VDC Research: Industrial Sensing, Networking & Control Market Blog

The Time When 'Made In America' Actually Means Something Again is Drawing Near

After reading a short article in the December issue of Control Design (Machinery Could Make U.S. Comeback) I began to think back to another Bloomberg BusinessWeek article written by Andy Grove that I blogged about back on December 20, 2010. I have been developing a hypothesis over the last 6-12 months based on the belief that as the wages of workers in countries such as China, India and Vietnam increase over time, the cost advantages enjoyed by those countries, and the companies outsourcing manufacturing, R&D and even some services (i.e. call centers, etc.) to those countries relative to the U.S. will diminish.

When companies factor in the financial cost of shipping as well as the opportunity lost cost due to delays in shipping, along with ability to gain competitive advantage by advertising “Made in America”, they will begin seeing even more politicians who are receptive to providing tax breaks and other incentives to create jobs in our own country. And as the workers in China, India and other countries continue to experience the benefits of capitalism and increased standards of living, they will continue to demand higher wages, thereby closing the gap which led to the stampede to outsource U.S. jobs to begin with.

In the future it will not only be politically expedient (or PR driven) to begin making more products and providing more services in the U.S., it will also be more economically prudent. The article in Control Design lists seven “tipping point” sectors that are set to return to the U.S. for manufacturing. The other six sectors besides machinery include computers and electronics, fabricated metal products, plastics and rubber, appliances and electrical equipment, furniture and transportation goods, according to a recent study by the Boston Consulting Group (BCG).

I recalled in that 12/20/10 blog asking the question, something to the affect of, ‘who will buy all the vacuum cleaners being made in China if no one is working here in the U.S.?’ Andy Grove was even more intellectual than I when he opined that our country is not only losing out on jobs, but the country was gutting its spirit of innovation and ability to develop an ecosystem which fosters innovation, ingenuity and the real American spirit. If you have not already read Andy’s article, I strongly recommend you do as it expressed the concerns that I had, much more intelligently and coherently than I could ever have.

In the final analysis, I believe that more and more companies in the future (and politicians giving them tax breaks) will begin looking to bring back jobs to America not just because it is the patriotic thing to do, rather because if they do not, then they risk losing market share to those firms that do.

 

Wondering When PAC Man Fever Will Strike Level Measurement & ITG Markets

For those that have been following my blogs over the last year or two you will be quite aware of my references to PAC Man to signify the impact previous mergers and acquisitions (M&A) had on markets such as industrial networking and data acquisition products.

After taking over the market intelligence activities in support of VDC’s ongoing 2011 Process Level Measurement and Inventory Tank Gauging Market Intelligence Program combined with just having completed eleven market studies covering data acquisition solutions, and having had several in-depth discussions with suppliers, it became quickly evident that ABB’s acquisition of K-TEK back in the summer of 2010 would likely not be an isolated event.

Most of the smaller to mid size suppliers I spoke with noted an increasing trend involving larger industry players such as Emerson, Endress + Hauser, Invensys and Honeywell deciding to move away from private labeling agreements. This trend does not favor some of these smaller players, since larger players are either developing a new product or technology in-house and/or considering acquiring a company that can help fill a gap in that supplier’s product or technology portfolio. Conversely it seems a few of the suppliers that are based in Europe or Asia-Pacific that to until now been supplying these larger (or even smaller) suppliers are starting to desire making inroads by marketing their products under their own brand.

It makes sound business sense, given that our research indicates that more level measurements customers are seeking out partnerships with suppliers that can not only provide “one-stop shopping” but also best in class and world-wide technical and application level support. Suppliers naturally have a vested interest to not create a situation in which a customer has to look somewhere else to meet their needs, since an overall market opportunity likely totaling over $2 billion in 2011 shipments is not chicken feed.

NASA Debunks Apocalyptic 2012 Predictions Using Data Acquisition Solutions

Although I saw the movie 2012 and found it to be reasonably entertaining, albeit not entirely believable, I never gave much credence to the predictions apparently made by the Mayans regarding the end of the Earth prophecy, or at least human life, on December 21, 2012. Nostradamus predicted the world would end in 3786 or 3797, depending on whom you believe, if you believe any of this which certainly gives mankind more time to avert catastrophe.

Thankfully NASA looks to have relied on real world data acquisition products to debunk these prophetic visions. Actually, in full disclosure, I am operating on the assumption that NASA leveraged data acquisition solutions (i.e. data loggers, paperless recorders, PXI plug-in data acquisition analog I/O boards, etc.) in order to prove that the Earth faces no life ending asteroid collisions, no rogue planet Nibiru (talk about strange), no signs of catastrophic solar storms or anything else that may end life on Earth as we know it.

