PLC Vendors Ride out 19.1% Market Contraction
Global PLC revenues in 2009 were down by an estimated 19.1% compared with 2008, reducing the world market for PLCs and directly associated software and services to $7.8 billion, according to IMS Research's recently published report, "The Worldwide Market for PLCs -- 2009 Edition," which predicts that the market will not recover to its 2008 level until the second half of 2012.
No regional market has escaped unscathed, but EMEA, the largest market for PLCs, has been the most badly affected by the downturn, principally because the most important national market within EMEA, Germany, suffered the largest contraction during the global recession. Germany is also forecast to be slower to recover than elsewhere, at least until the middle of 2010. Conversely, market contraction was least marked in Asia and that market is forecast to grow the fastest between 2008 and 2013, with revenues growing at an average of 6.0% compound. Driving the Asian market are improved prospects in China and India, in part reflecting a substantial macroeconomic stimulus, and a faster than expected turnaround in capital flows.
IMS reports PLC revenues contracting sharply across almost all industrial sectors in 2009 although certain markets, including electrical power, transportation and water treatment supporting infrastructure development, were less seriously affected. Such markets benefited from the various government stimulus packages which helped to boost demand for automation products. Sectors closely associated with consumer goods, such as food, beverage & tobacco machinery and packaging machinery, and emerging industries, such as renewable energy, also helped to sustain PLC demand and are expected to show global growth up to 2013.
IMS reports that many major PLC suppliers expect the market to start to recover slowly in 2010 as government investment filters through to more of the major discrete and process industries. Few, however are anticipating a V-shaped recovery and most expect another challenging year.
Nineteen percent is also the factor by which the Industrial PC market contracted in 2009, according to ARC's newly published "Industrial PCs Worldwide Outlook." "Even though the recovery will start quickly, the level of the boom year 2008 will not be reached again until 2012," said report author Florian Güldner, echoing colleagues at IMS. "A major factor dampening the recovery is the constant drop in prices that is driven by user demand and a drop in intermediate goods prices."
Industrial PCs remain a highly fragmented market with companies holding more that 2% market share accounting for only 62% of the market. More-over competition is further increased with industrial PC specialists such as Stahl HMI, focused automation suppliers such as Phoenix Contact, full-line automation suppliers such as Siemens and Rockwell Automation and PC-based automation suppliers such as Beckhoff and B&R all challenging for a piece of the action. And to them can be added PC specialists like Advantech and Kontron, as well as hundreds of Taiwanese companies feeding industrial PC products directly or indirectly into the market.
One of the key issues in the market is "build vs. buy" with depth of production varying greatly between suppliers and many companies using boards from Taiwan in their industrial PCs or brand label industrial PCs.
Intel's mighty Atom
ARC identifies Intel's Atom processor as the factor most influencing future market growth. Providing up to 2GHz within a low thermal design, it opens up a range of possibilities to end users and machine builders, enabling the creation of low-CPU power industrial PCs at a low price, with low energy consumption and low heat. Such size-independent computing power also makes possible new form factors such as flatter panel PCs that can be more easily integrated into machines and small wide-screen panel PCs.
Regionally ARC again identifies Asia as the key regional market with Taiwanese suppliers dominating. Looking to the future, it expects such companies to move up the supply chain and become established automation suppliers. China and India, it suggests, will require not only higher levels of automation as wages rise, but also more sophisticated systems with greater potential for achieving international quality standards.