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North American UPS Services Market
Frost & Sullivan, March 2010, Pages: 70
This research provides in-depth analysis on the North America market for uninterruptible power supplies (UPS) services. The qualitative part of market analysis consists of market engineering measurements which are a snapshot of the main parameters of the market in addition to challenges, drivers and restraints and its impact on the future market growth or decline. The revenue side of market analysis includes revenue forecast by service type (installation, warranty and extended warranty, contract, time and material, software and project management) and by UPS type (single-phase UPS and three-phase UPS). The research details the competitive structure and provides a comprehensive market share analysis.
The North American UPS services market has become highly significant for UPS manufacturers. The economy was severely affected toward the end of 2008 due to the subprime mortgage crisis. The credit crunch in the housing market resulted in reduced spending by consumers. This, in turn, affected equipment sales, especially in the backup power market.
Need for Back-up Power
The importance of backup power has largely risen over the last two decades from 1990, and still continues to increase. IT-related growth spurred the need to invest in backup power. The latter has grown to become an integral part of any IT installation to safeguard data as well as preserve the life of sensitive equipment. The market was specially focused on the growth of data centers from 2004 to 2007. This was immediately after the telecom bubble burst. As a result, opportunities opened up and OEMs became flexible with product offerings, and consolidated their product offerings, to position themselves as complete solution providers. They essentially became a one-stop-shop for end users.
Typically, a complete IT installation includes racks, cooling, ancillary equipment such as PDUs and static transfer switches, and UPS. Relationships with the IT industry have grown from exclusive partnerships to those of multiple offerings with IT vendors and technology partners such as DELL, HP, Ingram Micro, and Tech Data among others.
This Frost & Sullivan research service titled North American UPS Services Market provides revenue forecasts for North America along with a competitive analysis for six service segments of the North American uninterrupted power supply (UPS) services market. In this research, Frost & Sullivan's expert analysts thoroughly examine the following markets: installation, warranty, contract, time and material, software, and project management.
Market Overview
Economic Slowdown Compels UPS Owners to Maintain Existing Equipment, Increases Service Revenues
The credit crunch in the housing markets had a ripple effect on the North American UPS system market in 2009, as end users deferred investments in new systems and instead, chose to optimize output from existing assets. This was a shot in the arm for the UPS services market, with service contracts multiplying in both the single-phase as well as three-phase markets. However, installation, warranty, and contract services are typically cyclical markets and are dependent on the renewal cycle of equipment sales to drive revenue growth. Once the economy recovers, end-user segments such as datacenters are likely to contribute to new sales revenues. “The highest revenue contributors are the tier-one UPS original equipment manufacturers (OEMs) that focus on addressing the IT infrastructure as a whole, which includes cooling and IT server equipment and backup power systems,” says the analyst of this research. “As a result, companies are forging ahead with complete service solutions to address predictive faults, emergency, and regular checks to ensure the smooth functioning of equipment.”
Being a mature market, a stagnating economy will accentuate the stagnation in the product line. Few technological advancement in decades and intense competition inhibit high-level growth, but savvy service providers can crank up the momentum by maintaining healthy customer relations. There is considerable demand for premium services for the above 20kVA power segment, where deals are closed by leveraging relationships between the vendors and end users. OEMs can also take advantage of these relationships for system upgrades, retrofits, or even major expansions in data centers. Owing to the continued digitization drive and the growing usage of Internet connectivity applications, there has been a surge in demand for products such as UPS that ensure maximum uptime and availability. Therefore, service revenues will grow in tandem with the number of installed UPS systems.
End users will be eager to reduce power outage due to the costs related to lost data, damage to equipment based on the nature of the outage, and battery downtime. Although these critical factors justify investment in back-up power equipment, customers will also be looking to reduce overheads and improve competitiveness. “Therefore, an increasing number of businesses are re-aligning operations by outsourcing functions such as the maintenance of power infrastructure, since they are not directly linked to revenues,” notes the analyst. This trend bodes well for the UPS services market in North America, as it is expected to grow at a compound annual growth rate (CAGR) of 5.4 percent between 2009 and 2016.
Market Sectors
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
- Installation
- Warranty
- Contract
- Time and material
- Software
- Project management
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