one series, the C51xx. All of Beckhoff‟s control Panels are in fact no Opera-

tor Panels in the classical terms, but touch/function key monitors for

industrial PCs.

Beckhoff focuses heavily on the building automation market and serves

primarily markets that need high degree of openness – therefore less em-

bedded products – and often a larger batches and therefore a larger number

of industrial PCs.


Key Partnerships: Alber Weber GmbH, Artis, Microsoft, ASF Schir-

mer



Top Strengths: Open automation systems based on PC-compatible control

technology.

Top Challenges: Rapid growing competition in the core market from di-

verse suppliers, very focused portfolio, black box concept, holes in product

portfolio, growth via acquisitions is hardly possible



Company: BEG Bürkle

Web: http:// www.beg-buerkle.de

Key Products

Industrial Box PCs (Femto and Pico line) and Rack Mount IPCs (Ecoline

and Proline)

Regions

Europe, Middle East & Africa

Description

BEG Bürkle is a small industrial PC manufacturer located in the area of

Stuttgart. Bürkle currently employs 60 people and has an annual revenue

of approximately USD 14 million. Around 8300 industrial PCs are manu-

factured.

BEG Bürkle is now changing the focus towards more solution based busi-

ness. To achieve this they integrate a lot of functionality into a small

motherboard to leave room for customization. The share of custom IPCs is

currently at around 80 percent. While they have a 1 year innovation cycle

for chips and processors, they have a 2 to three year innovation cycle in

housing and other parts of the product. A large share of the PCs delivered

are ready to run.

The box PC lines (FemtoBox PicoBox NanoBox* CompactBox) are availa-

ble as embedded and standard industrial PCs. The ECOline and PROline

series are standard rackmount industrial PCs.


Key Partnerships: Partnership with panel producers – panel pc available

after the study was published



Top strengths: Specialized in box IPCs, focused on customer needs, high

degree of customization

Top challenges: Explore new markets (products and regionally)

http://www.beg-buerkle.de/



Company: Boser

Web: http://www.boser.com.tw

Key Products

Industrial PCs and single board computers

Regions


Description

Boser was founed in 1986 in Twaiwan and has developed from a supplier of

Boards and Singlie board computer to a supplier tht is ISO-9001 and ISO-

14001 certified and that provides Box, Panel, and Rack mount PCs. IN ad-

dition to the finished products from the end of the IPC value chain, Boser

still provides Industrial Single Board Computers, Chassis, Passive Back-

planes, Power Supplies, Mini PCIs, and Peripherals.

What is important is that BOSER has kept much of it‟s old cusomter, mean-

ing that BOSER is now providing complete IPC to e.g. European IPC

suppliers, that brand label these products.

The products included in this study are an Embedded Box(BBS 2xxx and

BBS 3xxx series), embedded Panel PCs (BPF series), standard rack mount

PCs (BBS 1xxx), standard Box PC (series BBS 4xxx series), and stan-

dard Panel PCs (BPC series)





Top strengths: good balance of price and quality, top supplier for IPC

products and boards for European/US suppliers.

Top challenges: Establish own brand,

http://www.boser.com.tw/



Company: B&R

Web: www.br-automation.com/

Key Products

Embedded box PCs (PC620) and embedded panel PCs (Powerpanel 100 and

300 Bios; Panel PC 300). The standard IPC (Box: PC 820 and PC 620,and

Panel: Panel PC 400,Panel PC 700)

Regions

North America; Europe; Asia; China; Latin America; India

Description

B&R offers a modular control philosophy to create platform independent

applications to meet OEM requirements. This philosophy is appluied

throughout all product portfolios.

B&R focuses on automation products for general motion control, visualiza-

tion, and process control for a variety of industries in machine and plant

control. This focus, and a network of 155 offices (most of them fully owned

subsidiaries) in more than 60 countries, enables them to support global end

users and OEMs.

B&R manufactures different types of automation controllers with full user

software compatibility throughout their range. Besides conventional opera-

tor panels B&R offers PLCs, industrial PCs (IPC), slot-PLCs, soft-PLCs, and

a full range of a slice I/O-line. This strategy helps them adapt their auto-

mation configurations and provide optimized solutions.

B&R has grown rapidly over the past years. The company claims that pri-

vate ownership synergizes with their specialized focus and offers an

environment for quicker decisions, resulting in faster support and product

development.

In the Industrial PC market B&R is part of the top players in terms of reve-

nue and technology. B&R‟s embedded IPC product line focuses on box

(PC620) and panel IPCs (Powerpanel 100 and 300 Bios; Panel PC 300). The

standard IPC line also focus‟ on these areas (Box: PC 820 and PC 620,and

Panel: Panel PC 400,Panel PC 700). One of B&R strength is the modular

design, which is a key feature throughout any product line. For example

panel PCs could be purchased with the PC 620 series core. The variety

http://www.br-automation.com/



based on modular design is a key strength that gives the customer great

variety of choice.


Partnerships: With automation manufacturers on the open Ethernet Power-

link network technology; Partnership with ALSTOM for the energy sector

and Bombardier for the train sector.

Acquisitions: None to report


Top strengths: Offering innovative automation solutions by incorporating

new technologies, while maintaining compatibility to protect users‟ soft-

ware investment.

Top challenges: Getting more into field building automation; Continue to

achieve growth in regions where large global suppliers command signifi-

cant market share.



Company: Contec

Web: http://www.contec.com/

Key Products

Measurement and Control, Networks, IPCs (embedded and standard Box

and Panel PCs) and other IPC related automation products (Single Board

Computers, Flat Panel Displays, Multi-Programmable Display, and Silicon

Disk Drives)

Regions

Asia, Japan

Description

Contec is based in Osaka, Japan and had annual sales of 11.3 billion Yen

($99 Million US Dollar sales) and 670 employees in the financial year that

eneded on March 2009.

Contec has alliances with Intel, Nexcom, and RMI. Nexcom itself is also

offering industrial CP, but also motherboards and other mezzanines. RMI

provides chip solutions for communication and media and delivers chips to

Advantech, Lanner, Nexcom or Contec, to name some examples.

The Product portfolio covers measurement and control products and indus-

trial PC products. The first category includes analog input/output, counter

& motion controller, digital input/output, bus expansion systems, serial &

GPIB communication, and accessories & cables. The second category in-

cludes box computers, single board computers, panel computers, flat panel

displays, and multi-programmable displays. Contec also offers network

and wireless products.

The product portfolio in industrial PCs focuses on fanless and embedded

products. Contec leverages modular design extensively. Panel PCs are

nearly exclusively offered with Windows CE, while Box PCs are available

in a greater combination with operating systems.


Key Partnerships: Intel, Nexcom, RMI


http://www.contec.com/




Top strengths: Established in Japanese Market, economies of scale for li-

mited products

Top challenges: develop solution business, enlarge product portfolio, de-

velop more industry and application specific know-how



Company: Eurotech

Web: http://www.eurotech.com/

Key Products

Regions

North America; Europe, Middle East & Africa; Asia; China; Japan

Description

Eurotech was founded in 1992 developed into a multinational company

with offices in, with offices in North America, Europe, China, and Japan.

The headquarter is in Amaro (Italy). In 2008 Eurotech earned revenue of

USD 135 million (80percent earned with Nano PCs and twenty percent with

high performance capaciticy PCs). Eurotech employed 586 people in 2008.

The revenue is not focused geographically on the home market, but is

spread out: 40 percent of revenue derive from business in the US, 25 per-

cent from the EU, and 31 percent from Japan.

The focus is still R&D focused and the implementation of the latest technol-

ogy into industry useable products and the focus is on miniaturization.

Eurotech focused on growth markets like pervasive computing but also of-

fers products to more established markets like manufacturing. Eurotech

offers two distinct products: Nano PCs and High Computing Capacity PCs.

The product line includes compact and industrial computers, panel com-

puters and monitors, networking, and wearable PCs. Eurotech has

comparably little revenue in manufacturing and a traditionally strong focus

on transportation, surveillance applications, and products for security, de-

fence and aerospace markets. Products range from highly reliable single

board computer (SBC), data communications, and I/O cards to complete

rugged mobile computer systems, IP networking equipment (switches, rou-

ters) and rugged flat panel displays.

Eurotech offers standard (VX series) and embedded (ICE-VIEW) panel PCs.

