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North American UPS Service Markets 2008
Frost & Sullivan, May 2008, Pages: 63
This Frost & Sullivan research service titled North American UPS Service Markets provides in-depth revenue analysis by service types as well as market share analysis. In this research, Frost & Sullivan's expert analysts thoroughly examine the following markets: warranty, installation, preventative maintenance, breakdown maintenance, and project management.
Market Overview
Increasing Complexity of Data Center Infrastructure Driving Demand for UPS Services
The increasing complexity of data centers and networks is contributing to the strong growth of the North American uninterruptible power supply (UPS) services market. UPS protection is vital for these data centers and networks and customers are overwhelmed by having to manage and control electrical systems in addition to managing networks. Issues such as heat, battery capacity, and UPS uptime require constant supervision, and the transition to server consolidation and high-density data centers has further aggravated this situation due to increases in heat and power density. IT managers are often under pressure to reduce cost and maximize efficiency. By outsourcing power quality management, they can relieve resources to concentrate on their core business.
However, in an increasingly competitive market environment, vendors are being challenged by shrinking margins, rising raw material costs, market mergers, and product commoditization. Consequently, vendors are bundling services, such as breakdown maintenance, with UPS shipments and using them as a bargaining tool. This, in return, is reducing revenues for UPS services. 'Furthermore, the market is expected to experience investment delays due to recent commentaries on potential economic recession,' notes the analyst of this research service. 'An increasing number of financial institutes continue to announce revenue losses as a result of failed sub-prime loans and the declining real estate market.'
Revamped Product Services Increasing Attractiveness of UPS Services
A major change observed in the industry is that sales are no longer limited to service UPS systems. In fact, market share analysis illustrates that the top revenue contributors consist of companies that have well-known brands in the data center space. Brands including InfraStructure, Liebert, and Eaton are all focusing on addressing the entire physical infrastructure of data centers. Physical infrastructure consists of UPS, power distribution units (PDU), chillers, air handlers, pumps, and other devices. As a direct result, companies have introduced, launched, and marketed service programs that provide holistic solutions that address predictive faults, emergency, and preventative maintenance issues.
Overall, the North American UPS service market generated $876.3 million in revenues in 2007, growing at a rate of 8.1 percent over 2006. The market is projected to grow at a compound annual growth rate (CAGR) of 5.7 percent between 2007 and 2014. 'Revenues are likely to be dominated by services supporting three-phase products throughout the forecast period,' says the analyst. 'Preventive and breakdown maintenance represented 61.9 percent of the total UPS service revenues in 2007. This consists of on-site service for breaks and fixes for the duration of two, three, and five years.'
Market Sectors
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
- Single-phase UPS service
- Three-phase UPS service
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