Currently at the initial stage of development, the wireless technologies for industrial applications market remains highly fragmented, displaying only a vague structure in terms of products, suppliers and applications.
Original proponents and early adopters may so far be the only active advocates for wireless products on the factory floor, but a new study by Frost & Sullivan points to bright growth prospects in the European wireless technologies for industrial applications market. Values at approximately $117.0 million in 2002, revenues are set to quadruple between 2003 and 2006, defying the adverse impact of a slowing economy.
However, the market still has a number of hurdles to overcome before it can truly prosper. Frost & Sullivan cites user sceptism as well as concerns over security and reliability as the key forces behind the prevailing hesitancy about investments in wireless solutions. Widening acceptance has also been hampered by the lack of standards and limited awareness of the technology’s capabilities amongst potential customers.
Gabriela Martinho, Industry Analyst at Frost & Sullivan, believes that players in the device-to-device communications sector can successfully clear the obstacle of apprehension over security by educating end-users and providing evidence of continued security assurance. This restraint might still affect market growth over time, Ms Martinho cautions, as wireless LANs become integrated in WAN, and the need for high security becomes imperative.
The study asserts that the interoperability of new products being launchedthe market will likely contribute to potential customers' increased confidence in the technology and consequently drive overall demand.
The main impetus for future growth derives from the rising need for productivity and cost reduction. As prices of wireless products decline, the benefits associated with wireless solutions in terms of mobility and flexibility, along with easier installation and reduction in both materials and overall cost, will stimulate greater interest.
Ms Martinho observes that numerous large automation suppliers have recently entered the market with a limited number of products, and most are still working on product development based on emerging technology standards. Automation manufacturers are readying themselves for market take-off, anticipating a much more stable market in terms of standards and product development, she comments.
One of the main challenges facing companies in the market is to be able to fine-tune their product and solutions offering to particular vertical market markets. So far, only a small percentage of the potential market has been targeted and, instead of focussing on specific areas, suppliers are still looking to reach the highest possible range of customers.
The number of competitors in the market is low. In terms of technology specialists, there are only a few companies offering industrial products, providing full industrial temperature range compatibility, ruggedness, compact design and easy installation and compatibility with existing bus networks.
The establishment of partnerships and associations between technology specialists, wireless product developers and industrial automation providers is anticipated to be a fast growing trend in this market. The synergy created through associations are beneficial both to automation manufacturers and technology specialist providers.
A key example was the partnership established in early 2003 between ABB and connectBlue. The agreement is to supply the Bluetooth web enabler to ABB divisions and customers world-wide and follows the successful implementation of the Bluetooth web enabler along with ABB’s control systems 800C solution by Oslo Municipality, which has provided wireless maintenance and operation of the city's water pumping stations.
Another player in the wireless technologies market for industrial applications is Wilcoxon, provider of vibrating sensing and wireless products for the industrial, military and laboratory markets. Wilcoxon is a small company with a relatively quiet position in the industrial wireless market. However, it stands out as a provider of the only Bluetooth radio transceivers available in the market that withstand the full industrial temperature range (-40 degrees C to 85 degrees C).
While the fastest growth is set to be recorded in the automotive sector, the utilities industry held the largest share of revenues in 2002 with 26.9 percent. The buoyancy of the utilities sector is due to the increasing customer base and improved water and wastewater requirements. Demand for wireless devices from this industry has been higher than in other sectors due to a greater confidence in the technology, as wireless has been used for some years to monitor remote water towers and pumping stations.
In overall terms, the European market for wireless technologies in industrial applications is at the development stage, but is expected to see a significant and sustained rise in demand and revenues in the next years. Growth should be driven by wider understanding and acceptance of the technology, more competitive price levels, greater market transparency as well as increased use of wireless solutions across a wider variety of industry sectors.
Frost & Sullivan, an international growth consultancy, has been supporting clients' expansion for more than four decades. Our market expertise covers a broad spectrum of industries, while our portfolio of advisory competencies include custom strategic consulting, market intelligence and management training. Our mission is to forge partnerships with our clients' management teams to deliver market insights and to create value and drive growth through innovative approaches. Frost & Sullivan's network of consultants, industry experts, corporate trainers and support staff, spans the globe with offices in every major country.
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