Eurotech also offers operator panels based on RISC architecture (VH-50R

and VX-50R), these are excluded in this study. The embedded box PC line

includes the VIPER ICE, the Pegasus ICE, and the Bx-400F-N270. Standard

box computers are offered with the VULCAN ICE, the BX-400F, and the

BX-400P. The Rack mount standard IPCs include the following products:

http://www.eurotech.com/



GEMINI ICE 1U, APOLLO ICE 1U,vAdRC-EXP1, and APC-INDUSTRIAL

PC.

Next to the IPC line, Eurotech offers industrial monitors



Key Acquisitions: In 2007 Eurotech entered into a contract for the acquisi-

tion of 65% of the share capital of Advanet (headquartered in Okayama,

Japan, in 2006 Eurotech acquired the Arcom Group, Applied Data Systems

Inc., Kurchatov Research Holdings, Chemonol, Remptech


Top strengths: deep production depth, customization

Top challenges: strong competitors in the embedded boards and system

business (Kontron and Taiwanese suppliers)



Company: EVOC

Web: http://www.evoc.com/

Key Products

Industrial PCs, PC components and mezzanines, Kiosk, and OTC systems.

Regions

Asia; China

Description

EVOC Intelligent Technology Co. Ltd. was founded in 1993 is a supplier of

embedded & industrial computing. The revenue in 2008 was approximately

175 Mio. USD. EVOC provides embedded products and system-integrated

solutions for various applications, such as traffic system, electric power,

telecom, sports, banking, gaming, medical care, energy, manufacturing and

networking. EVOC experienced 15 years of strong growth benefitting from

the general growth in the home mare China. Now, EVOC is penetrating

emerging economies and is trying to get into the market of industrial auto-

mation. In 2003, one of EVOC' s subsidiaries was successfully listed on the

Hong Kong Stock Exchange.

Still the main revenue of EVOC is outside this study scope and is to be

found in non-industrial applications, as well as in the field of PC compo-

nents. EVOC is not focusing in pure price competition, but also invests

heavily in R&D to enlarge the revenue share from higher margin segments

of the industrial PC market. In this movement EVOC became a member of

ECA (Intel® Embedded and Communications Alliance) in Mainland China

and is also cooperating with Microsoft, HUAWEI, ZTE, GE, SINOPEC, and

Lenovo, among others.

The Product line of industrial PCs mainly consists of standard IPC, while

the embedded PC line only consists of Box PCs. The standard IPC line in-

cludes a wide range of Panel, Box, and Rackmount PCs.


Key Partnerships: Intel, Microsoft, HUAWEI, ZTE, GE, SINOPEC, Lenovo


http://www.evoc.com/




Top strengths: Well established in Asia, especially in China.

Top challenges: get established in Europe as a supplier for industrial PCs.



Company: Flytech

Web: http://www.flytech.com.tw/

Key Products

Panel PCs K790 and K870, line of customized IPCs

Regions

North America; Asia; China

Description

Flytech was founded in 1984 and is a Taiwan based supplier for industrial

PCs. Flytech sells and manufactures industrial PCs, POS, and Kiosk-

systems. In 2008 its revenue was USD 73 million. Flytech US was respon-

sible for more than 50 percent of the total revenue. In 1989, Flytech

announced the first book size PC-8000 series and expanded this series later

on in terms of variations and computing power.

Flytech offers a product range that includes a POS and a kiosk series, which

are not included in this study. The panel PCs K790 and KK870 are included

and are both standard panel IPCs. The OEM&ODM business from Flytech

Flytech OEM / ODM business provides customized hardware and manu-

facturing for computer based niche products





Top strengths: Established in the POS and kiosk market, experienced in

IPCs, high production depth with own producing facilities.

Top challenges: get established in other markets beside POS and kiosk

http://www.flytech.com.tw/



Company: Hitachi

Web: http://www.hitachi.com/

Key Products

HF-W series, the HW-W7500RM, the HF-W7500, the HF-W6500, and the

HF-W2000.

Regions

North America; Asia; China

Description

Hitachi was founded in Japan in 1910 and currently earns total revenue of

10,000 billion yen(USD 91.2 billion), as reported in March 2009, about one

third (USD 23 billion)is earned with the industrial and power sector.

Hitachi, one of the world's leading global manufacturing companies, manu-

factures and markets a wide range of products that includes consumer

products, electronics, information systems, and power and industrial sys-

tems. Industrial automation and process control products such as drives,

field instrumentation, DCSs and PLCs, along with hydroelectric, nuclear,

and thermal power plants, are included in the power and industrial sys-

tems division. Industrial PCs are no key product for Hitachi. Hitachi is

known for its prowess in power plant construction, especially in the field of

nuclear technology. Other products in the industrial segment include com-

pressors, rolling mill equipment, elevators, and chemical plants.

Hitachi maintains research and development departments in all branches of

the company, which continually work on the improvement of products and

technologies. Synergy effects are specifically considered in product policy.

As a result, many components for Hitachi products are produced within

the company. Hitachi‟s medium-term management plan aims at providing

total solutions to customers.

Hitachi Industrial Equipment Systems Co., Ltd. was established in April

2002 by the consolidation of the Industrial Components and Equipment

Group of Hitachi, Ltd.; Hitachi Drive Systems, Ltd.; Hitachi Nakajo Tech-

nology, Ltd.; Hitachi Service & Engineering (East), Ltd.; and Hitachi Service

& Engineering (West), Ltd. Hitachi IES (known as Hitachi Sanki in Japa-

http://www.hitachi.com/



nese) is also targeting new business areas, such as remote monitoring ser-

vices for factories, the environment, entertainment, and IT.

The IPC models include the HF-W series, the HW-W7500RM, the HF-

W7500, the HF-W6500, and the HF-W2000.


Key Partnerships: Hitachi has a partnership with Fuji Electric Systems on

high power motors



Top strengths: Power modules and modular design

Top challenges: Implementing growth strategies in the face of fierce com-

petition



Company: ICP Electronics

Web: http://www.icpems.com/en

Key Products

Regions


Description

ICP Electronics was founded in 1997 on Taipei, Taiwan and developed

quickly to a company with over USD 100 million revenue. From January

2002 to January 2009 the revenue rose from USD 97.7 million to USD 143.7

million. ICP Electronics focused on boards, mezzanines, chips, and indus-

trial panel PCs. ICP conducted re-organization in 2004. The main business

of industrial PC was divided into IEI and ICPEMS. The IEI becomes mar-

keting and branding for the industrial PC business while unique electronic

manufacturing service becomes ICPEMS core.

ICP Electronic operates in the electronic manufacturing services industry.

It offers electronic, mechanical, and industrial design services, as well as

provides software/firmware development and design assurance services.

The company also provides various supply chain management services.

Products offered include motherboards, LCD Products, panel PCs, worksta-

tions, chassis, network, power supply, and accessory. Their customers are

worldwide and even though factories are concentrated across Taiwan and

mainland China, ICP Electronics has sales channels in almost 100 countries.





Top strengths: Electronic manufacturing services (EMS) for automation

suppliers, strong growth through 2009

Top challenges: moving up in the supply chain

http://www.icpems.com/en



Company: Kontron Elektronik

Web: http://www.kontron.de/

Key Products

Industrial PCs,

Regions


Description

Founded in 1962 Kontron is headquartered in Eching near Munich (Germa-

ny); further important locations are Kaufbeuren and Deggendorf

(Germany), Pittsburgh and San Diego (USA), Montréal (Canada), Taipei

(Taiwan), Moscow(Russia), and Beijing(China). The Kontron Group em-

ploys a workforce of over 2,500 persons, and is listed in the TecDAX 30

Index. Kontron‟s sales structure is present in approximately 20 countries.

During the current crisis Kontron benefits from the business in telecommu-

nications and infrastructure, this stabilizes the automation business. Total

revenue in 2008 was around USD 700 million, thereof 43 percent were

earned in America, 46 percent in Europe, and the remaining 11 percent in

emerging markets. Roughly a quarter in revenue results from industrial

sector.

In order to guarantee consistent product quality, Kontron Elektronik ap-

plies extensive quality assurance measures in the fields of design,

development, production, assembly and service, which conform to DIN ISO

9001 accreditation. For many years, the company has been developing its

range of products in line with DIN and EN regulations. By 1994, equip-

ment and systems were already being supplied in accordance with the

requirements of CE certification.

Kontron Elektronik sells its industrial computers directly as well as via

leading OEM partners, system houses as well as the company's own sales

forces in France, Singapore, Spain, Switzerland, the UK, and the USA. As a

result of the partnership formed with Thomson CSF at the end of 1995, the

company now supplies the largest range of computer products in France.