In order for man to understand the world around us we need to acquire data on things such as temperature, speed, light, pressure, force and other phenomena in order for NASA to give most of mankind, at least the reasonable people among us, some measure of comfort and confidence that the Mayans were not visited by aliens way back when and given a crystal ball into the window of our own destruction.

I am not ruling out the fact that other intelligent life forms exist elsewhere in an almost infinitely large universe(s), as I believe Drake's equation will mathematically and definitively answer that question some day, but rather I am not privy to enough evidence to believe the Mayans (or the Egyptians or any other earlier civilization for that matter) were visited by intelligent beings and told that mankind only had 2012 years to make a go of it before we went the way of the dinosaurs.

Shipments of data acquisition solutions to research related organizations such as NASA are very real, likely generating millions of dollars per annum worldwide. Mayan predictions of a pending Doomsday scenario or visitations by Extraterrestrial Biological Entities (EBE's) are discussions I will leave for a different day and a different venue.

Hope you had a Happy New Year and best wishes for a prosperous 2012

Security vs. Efficiency? I Could Not Have Said it Better Myself

Recently I read an excellent article in Automation.com written by Eric Byres, CTO and VP of Engineering at Byres Security, Inc. which was acquired by Belden earlier this year, which discussed the ongoing dilemma between industrial automation companies' concern over security (and for good reason in most cases) versus the need and desire to connect the factory floor/plant operations to the rest of the enterprise so as to maximize ROA and to improve corporate competitiveness.

I am a firm proponent in encouraging companies to invest, wisely of course, in products and technologies that will enable greater productivity, increased operational visibility, greater agility and increased profitability. Traditionally industrial automation operations have operated as walled off silos from other parts of an organization and have not been connected into the larger corporate enterprise; historically this was done in many cases for good reason as the potential impact of a security breach or communications error may have had dire consequences for the company itself as well as perhaps the surrounding public.

What I really liked about this article was it touched on several different markets such as industrial networking - both wireline and wireless, functional safety and data acquisition, as after all one needs to acquire data before it can be actionable and tied into the enterprise, on which VDC has been covering for decades and it imparted a sound rationale for achieving both greater security and operational efficiency.

I strongly encourage anyone interested in, or concerned over, security and efficiency as it relates to industrial automation operations to read this article and think about how it may relate to your own organizational and/or operational issues and how you may put some of the information imparted to good use.

Happy New Year wishes to you and yours

 

Study Shows Most Companies Not Equipped to Use Data Effectively; Is an Effective Data Acquisition Platform the Solution?

After reading a recent article in Sensors magazine in which the results of a study conducted by EMC Corporation indicated that almost two-third of companies surveyed were ill-prepared to take advantage of the explosion of digital data created by mobile sensors, social media, surveillance, medical imaging and smart grids. Although the article was not directly related to data acquisition as VDC defines it, I imagine that a larger number of companies are better prepared to deal with different types of analog data being collected from any one or more of a plethora of sensors that act as the "tip of the spear" in industrial automation and process automation applications across the world.

I imagine that a larger number of companies are better prepared to deal with the analog data being collected from any one or more of a plethora of sensors that are the "tip of the spear" in industrial automation and process automation applications. This blog will focus not just on the actual process and platforms used to acquire analog data so as to make actionable decisions based on digital information but the greater importance of what to do with the data once it has been collected.

Based on VDC’s recently published 2011 Data Acquisition Solutions Market Intelligence program, the global market for data acquisition solutions will likely exceed $1.5 billion in 2012. It appears on the surface that companies are investing in platforms such as paperless recorders, data loggers and plug-in cPCI data acquisition analog I/O boards designed to convert analog data into digital information which can then be, theoretically, used to make actionable decisions and effective action.

In my humble opinion, based on a quick 'back of the envelope' analysis, I estimate that probably less than 60% of the total available application opportunity for data acquisition solutions is likely being served by one or more of the product platforms under study; that still leaves a great deal of need, and opportunity, for data acquisition solutions which can more effectively enable users to acquire data and also process it into actionable information and action.

People seem to want more convenience, comfort and information about the world around them. The digitization of data through a growing number of platforms is providing that. As I have always said, be careful for what you wish for since you just may get it and the price we pay to get it may not be what we bargained for. 

Predictions for Data Acquisition Solution Markets in 2012

With the last of eleven market studies covering the data acquisition (DAQ) solutions markets now being published I decided to take this time to reflect on what I learned over the last several months and to blog some informal predictions on what I may expect to see happen in the DAQ market in 2012 (admittedly I am not going out on many limbs with these).

