Frost: Communication Sector Growth to Boost Revenues for Test, Measurement Equipment Market
October 23, 2007 // Published as a news service by IHS
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The communication end-user segment holds great promise for the general purpose test and measurement equipment market, according to Frost & Sullivan.
Due to rapid technological advancements in the communication sector and a potential increase in demand from the aerospace and defense end-user segment, demand for test and measurement equipment will likely grow.
Recent analysis from Frost & Sullivan of the general purpose test and measurement equipment market found earned revenues of $1.77 billion in 2006, with estimates to reach $2.33 billion in 2013.
"Despite the slump in the communications industry in 2001 and 2002, it continues to drive the general purpose test and measurement market as reflected not only in terms of revenue growth, but also in terms of the technology being used," said Frost & Sullivan research analyst Vijay Mathew.
"With technologies such as wireless interoperability for microwave access (WiMAX), third generation (3G) wireless and wideband code division multiple access (W-CDMA) coming to the forefront, this segment is expected to have a strong impact on the market."
Analysts said the industry made a turnaround in 2003, marked by the recovery of its end-user industries. Since then, the general purpose test and measurement industry has slowly and steadily worked toward rebuilding itself. Growth of the telecommunications sector will likely contribute greatly to the growth of this market.
Growing pricing pressure has reduced vendors' margins, analysts said. With advancements in technology, end-users have become accustomed to increased functionalities in the equipment they purchase. Similar to the case of the PC or the mobile phone, end-users expect more for the same price and as a result, test vendors feel pressured to deploy equipment with increased functionalities at lower prices.
"In the communication industry, technological innovation occurs at a rapid pace and although this drives the market, the lack of standardization poses a challenge for vendors," said Mathew. "Test equipment vendors are under constant pressure to keep pace with the latest technology innovations and it has become necessary to implement multiple standards at the same time, which can increase costs and reduce profit margins."
Technology drives the general purpose test and measurement market and as such, analysts said participants need to invest more in R&D to keep pace with the competition. Due to rapid technological advancements, end-users expect more sophisticated and innovative equipment with increased functionalities to speed up their testing processes. Investing more in R&D will help companies keep pace with the latest technological trends and satisfy the demands of their customers.
Source: Frost & Sullivan.