A worldwide consultancy and service network comprising the company's

own subsidiaries and technical representatives guarantee proximity to the

http://www.kontron.de/



customer. All computers are supplied with a 3-year guarantee which en-

sures safe operation. A 7-year product availability period is also

guaranteed.





Top strengths: high production depth, customization, active in stable mar-

kets beside manufacturing, premium partner of Intel

Top challenges: Taiwanese companies at the chip markets, maintain mar-

ket leadership in the robotic market



Company: Micro Innovation

Web: http://www.microinnovation.com/

Key Products

SystemP (industrial PCs), SystemN (Modular IO), SystemY (oparetor pa-

nels)

Regions

North America; Europe, Middle East & Africa

Description

Micro Innovation AG is located in St. Gallen, Switzerland, and manufac-

tures industrial PCs, Modular IOs, and operator panels. The Micro

Innovation AG was formed in 1990 and 50 percent of the share are owned

by Moeller, a company owned by Eaton. In 2001 Micro Innovation had

140employees and annualrevenue of Euro 27 Million.

While Moeller concentrates more on the classical automation, Micro Inno-

vation is focusing on PC based automation and high end equipment that

reflects the merge in automation layers. Micro Innovation also represents

the solution business. Micro Innovation uses the Moeller distribution

channels. While this clear split was announced before Moeller was ac-

quired by Eaton, Moeller and Micro Innovation are working closely

together for 15 years.

Moeller itself was acquired by Eaton on April 4, 2008 and is now a 100 per-

cent Eaton company. At this point of purchase Moeller had an annual

revenue of about USD 1.3 million. The synergy effects are largely in distri-

buting, where Eaton in the US and Moeller in Europe. In addition Moeller

(Easy Relay) manufactures the Eaton Intelligent controller and the Allen

Bradley Pico.

The operator panel line from Moeller consists predominantly of smaller

operator panels with text and graphical display. The operator panel line

that uses the Eaton / Cutler Hammer brand name ranges from simple text

displays to large and sophisticated panels that offer additional functionali-

ty.

http://www.microinnovation.com/



Micro Innovation benefited strongly from the 2007/2008 boom phase and

partly grew with 20 percent per annum. The IPC product range consists of

XP500 embedded panel PC, and the XP700.


Key Partnership: Eaton/Moeller, Turck



Top strengths: Innovation, substantial funding, comprehensive product

range, small fast growing innovative company, collaboration with Moeller

Top challenges: Turck could get a competitor in the long run, develop a

broader portfolio, leverage economies of scale, dependency on Moeller



Company: NEC

Web: http://www.nec.com

Key Products

PC technology, commercial and industrial

Regions

Asia; China;

Description

NEC Corporation was founded in 1899 and is based in Tokyo, Japan. The

consolidated net sales for the fiscal year ended March 31st 2009 were

¥4,215.6 billion. The main operating units of the NEC Group IT Service,IT

Products, Network Systems, Social Infrastructure, Personal Solutions, and

Electronic Devices. NEC was heavily affected by the poor overall economic

performance of its home market in 2008 and 2009.

Even though NEC is a globally oriented company they focus their IPC

business in manufacturing nearly primarily on Japan.

NEC represents a large part of the supply chain in silicon products. They

not only offer “silicon” products like Chips, e.g. for IO link or consumer

electronics, but also products and systems for e.g. visualization in manufac-

turing plants.


Key Partnerships: Oracle, Microsoft, bea, hp, EMC², Cisco Systems, Foun-

dry



Top strengths: high production depth, focus on silicon, Asian markets

Top challenges: price pressure

http://www.nec.com/



Company: Nematron

Web: www.nematron.com

Key Products

Rack (RM1400), box (nPC200 Series, SB600/800 Series), and panel (ePC-

Series, ePC-Plus Series) industrial PCs.

Regions

North America; Europe, Middle East & Africa; Asia; China; Latin America;

India

Description

Nematron designs and manufactures PC-based industrial automation

products that include software for logic control, process visualization,

SCADA, process control and data acquisition. Nematron products cover a

broad spectrum from low-end operator inter-face to Windows based con-

trol software.

During the 1990s Nemarton grew strongly and aggressively acquired a

couple of companies to form an integrated supplier for Hard- and Software

for automation.

Nematron designs and manufactures open, PC-based industrial automation

hardware products. Nematron products are designed for reliability in the

harshest operating environments and are easily serviceable using standard

tools for minimum downtime. Nematron was one of the founders of the

Industrial PC movement.

Nematron has outsourced manufacturing of all its computers to Solectron

of Columbia, S.C. The company itself shall focus on hardware and software

design, not manufacturing. Solectron, a multi-billion dollar global electron-

ics manufacturing service provider, assembles computers for IBM, Hewlett-

Packard and Dell Computer. Nematron has also cut a deal with AT Com-

puters in the Czech Republic to make its products under license in Europe.

The line of products include standard industrial PCs in various housings:

Rack (RM1400), box (nPC200 Series, SB600/800 Series), and panel PCs

(ePC-Series, ePC-Plus Series) are available.

http://www.nematron.com/







Top strengths: tradition in PC based control business

Top challenges: regaining technological and market strength



Company: Pepperl + Fuchs

Web: http://www.pepperl-fuchs.de

Key Products

Complete set of factory and proximity sensors. Instrinsically safe isolators,

zener barriers, signal conditioners, Fieldbus infrastructure, remote IO sys-

tems, HART interface solutions, level measurement, visualization, Sensors

for hazardous areas.

Regions


Description

Founded in 1945 and privately held, Pepperl+Fuchs has an overall revenue

of around USD 490 Million, 1/3 is created in process automation and 2/3 in

factory automation. Their in house manufacturing depth is very high in

their core products (Ultrasonic sensors are manufactured in Hungary, in-

ductive are manufactured in Singapore and Indonesia). In their factory

automation business the main products are: AS-Interface, Barcode & Cam-

era Systems, Capacitive Proximity Sensors, Inductive Proximity Sensors,

Industrial Vision, Photoelectric Sensors, RFID Systems, Rotary Encoders,

and Ultrasonic Proximity. One of the technological leaders, build most of

their own sensors and have own distributor network, Pepperl+Fuchs‟ strat-

egy is to offer sensing solutions.

During the last years their growth was mainly driven by acquisitions. To

compete in the sensor business Pepperl+Fuchs is cutting production costs,

so they moved to Singapore in 1989 and to Indonesia in 2000.

Further penetrating the market for process automation and made panel PCs

a key product. In this process Pepperl + Fuchs acwuired a company called

Extec, Germany and Christensen Display Products, US to achieve a fast

market entry. Christensen was acquired in late 2008 and is a suppler of in-

dustrial monitors. Extec is a supplier of panel PCs and operator panels for

explosion areas and was acquired in 2005. The acquisition of Extec Oesterle

GmbH was Pepperl + Fuchs‟ reaction to the merge of automation layers.

Panel PCs are a strategic product, even though they are not representing

the major part of revenue. At the time of the acquisition Extec barely had

thirty employees and no chance to enter the world market anytime soon.

http://www.pepperl-fuchs.de/



Pepperl + Fuchs is leveraging it sales network to provide Panel PCs world-

wide.

The products included in this study are all standard panel PCs and include

the following product series: VisuNet GMP, VisuNet, IPC-Ex. Panel PC

VISUEX.

The overall topic of intrinsically safe and Ex area automation is strong with-

in Pepperl + Fuchs.


Key Partnerships:

Partnerships: Partnership with GE Fanuc Automation. The partnership

includes the delivery of Schnittstellen-Komponenten and focuses on Profi-

bus technology.


Omnitron: Pepperl+fuchs added a new product to their portfolio with the

acuisition of Omnitron AG: Weg-Codier-System

P+F acquired the Intrinsic Safety Instrumentation (ISB) business located in

Buehl, Germany, from Cooper Crouse-Hinds, a division of Cooper Indus-

tries. The products manufactured by ISB – including Remote I/O, Din Rail

devices and Zener-Barriers components

VMT Vision Machine Technology: Supporting growth, in the year 2006,

P+F took over VMT Vision Machine Technic Bildverarbeitungssysteme

GmbH located in Weinheim. VMT GmbH supplies turnkey solutions for

the field of robot vision, robot guidance and machine vision, this extended

the Factory Automation product range by high-end image processing sys-

tems.


Top strengths: strong positioned in process industries and discrete indus-

tries, focus on explosive areas

Top challenges: leverage synergies between process and discrete business,

leverage synergies between acquired companies, enlarge IPC business from

explosive areas to other control applications



Company: Lanner


Key Products

EM- and LEC-series, ODM for other IPC suppliers, intermediate PC prod-

ucts

Regions

North America; Asia; China;

Description

Lanner Electronics Inc. was founded in 1986 and is a publicly listed compa-

ny based in Taiwan and has additional offices in mainland China, and US.

The company was formerly known as GES Taiwan and changed its name to

Lanner Electronics Inc. in 1993. Lanner Electronics Inc. is a designer and

manufacturer of frontline network security, network video and embedded

computing platforms. Lanner faced a decline in revenue that started in

2008 (revenue in million USD: 29.0 in 2005), 38.2 in 2006, 63.5 in 2007, 56.0

in 2008) and continued through 2009.

Lanner‟s business model is to supply intermediate products to IPC and op-

erator panel manufacturers. It also provides ODM services, which include

engineering and manufacturing services; custom design and manufacturing

services; and technical support services

As products the company offers network application platforms (including

x86 network appliances), network processor platforms, and network acces-

sories. In this market research only the embedded and industrial

computing products, including fanless computers, industrial control sys-

tems are included. Lanner‟s line of slot cards, SBC backplanes, and

embedded and industrial motherboards is excluded in this study.


Key Partnerships: Strategic alliances with Intel, Microsoft, Cavium Net-

works, Beijing L&S Lancom Platform Tech.Co.,Ltd, RMI Corporation,

6WIND, Storage Bridge Bay Working Group (SBB), and Stretch Inc.






Top strengths: located in the Taiwan clusters, well connected within the

PC manufacturer community

Top challenges: getting established as a supplier of products, bridge be-

tween supplying IPC suppliers and concurring with them.



Company: Rockwell Automation

Web: http://www.rockwellautomation.com/

Key Products

Embedded box and panel IPCs, standard panel, box, and rack mount IPCs;

SoftLogix5800 Controller

Complete line of PLC products: Nano PLCs (Pico controller), micro PLCs

(MicroLogix and CompactLogix), small PLCs (ControlLogix and SLC 500),

large PLCs (ControlLogix and PLC), and PanelView series of operator pa-

nels

Regions


India

Description

Rockwell Automation is a leading global provider of industrial automation

control and information solutions that help manufacturers achieve a com-

petitive advantage in their businesses. The company focuses on addressing

customers‟ business needs to form automation solutions through partner-

ships with a large network of local companies in distribution, services, and

software around the world.

With headquarters in Milwaukee, Wisconsin, Rockwell Automation has

two major product lines, Allen-Bradley and Rockwell Software, which offer

automation solutions that include control and information platforms, in-

dustrial components, intelligent motor control and global manufacturing

support services. The Operator Panel series PanelView uses the Allen

Bradley Brand name. Rockwell Automation continues to maintain its posi-

tion as the leading supplier of industrial automation equipment, systems,

and services in North America. In addition, around 50 percent of the com-

pany‟s total revenue is now coming from their non-US operations.

Having a strong financial position, Rockwell Automation continues to ac-

quire expertise and invest in innovation and aggressive research and

development. Through a global transformation of its business processes

and the underlying information systems that support them, the company

has simplified and increased collaboration to better serve its customers and

http://www.rockwellautomation.com/



achieve its growth goals. The company‟s long-term strategies include pro-

viding business-driven solutions, Six Sigma practices, and a performance-

driven culture to solve customer challenges.

Rockwell Automation offers the complete range of PLCs. The Logix control

platform, which is classified as a Programmable Automation Controller

(PAC), provides a single control platform for discrete, drives, motion, and

process control systems. The ViewAnyWare visualization software could

also enable the PAC to be used for visualization. The complete PLC line

pushes the Operator Panel business, since they are often sold in a bundle.

The PanelView Standard operator terminals offer the classic operate and

monitor functionality. PanelView 'e' Operator Terminals are graphic Oper-

ator Panels, the PanelView Plus series adds functionality to the „e‟ and

standard series. The PanelView Plus CE series adds the open platform flex-

ibility of Microsoft Windows and is an Automation Panel.

The complete Rockwell Automation advantage includes seamless integra-

tion with the full suite of Rockwell Software solutions, including Integrated

Architecture™ and FactoryTalk® View software. Combining Rockwell Au-

tomation hardware with its software assures comprehensive application

support from an industry leader.

6180P Integrated Keypad is and embedded panel PC that either functions

as an operator panel or an IPC. 6181 P/F (performance and standard op-

tion) are standard panel IPCs and are both using Windows XP Professional

as an operatong system. 6155R/6155F 200R is a box PC that has the option

to be Din Rail mounted and also embedded. 6177R models 650R and 750R

is also a standard box PC, which additionally offers the option to be used as

a server. 6177R model 1450R is a rack mount standard IPC.

Rockwell offers the 6181H, which is a standard box IPC with Windows XP

Professional in combination with the 6186M monitor to create a panel and

box application for hazardous locations.

SoftLogix5800 Controller is also an IPC that developed from Rockwell Au-

tomation‟s PAC line. IT is classified here as an embedded panel PC.

Rockwell Automation offers a large line of accessories that include moni-

tors, industrial keyboards and mice, and mounting hardware.




Key Partnerships: OSIsoft, Samsung, Omron, Weidmüller, En-

dress+Hauser; Relationships with Intel, IBM, Moeller, and Cisco for

collaborative manufacturing solutions.

Key Acquisitions: Xi'An Hengsheng Science & Technology Company Li-

mited, a privately held engineering firm. Xi'An Hengsheng Science &

Technology delivers automation solutions to the electrical power and other

heavy process industries in China. CEDES' Safety and Automation Busi-

ness, Incuity Software, Inc., (Enterprise Manufacturing Intelligence (EMI)

software), Pavilion Technologies (model predictive control), ICS Triplex

(process safety, ISaGRAF), ProsCon Holdings Ltd., (process industry solu-

tions); Datasweep and Propack Data (manufacturing solution software), the

controller business of Samsung‟s Mechatronics division, Tesch GmbH (safe-

ty relays), EJA (safety products), Entek IRD (condition monitoring), batch

software business of Sequencia (RPM Series), SMC (shop floor scheduling

and simulation), PowerAutomation GmbH, Interwave Technology.

Rockwell Automation recently acquired Rutter Hinz Inc., an engineering

company with expertise in industrial automation, process control and pow-

er distribution, specifically for the Oil & Gas industry, in addition to the

pipeline, utility, mining, forestry, and food and beverage sectors. The ac-

quisition accelerates the growth in Canada‟s heavy industries and oil and

gas market, enhances Canadian oil sands opportunities, and strengthens

global project management and engineering solutions delivery capabilities.


Top strengths: Broad range of products, Logix PAC platform, good stra-

tegic focus and aggressive execution of strategies

Top challenges: Penetrating the European market.



Company: Schneider Electric

Web: http://www.schneider-electric.com/

Key Products-

Schneider Electric Brand Name

Pro-Face Brand Name:

Digital Electronics brand name:

Regions


India

Description

The revenue and products reported here include the products from teleme-

canique, Pro-face, Digital Electronics, and products that use the Schneider

electric Brand name.

Schneider has a strong corporate geographic balance to support its long

history of success and concentration in the industrial automation market,

Schneider Electric continues to invest in its automation business. Since

Schneider Electric invented the PLC in the late 1960s (Modicon), the com-

pany has constantly improved its breadth and depth of experience and

know-how across a wide spectrum of industrial applications and markets

in countries all around the world.

Schneider Electric organizes its automation business to assure focus on its

customer‟s business success. Schneider Electric will marshal its resources

to help enable customers to reduce engineering costs, increase real-time op-

erating efficiency, increase flexibility, and safety, and continuously improve

productivity. In that respect, Schneider Electric has developed collabora-

tive automation as a differentiating value since the early 1990s. Schneider

Electric claims that this differentiating value rests on a foundation of inno-

vation and open technology choices and on the active collaboration with

partners and system integrators.

Schneider Electric‟s bias toward open technology choices is evident in the

industrial communications area, where Schneider Electric has been the first

mover with Ethernet for communications fieldbus as widely implemented

http://www.schneider-electric.com/



through Modbus/TCP. Soon thereafter, Modbus was released as a public

standard (www.modbus.org).

With a strong solutions orientation as the guiding principle, Schneider Elec-

tric has created automation competency centers and project execution

centers across the world to more easily deliver automation design and deli-

very resources with deep know-how about specific industry segments for

its customers. Schneider Electric also carefully handles the migration path

for Schneider Electric automation and control products and solutions

among existing Schneider Electric customers.

Digital Electronics Osaka, Japan was founded in 1972 as digital Electron

Corporation and named itself digital Electronics since 1973. Digital Elec-

tronics employs over 1100 people and has estimated annual revenue of

USD 280 Mio. Since 2002 Schneider Electric controls this company and

owns 98.7 percent of all shares since December 31st 2003. Operator Panels

with the Pro-Face brand name are produced in Wuxi, China. Xycom is also

a part of Digital Electronics and after the acquisition adopted the Pro-face

brand name.

ProFace was the first company on the market with operator panels and has

been the market leader for a long time. Still ProFace is internally more fo-

cused on panels than on industrial PCs, which are also part of its portfolio.

The magelis IPC series from Schneider is reduced to some core products,

especially Panel PCs. In addition to the Panel PCs, Schneider Electric also

offers a Box PC (Control box 102 and 402) that could be used as a stand

alone PC, or be combined with a screen to a modular panel PC. The smart

box is an embedded box PC and the Flex PC BOX allows to include PCI

cards and is also available in a heavy duty model.


Key Partnerships: Sun Microsystems, Toshiba, Clipsal Industries, Tatung,

Brooks Automation (semiconductor wafer fabrication solutions), Gira for

Building Automation.

Key Acquisitions: Intelligent Motion Systems (IMS), Pelco, Citect

(HMI/SCADA, production management software), Crouzet Automatismes,

SIG-Positec (Swiss), Square D, Modicon, Telemecanique, Merlin Gerin,

Elektropøístroj Písek (Czech), SIG-Positec & Berger Lahr (stepper motors),

TAC AB (building automation systems), Kavlico (Sensors), Nu-Lec, ELAU

http://www.modbus.org/



(packaging machinery controls), Lexel Concern (electric installation materi-

al), Digital Electronics (Japan), Conlog (South Africa), Crompton Greaves

(India), Samwha SEOCR (Korea), Andover Controls (Building Automation

Systems), VA TECH ELIN EBG (Austria).


Top strengths: Global company with local and distribution channel focus

and a broad range of automation products; „One Stop Shopping‟ for factory

automation such as relays, sensors, PLCs, HMI/SCADA, drives; a large

range of products in power & control for large infrastructure sites

Top challenges: Sustain global expansion in the presence of other strong

automation suppliers



Company: Siemens


Key Products

Embedded PCs (Embedded Box PCs: SIMATIC IPC427C, and embedded

Panel PCs: SIMATIC HMI IPC477C), standard IPCs (Rack Mount: SIMATIC

IPC547C, SIMATIC Rack PC 647B, and SIMATIC Rack PC 847B , Box: SI-

MATIC Box PC 627B, SIMATIC Box PC 827B, and Panel: SIMATIC Panel

PC 577B and SIMATIC Panel PC 677B series).

SIMATIC family: S7, WinAC, WinCC, PCS 7, SIMATIC IT, ET 200, LOGO!

Regions


India

Description

Siemens AG (Berlin and Munich) is a global provider of electronics and

electrical engineering, operating in the industry, energy and healthcare sec-

tors. The company has around 430,000 employees (in continuing

operations) working to develop and manufacture products, design and in-

stall systems and projects, and tailor a wide range of solutions for

individual requirements. In fiscal 2008, Siemens had revenue of €77.3 bil-

lion and a net income of €5.9 billion (IFRS).

The Siemens Industry Sector (Erlangen, Germany) is the worldwide leading

supplier of production, transportation, building and lighting technologies.

With integrated automation technologies as well as comprehensive indus-

try-specific solutions, Siemens addresses the productivity, efficiency and

flexibility of its customers in the fields of industry and infrastructure. The

Sector consists of six Divisions: Building Technologies, Drive Technologies,

Industry Automation, Industry Solutions, Mobility and Osram. With

around 222,000 employees worldwide Siemens Industry posted in fiscal

year 2008 a profit of EUR 3.86 billion with revenues totaling EUR 38 billion.

Siemens has long been is the leading PLC supplier worldwide. The combi-

nation of an extensive product range in PLCs and IPCs puts Siemens in the

position to offer both technologies as being complementary without loosing

any customer. Siemens‟ sheer size, combined with a comprehensive range




of products and solutions, provides Siemens with a unique competitive po-

sition. Siemens‟ strategy is to offer customers the benefits of dealing with a

single, financially secure supplier for all electrical products including au-

tomation, drives, switchgear, control gear, and motors.

Siemens‟ Industry sector is responsible for the design and production of a

wide range of automation products, including controllers, industrial PCs,

Operator Panels, drives, an array of low voltage products and peripheral

products, and software ranging from configuration and programming to

PLM systems. The key concept behind this is called TIA: Totally Inte-

grated Automation. To keep this concept up to date Siemens acquired the

software companies UGS and Innotec.

Siemens provides a line of embedded PCs (Embedded Box PCs: SIMATIC

IPC427C, and embedded Panel PCs: SIMATIC HMI IPC477C), standard

IPCs (Rack Mount: SIMATIC IPC547C, SIMATIC Rack PC 647B, and SI-

MATIC Rack PC 847B , Box: SIMATIC Box PC 627B, SIMATIC Box PC

827B, and Panel: SIMATIC Panel PC 577B and SIMATIC Panel PC 677B se-

ries). In contrast to many other suppliers Siemens offers decentralized

architecture as a product (those products are therefore also Panel PCs).

One of they key advantages is the modular design that Siemens leverages

to provide custom solutions in small batches.

The real Time Operating System is called RMOS3 and Siemens also offers a

solution package for automation purpose that expands RMOS3 with addi-

tional functionality to fit machine builders and end users demand. The so

called Board Support Package for example includes functionality to use

SIMATIC IPCs as PROFINET IO controllers or PROFINET device by means

of a CP 1616-compatible call interface.

In addition to the extensive line of industrial PCs, Siemens is providing op-

erator and automation panels. Siemens automation panels (Multi Panels)

are very open and merging in capabilities with embedded Panel PCs.


Key Partnerships: Yaskawa, Fuji Electric

Key Acquisitions: Flender, Robicon, Orsi, VATech, Moore Products,

Milltronics, Flow Division of Danfoss, US Filter, UGS, Innotec




Top strengths: Broad automation portfolio, a strong identity as a discrete

controls company with a growing presence in process automation, and a

significant presence in fast growing markets, such as India and China

Top challenges: Maintain a strong position in fast growing markets such

as China, India, and Russia

Appendix A

Copyright 2009 © ARC Advisory Group • ARCweb.com • For Internal Use Only • A-1

Appendix A:

Methodology

Over the past two decades, ARC Advisory Group has become the leader in

providing in-depth and accurate market intelligence for the industrial au-

tomation marketplace. From the beginning, our corporate goal has been

total client satisfaction. We have continuously strived to refine and im-

prove our vision of future plant automation systems. To meet the growing

need for global market intelligence, we have recently expanded our services

to cover the international marketplace.

ARC’s research database is based on thousands of user surveys, telephone

interviews, plant visits, and in-depth profiles of hundreds of suppliers and

users. Our extensive network of industry contacts has been an invaluable

asset in filtering out long-term trends from fads. Our consultants are

skilled in analyzing and forecasting the impact of new technology and

products on plant automation systems. We systematically study each mar-

ket segment before developing specific recommendations for our clients.

ARC consultants follow technology and industry events on a daily basis,

and have a broad range of expertise in all areas of industrial automation,

including sensors, control systems, networks, computers, software, and

services. We are experienced in working with all types of manufacturing

processes including continuous, batch, discrete repetitive, and job shop.

Each year, ARC consultants attend the most important trade shows around

the world. In addition, ARC consultants attend press conferences held by

most major suppliers and review hundreds of news releases each year.

ARC consultants then sort out real and long lasting trends in the market-

place.

ARC uses a five step approach to conduct global market research for the

industrial automation marketplace. This approach provides our staff with

a solid framework to formulate meaningful strategies for our clients. You

can be assured that we give all areas of the study a considerable amount of

time and thought before moving on to the next step. The following con-

tains a brief description of how we conduct each of these five steps.

Appendix A

A-2 • Copyright 2009 © ARC Advisory Group • ARCweb.com • For Internal Use Only

Step 1: Client Inputs and Secondary Search

ARC started this project by inviting inputs from our primary clients and

researching all secondary sources of information. Key secondary sources

researched include the following.

ARC Database

ARC maintains a proprietary database on the industrial automation mar-

ketplace. This database provides our staff with a solid base to start their

research project. The database includes the following information on sev-

eral thousand companies:

Annual Reports

10K and other Financial Reports

Client Lists

Price Lists

Published Secondary Data on Companies and Products

Market Size and Forecast Data

Market and Technology Trend Data

Literature Search and Review

ARC subscribes to over 150 magazines and newspapers covering a wide

range of topics relevant to the industrial automation community, as well as

an extensive library of directories and books. We are on the news and

product release mailing lists of every key user and supplier in the market-

place today. We sort and file important news and articles for future use.

We research and analyze our in-house database and the prominent publica-

tions relevant to this study to identify:

Issues of interest pertaining to the study

Product and technology trends in the industry

Changing user needs

Manufacturer's products and key individuals within the study's scope

Sales and Financial Literature Requests

ARC requests capability brochures, catalogs, data sheets, application notes,

and price lists from all known or potential manufacturers and suppliers of

products pertinent to a study. We also request the following financial re-

ports when needed:

Annual reports

Appendix A


10K statements

Prospectus and investment analyses

Our studies evolve rather than being forced. This assures you that the re-

sults are accurate, up-to-date, and meaningful.

Step 2: Identify Key Issues

After discussions with clients and a careful review of all secondary infor-

mation, ARC developed a list of key issues concerning both users and

suppliers. In terms of elapsed time, ARC spent several weeks discussing

issues pertinent to this study with the leading suppliers. We also capita-

lized on information contained in our previous market research reports and

seminars on process control.

Step 3: Gather Primary Data

Supplier Survey and Interviews

First, we conducted a top down analysis of the leading suppliers' products

and various businesses in order to get a better understanding of the global

business environment. Then we conducted telephone interviews with key

individuals at all major suppliers. Where possible or necessary, we inter-

viewed more than one person at each company to verify the accuracy of the

information. We interviewed individuals typically engaged in one of the

following functions at these companies:

Product management

Marketing management

Product planning

Sales management

Automation Profiles of the Leading Edge OEMs and

Manufacturing Companies

ARC has compiled automation profiles of the leading edge OEMs and

manufacturing companies. Some highlights of the information that is in-

cluded in these profiles are:

Plant automation budget of the company and how it is likely to change

over the next five years.

Open systems implementation plans and preferences of the company.

Appendix A

A-4 • Copyright 2009 © ARC Advisory Group • ARCweb.com • For Internal Use Only

What the top automation priorities are for the company and what por-

tion of the budget is likely to be spent on control systems, sensors,

computers, software, and systems integration.

Enterprise-wide integration plans and strategies of the company by

geographic region.

Company preferences for different types of control systems, computers

and software.

Step 4: Data Analysis

We organized and entered all gathered data into a computer database. The

data was verified, sorted and cross-tabulated in numerous ways to filter out

industry trends and answers to the key issues identified earlier.

After analyzing all market data, we prepared preliminary market forecasts.

At this time, we considered many alternative scenarios and tested them

against some key criteria. Finally, we chose the most accurate scenario.

Step 5: Prepare Final Report

After finalizing market forecasts, we drew charts and graphs to get further

insight into user needs and wants. We spent a considerable amount of time

and effort to draw conclusions and sort out long-term trends from fads. Fi-

nally, after we considered many different strategic alternatives, we

developed recommendations for the industry participants.

Benefits of ARC's Methodology

Key benefits of ARC's methodology in conducting market research are:

This is a proven approach and is designed specifically to conduct global

market research for the industrial automation marketplace.

Our staff members do all our research work. The ARC staff has first-

hand industry knowledge and experience. Our staff's average level of

industry experience is over twenty years.

ARC actively solicits inputs from suppliers and users throughout the

duration of a project.

Our experienced staff conducts all interviews - not someone with abso-

lutely no knowledge of the industry.

We encourage independent thinking by our staff members.

Appendix A


We can identify key individuals for interviews quickly and accurately

through our extensive network of industry contacts and data base.

We can complete each task very efficiently through our use of auto-

mated resources.

Appendix B

Copyright 2009 © ARC Advisory Group • ARCweb.com • For Internal Use Only • B-1

Appendix B:

Common Industry Abbreviations

3PL 3rd Party Logistic

3PP 3rd Party Parts Provider

3PS 3rd Party Service Provider

4GL Fourth Generation Language

A/D Analog-to-Digital

ABC Activity Based Costing

ACM Abnormal Condition Management

ActiveX Object-Oriented programming language for Internet

ADR Automatic Device Replacement

AEC Architect, Engineer & Constructor Firm

AEGIS Abnormal Event Guidance Information System

AERS Adverse Event Reporting System

AGC Automatic Guidance Control

AGV Automated Guided Vehicle

AI Artificial Intelligence

AIM Asset Information Management

ALM Asset Lifecycle Management

AnIML Analytical Information Markup Language

ANSI American National Standards Institute

APC Advanced Process Control

APEC Asia-Pacific Economic Cooperation

API Active Pharmaceutical Ingredient

API Application Program Interface

APM Analytics and Performance Management

APO Advanced Planning & Optimization

Applet Small Software Application or Component

APQP Advanced Product Quality Planning

APS Advanced Planning & Scheduling

AS/RS Automatic Storage & Retrieval System

ASIC Application Specific Integrated Circuit

ASM Abnormal Situation Management

ASN Advanced Ship Notice

ASP Application Service Provider OR Average Selling Price

ATA American Trucking Association

ATF Alcohol, Tobacco, & Firearms

ATP Available-to-Promise

Appendix B

B-2 • Copyright 2009 © ARC Advisory Group • ARCweb.com • For Internal Use Only

AVL Approved Vendor List

B2B Business-to-Business

B2C Business-to-Consumer

B2MML Business-to-Manufacturing Markup Language

BAPI Business Object APIs

BAS Building Automation System

BI Business Intelligence

BOD Business Object Document (OAGi)

BOL Bill of Lading

BOM Bill of Material

BOOT Build, Own, Operate, Transfer

BPA Business Process Automation

BPE Business Process Engineering

BPEL4WS Business Process Execution Language for Web Services

BPM Business Process Management

BPO Business Process Outsourcing

BPR Business Process Reengineering

BPS Best Practice Sharing

BTF Build to Forecast

BTO Build to Order

C++ Object Oriented Programming Language

CAD Computer Aided Design

CAGR Compound Annual Growth Rate

CALM Collaborative Asset Lifecycle Management

CAM Computer Aided Manufacturing

CAN Controller Area Network

CapEx Capital Expenditure

CAPA Corrective and Preventative Action

CAPP Computer Aided Process Planning

CAS Collaborative Automation System

CASE Computer Aided Software Engineering

CBM Condition-Based Maintenance

CBP Customs and Border Protection

CCM Critical Condition Management

CDAS Collaborative Discrete Automation System

CDDI Copper Distributed Data Interchange

CDM Clinical Data Management

CDSCO India’s Central Drugs Standard Control Organization

CD-ROM Compact Disk, Read Only Memory

CDV Committee Draft Vote

Appendix B


CEMS Continuous Emissions Monitoring System

CENELEC Committée de European de Normalization Electrotechnique

CEO Chief Executive Officer

CFM Continuous Flow Manufacturing

CFO Chief Financial Officer

CFR Code of Federal Regulations

cGMP Current Good Manufacturing Practices

CIDX Chemical Industry Data Exchange

CIM Computer Integrated Manufacturing

CIO Chief Information Officer

C-I-O Collaboration, Integration, Optimization

CIP Control & Information Protocol OR Common Industrial Protocol

CISC Complex Instruction Set Computing

CLN Collaborative Logistics Network

CLR Common Language Runtime

CM Condition Monitoring

CM&C Cell Monitoring & Control

CMM Collaborative Manufacturing Management

CMMS Computerized Maintenance Management Systems

CMO Contract Manufacturing Organization

CMS Carrier Managed Shipment

CNC Computer Numerical Control

COM Component Object Model OR Collaborative Operations Management

Component Software Object containing Data and Method

CORBA Common Object Request Broker Architecture

COSE Common Open Software Environment

COTS Commercial Off-the-Shelf

CPAC Center for Process Analytical Chemistry

CPAS Collaborative Process Automation System

CPFR Collaborative Planning, Forecasting, & Replenishment

CPG Consumer Packaged Goods

CPI Chemical Process Industry OR Continuous Process Improvement

CPM Collaborative Production Management

CPN Collaborative Partner Network

CPS Collaborative Planning & Scheduling

CPU Central Processing Unit

CRAMS Contract Research Manufacturing Services

CRM Customer Relationship Management

CRO Contract Research Organization

CROMERRR Cross-Media Electronic Reporting & Record-keeping Ruling

Appendix B


CRP Capacity Requirements Planning

CSA Canadian Standards Association

CSI Current Source Inverter OR Container Security Initiative

CTMS Clinical Trials Management System

CTO Chief Technical Officer

CTP Capable-to-Promise

CTPAT Customs-Trade Partnership Against Terrorism

CVN Collaborative Value Network

DAS Data Acquisition System

DC Distribution Center

DCE Distributed Computing Environment

DCOM Distributed Component Object Model

DCS Distributed Control System

DD Device Description

DDE Dynamic Data Exchange

DDL Device Description Language

DE Digitally Enhanced

DES Discrete Event Simulation

DFM Design for Manufacturing

DHCP Dynamic Host Configuration Protocol

DIN Deutsches Institut Normung

DLL Dynamic Link Library

DM Demand Management

DMAIC Define, Measure, Analyze, Improve, Control

DNA Microsoft's Distributed iNternet Architecture

DNS Domain Name Service

DOD U.S. Department of Defense

DOE Design of Experiments

DOE U.S. Department of Energy

DOI Desktop Office Integration

DOS Disk Operating System

DP Differential Pressure OR Demand Planning

DQM Data Quality Management

DRAM Dynamic Random Access Memory

DRP Distribution Resource Planning

DSD Direct Store Delivery

DSP Digital Signal Processor OR Digital Signal Processing

DSS Decision Support System

DSSS Direct Sequence Spread Spectrum

DTD Document Type Definition

Appendix B


DTM Device Type Manager

DVD Digital Versatile Disc

EAI Enterprise Application Integration

EAM Enterprise Asset Management

EBIT Earning Before Interest & Taxes

EBR Electronic Batch Record

EC Electronic Commerce OR European Commission

ECM Electronic Content Management

ECN Engineering Change Notice

ECO Engineering Change Order

ECR Efficient Consumer Response OR Engineering Change Request

eCRM Electronic Customer Relationship Management

EDD Electronic Device Description

EDDL Electronic Device Description Language

EDI Electronic Data Interchange

EDM Electronic Data Management OR Electrical Discharge Machine

EEMUA Engineering Equipment & Material Users Associations

EFSA European Food Safety Authority

EI Enterprise Integration

EJB Enterprise Java Beans

EL Electroluminescence

ELV End of Life Vehicle

EMEA European Medicines Agency

EMEA Europe, Middle East, Africa

EMI Electro Magnetic Interference

EMS Energy Management System

EOS Economy of Scale

EPA U.S. Environmental Protection Agency

EPC Electronic Product Code OR Engineer, Procure, and Construct

EPRI Electric Power Research Institute

ERES Electronic Records & Electronic Signatures

ERP Enterprise Resource Planning

ESD Emergency Shut Down System

EU European Union

EVA Economic Value Added

FBAT Food Bio-security Action Team

FBD Function Block Diagram

FBWA Fixed Broadband Wireless Access

FCC U.S. Federal Communications Commission

FCS Field Control System

Appendix B


FDA U.S. Food & Drug Administration

FDC Factory Data Collection OR Fault Detection and Classification

FDDI Fiber Distributed Data Interchange

FDR Faulty Device Replacement

FDT Field Device Tool

FF Fieldbus Foundation

FFB Flexible Function Block

FHSS Frequency-hopping Spread Spectrum

FIP Factory Instrumentation Protocol

FMEA Failure Mode & Effect Analysis

FMP Flexible Manufacturing Plant

FMS Factory Management System OR Factory Message Specification

FSAT Field System Assessment Tool

FSEM Field System Evaluation Matrix

FTC Federal Trade Commission

FTP File Transfer Protocol

GAMP Good Automated Manufacturing Practices

GC Gas Chromatography

GCI Green Chemistry Institute

GCP Good Clinical Practices

GDP Gross Domestic Product

GDS Global Data Synchronization

GEMS Global Enterprisewide Management System

GERM Good Electronic Records Management

GIS Geographic Information Services

GLN Global Location Number

GLS Global Logistics Systems

GMC General Motion Control

GMP Good Manufacturing Practice

GOSIP Government Systems Interconnect Protocol

GP Gauge Pressure

GPS Global Positioning System

GSM Global System for Mobile

GTIN Global Trade Item Number

GTM Global Trade Management

GUI Graphical User Interface

HACCP Hazard Analysis Critical Control Point

HAL Hardware Abstraction Layer

HART Highway Addressable Remote Transducer

HAZOP Hazard & Operability

Appendix B


HCF HART Communication Foundation

HDLC High Level Data Link Control

HIPAA Health Insurance Portability & Accountability Act

HIPPS High Integrity Pressure Protection System

HMI Human Machine Interface

HPI Hydrocarbon Processing Industry

HR Human Resources

HSE High Speed Ethernet

HTML HyperText Markup Language

HTS Harmonized Tariff Schedule

HTTP HyperText Transport Protocol

HVAC Heating, Ventilating, Air Conditioning

I/O Input/Output

IA Industrial Automation

IC Integrated Circuit

ICH International Conference on Harmonisation

IDE Integrated Development Environment

IDEA Industry Data Exchange

IEC International Electrotechnical Commission

IEEE Institute for Electrical & Electronic Engineers

IQ Installation Qualification

IVRS Interactive Voice Response System

IOp Interoperability

IP Internet Protocol OR Intellectual Property

IPO Initial Public Offer

IR Infrared

IRT Isochronous Real-time

ISA Instrumentation, Systems, and Automation Society

ISM Industrial Scientific & Medical OR Industrial Scientific & Medical RF Bands

ISO International Standards Organization

ISP InterOperable Systems Project

ISV Independent Software Vendor

IT Information Technology

ITAR International Traffic in Arms Reglations

ITEAM Enterprise Asset Management for Information Technology

ITRAM Information Technology & Remote Asset Management

J2EE Java 2 Enterprise Edition

JAVA Object-Oriented programming language for Internet

JCAF Java Control & Automation Framework

JEIDA Japan Electric Industry Development Association

Appendix B


JEIF Japan Electrical Industrial Federation

JEMA Japan Electrical Manufacturers’ Association

JEMIMA Japan Electrical Measuring Instruments Manufacturers’ Association

JISC Japanese Industrial Standards Committee

JIT Just-in-Time

JV Joint Venture

JVM Java Virtual Machine

KCM Knowledge and Content Management

KPI Key Performance Indicator

LAN Local Area Network

LAS Link Active Scheduling

LCD Liquid Crystal Display

LCL Less than Container Load

LD Ladder Diagram

LES Logistics Execution System

LIFO Last In, First Out

LIMS Laboratory Information Management System

LOB Line of Business

LOC Letter of Credit

LSI Large Scale Integration

LSP Logistics Service Provider

LTL Less Than Truckload

LVC Logistics Visibility and Control

M&A Mergers & Acquisitions

M2M Machine-to-Machine

MAC Medium Access Control

MAM Mobilized Asset Management

MAN Metropolitan Area Network

MBWA Mobile Broadband Wireless Access

MCBF Mean Cycles Before Failure

MEMS Micro-Electro-Mechanical Systems

MES Manufacturing Execution System

MHCS Material Handling Control System

MIB Management Information Base

MIMOSA Machinery Information Management Open Systems Alliance

MIPS Millions of Instructions Per Second

MIS Management Information System

MLC Multi-Loop Controller

MMS Manufacturing Message Specification

MOC Management of Change

Appendix B


MOM Manufacturing Operations Management

MPC Modular Platform Component

MPS Manufacturing Performance Services

MPU Microprocessor Unit

MRM Mobile Resource Management

MRO Maintenance, Repair & Operations

MRP Manufacturing Resource Planning OR Materials Resource Planning

MSDS Material Safety Data Sheets

MSPC Multivariate Statistical Process Control

MTBF Mean Time Between Failure

MTBR Mean Time Before Repair

MTO Make to Order

MTTR Mean Time to Repair

MVC Multivariable Predictive Control

MVS Machine Vision System

NABP National Boards of Pharmacy (US)

NAFTA North American Free Trade Association

NAICS North American Industry Classification System

NAMUR Normal Ausschultz Fur Messung Und Regelung

NC Network Computer (Internet) OR Numerical Control

NCR Non Conformance Report

NEMA National Electrical Manufacturers’ Association

NeSSI New Sampling Sensor Initiative

NHTSA National Highway Transportation Safety Authority

NIST National Institute of Standards and Technology

NN Neural Network

NPDI New Product Development & Introduction

NSF National Science Foundation

OAGi Open Applications Group, Inc.

OAGIS Open Applications Group Integration Specification

OASIS Organization for Advancement of Structured Information Standards

OCS Open Control System

OCX OLE Custom Control

ODA OPC for Data Access

ODBC Open Database Connectivity

ODVA Open DeviceNet Vendors Association

OEE Overall Equipment Effectiveness

OEM Original Equipment Manufacturer

OI Operator Interface

OLAP On-line Analytical Processing

Appendix B


OLE Object Linking and Embedding

OM Operations Management

OMAC Open Modular Architecture Control

OMG Object Management Group

OMP Operations Management Platform

OMS Order Management System

OO Object-oriented (Analysis, Design or Programming)

OPC OLE for Process Control

OpX Operational Excellence

OQ Operational Qualification

OS Operating System

OSC Operation Safe Commerce

OSF Open Software Foundation

OSHA Occupational Safety & Health Administration

OSI Open Systems Interconnect

OTC Over-the Counter

P&ID Piping & Instrumentation Diagram OR Process & Instrumentation Diagram

P&L Profit and Loss

P2B Plant to Business OR Production to Business

P2D Plant to Design OR Production to Design

PAC Programmable Automation Controller

PAM Plant Asset Management

PAS Process Automation System

PAT Process Analytical Technology

PC Personal Computer

PCA Principle Component Analysis

PCB Printed Circuit Board

PCM Predictive Condition Monitoring

PCS Process Control System

PD Positive Displacement

PDA Personal Digital Assistant

PDM Project Data Management

PDXI Process Data Exchange Institute

PES Process Electrochemical Systems

PET Process Engineering Tools

PFC Procedure Function Chart

PID Proportional Integral Derivative

PIM Plant Information Management

PIMS Process Information Management System

PIP Partner Interface Process

Appendix B


PLC Programmable Logic Controller

PLM Product Lifecycle Management

PLS Partial Least Squares

PM Preventive Maintenance OR Production Management

PM&C Process Monitoring & Control

PMD Programmable Message Display

PNO PROFIBUS User Organization

PO Purchase Order

POM Perfect Order Metric

POMS Packaging Operations Management System

POSIX Portable Operating System Interface

PP Production Planning

PPP Point-to-Point Protocol

PPt Performance Personalization Tool

PSI Pounds per Square Inch

PSM Process Safety Management OR Product Service Management

PSO Process Simulation & Optimization

PTO PROFIBUS Trade Organization

PTP Profitable-to-Promise

PWM Pulse Width Modulation

QA Quality Assurance

QbD Quality by Design

QC Quality Control

QM Quality Management

QMS Quality Management System

QR Quick Response

R&D Research & Development

R2R Run-to-Run

RCM Reliability Centered Maintenance

RDBMS Relational Database Management System

RFC Remote Function Call

RFDC Radio Frequency Data Communications/Collection

RFI Radio Frequency Interference OR Request for Information

RFID Radio Frequency Identification

RFP Request for Proposal

RFQ Request for Quote

RLL Relay Ladder Logic

ROA Return on Assets

ROHS Restriction of Hazardous Substances

ROI Return on Investment

Appendix B


ROM Read Only Memory

ROV Remote Operated Vehicle (Subsea)

RP Replenishment Planning

RPC Remote Procedure Call

RPM Real-time Performance Management

RPO Real-time Process Optimization

RT Real-time

RTD Resistance Temperature Detector

RTO Real-time Optimization

RTOS Real-time Operating System

RTU Remote Terminal Unit

RTX Real-time Extension

S&OP Sales & Operations Planning

S/W Software

SaaS Software as a Service

SAFE Secure Access for Everyone

SAM Sensor Actuator Manager

SAMA Scientific Apparatus Makers Association

SBA Service Based Architecture

SBI Service Based Infrastructure

SCADA Supervisory Control and Data Acquisition

SCC Supply Chain Connectivity

SCE Supply Chain Execution

SCEM Supply Chain Event Management

SCM Supply Chain Management

SC-ON Supply Chain Operating Network

SCOR Supply Chain Operations Reference

SCP Supply Chain Planning

SCPC Supply Chain Planning and Collaboration

SCPM Supply Chain Process Management

SCpM Supply Chain Performance Management

SDC Smart Device Configurator

SDLC Synchronous Data Link Control

SDMS Scientific Data Management System

SEC Statistical Equipment Control OR Securities & Exchange Commission

SEM Strategic Enterprise Management

Sercos Serial Real-time Communication System

SFA Sales Force Automation

SFC Shop Floor Control OR Sequential Function Chart

SI Systems Integrator OR Systems Integration

Appendix B


SIC Standard Industrial Classification

SIL Safety Integrity Level

SIS Safety Instrumented System OR Short-Interval-Scheduling

SKU Stock Keeping Units

SLA Service Level Agreement

SLC Single Loop Controller

SLDC Single Loop Digital Control

SLIP Serial Line IP

SmallTalk Object Oriented Programming Language

SMB Small to Medium Businesses

SME Small & Mid-sized Enterprises

SMP Symmetrical Multiprocessing

SMT Surface Mount Technology

SNMP Simple Network Management Protocol

SNTP Simple Network Time Protocol

SOA Service-Oriented Architecture

SOAP Simple Object Access Protocol

SOC System on Chip

SoftLogic PC-based Logic Control

SOP Standard Operation Procedure

SOX Sarbanes Oxley

SP50 Standards & Practice Committee No. 50 (ISA)

SPC Statistical Process Control

SQC Statistical Quality Control

SQL Structured Query Language

SRM Supplier Relationship Management

SRT Soft Real-time

SSH Secure Shell

SSL Secure Socket Layer

SSOP Standard Sanitary Operating Procedures

SST Smart & Secure Tradelanes

SVG Scalable Vector Graphic

T/C Thermocouple

TAV Total Asset Visibility

TBP Transaction Based Payments

TCO Total Cost of Ownership

TCP/IP Transmission Control Protocol / Internet Protocol

TCT Total Cycle Time

TEAM Total Enterprise Asset Management

TIE Technical Information Exchange

Appendix B


TL Truckload

TM Transportation Management

TMS Transportation Management System

TOP Technical and Office Protocol

TPM Total Productive Maintenance

TQC Total Quality Control

TQM Total Quality Management

TREAD Transportation Recall Enhancement Accountability and Documentation Act

TÜV Technischer Überwachungs Verein (Technical Inspection Association)

TVO Total Value of Ownership

UA Unified Architecture

UAF Unified Application Framework

UCC Uniform Code Council

UDDI Universal Description, Discover, and Integration

UEM Unified Enterprise Management

UFF Unified Field Framework

UHF Ultra High Frequency

UID Universal Identification

UL Underwriters Laboratories

UML Unified Modeling Language

UPC Uniform Product Code

UPNP Universal Plug & Play

URL Uniform Resource Locator (Internet)

USB Universal Serial Bus

USDA United States Department of Agriculture

UV Ultraviolet

VAN Value Added Network

VAR Value Added Reseller

VAS Value Added Services

VBX Visual Basic custom control

VCI Value Chain Initiative

VDU Visual Display Unit

VFD Variable Frequency Drive

VICS Voluntary Inter-Industry Commerce Standard Committee

VLSI Very Large Scale Integration

VMI Vendor Managed Inventory

VoIP Voice Over Internet Protocol

VPN Virtual Private Network

VSD Variable Speed Drive

VVI Variable Voltage Inverter

Appendix B


VVVF Variable Voltage, Variable Frequency

W3C World Wide Web Consortium

WABI Windows Application Binary Interface

WAH Web Application Hosting

WAN Wide Area Network

WBF World Batch Forum

WCO World Customs Organization

WEEE Waste Electrical & Electronic Equipment

WFOE Wholly Foreign Owned Enterprise

WINS Windows Internet Naming Service

WIP Work in Process

WLAN Wireless Local Area Network

WM Warehouse Management

WMS Warehouse Management System

WOSA Windows Open Systems Architecture

WPAN Wireless Personal Area Network

WPMF Work Process Management Facility

WSDL Web Services Description Language

WSN Wireless Sensor Network

WTO World Trade Organization

WWRE Worldwide Retail Exchange

WWW World Wide Web (Internet)

XML eXtensible Markup Language

worldwide_industrialpc_10.pdf

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