1. 2012 shipments of external chassis & modules (i.e. DAQ systems), plug-in data acquisition analog I/O boards and standalone (non-bundled) data acquisition software will likely exceed $1.5 billion globally, with DAQ systems accounting for almost 76%.
2. Demand for modular data acquisition systems (one of eight platforms under study) will continue to grow at an above average market growth rate, comprising ~23% of DAQ systems shipments by 2012, as users desire the greater flexibility and ability to mix and match sensor inputs to meet their specific needs without spending on functionality which they do not require.
3. The number of data loggers designed with LCD displays will increase as other suppliers begin to realize that offering video graphic type functionality in a data logger is a sure way to gain market share in that category, just ask Graphtec, Keyence, Hioki E.E. and Dranetz-BMI.
4. Paperless chart recorder suppliers, for units with both >144 mm  and <144 mm panel cutouts, will continue to make inroads into non-process focused markets as an increasing number of these customers realize the benefits of greater real-time visibility into their operations, most of which are increasingly being automated through technology investments.
5. Demand for plug-in analog I/O boards will continue to lag that of most external chassis & module products as an increasing number of users seek out USB PC front ends as they are attractive as peripheral add-ons to computers that are portable and can easily be moved to another platform in a different location. Expectations in usage of USB 3.0 in all new PCs going forward is also expected to help fuel this trend.
6. There will be at least one merger and acquisition within the data acquisition solutions marketplace. The overall market is too large and too fragmented to not experience continued consolidation. Assuming that some predict the future by looking in the rear view mirror of history, some likely targets to consider watching may include Spectris (HBM and Bruel & Kjaer), National Instruments and DynamicSignals LLC. Who knows, maybe ABB or Honeywell will decide to get a little more active in the market and decide to expand their product portfolio beyond paperless chart recorders by acquiring a smaller player.

Okay, so maybe I decided to go out on a limb somewhat with the last prediction but that is what makes these things fun. I welcome to learn about any predictions you may have and/or what you think of mine.

Data Acquisition Products Market is Consolidating

Based on soon to be published research VDC determined that the market for data acquisition products has not only grown faster than previous expectations, thanks in large part due to strong demand for modular data acquisition systems, but it continues to experience consolidation.

In 2008, back when the market was just over $920 million, VDC determined that the top 10 suppliers controlled just over 52% of the market for data acquisition solutions (external chassis and boards). New research indicates that the top 10 suppliers now control almost 55% of the $1.4 billion market in 2010.

The composition of the top 10 data accquisition solution (chassis, boards and software) suppliers themselves has also changed dramatically since 2008.

	2010 Shipments
1	National Instruments
2	HBM
3	Yokogawa
4	Agilent Technologies
5	Bruel & Kjaer
6	Campbell Scientific
7	Dewetron
8	Advantech
9	GE
10	VTI Instruments

In 2008 National Instruments was still #1 but most of the other suppliers have either changed position (only Agilent remained at #4), dropped out of the top 10 (Dranetz-BMI and Fluke) or completely exited the market as Sony did over a year ago. 

Companies such as VTI Instruments and Dewetron have made material gains in market share due to strong product offerings, strong technical support and savvier marketing. B & K was not covered in the 2008 research.

The size of the data acquisition market is materially larger than our 2008 research forecast due to expanded coverage which included modular data acquisition systems and standalone (non-bundled) data acquisition software as well as new coverage of VPX and XMC plug-in data acquisition analog I/O boards. Despite the expanded coverage the research indicates the core product markets have rebounded nicely since the global recession of 2009.

The modular systems category comprises the largest share among the external chassis & modules segment and is forecast to experience the strongest growth in demand through 2015. Clearly customers are demanding solutions which offer flexibility and agility in the ability to mix and match sensor inputs while also delivering required performance. Growth rates among VPX and XMC boards are also at well above average board market growth rates due to their enhanced performance, rugged design and growing popularity among military and aerospace applications.

 

Spectris, intent on winning Pac Man game, Acquires Sixnet

Hot off the presses is news that Red Lion Controls, parent is Spectris PLC, acquired Sixnet LLC on October 6, 2011 for the reported price of $72 million. Sixnet will join Red Lion Controls (and N-TRON) as part of the Industrial Controls segment of Spectris PLC. Sixnet will be led by Red Lion Controls' President, Mike Granby.

Sixnet employs over 100 people and provides Red Lion Controls with industrial connectivity and automation solutions such as industrial network switches (compliments N-TRON's own network switch line), remote automation devices such as RTUs, industrial distributed remote I/O and wireless routers and modems. Sixnet’s cellular wireless portfolio for the machine-to-machine market represents a new area of business for Red Lion.

Most of Sixnet’s sales historically have been to the US domestic market, but the acquisition provides a good opportunity to expand Sixnet’s overseas sales using Red Lion's international channel networks, particularly in China. “The acquisition of Sixnet will enable Red Lion to provide a broader range of solutions to our customers, and expand both our global presence and our strategic business segments,” says Granby. “Sixnet’s solutions and 35 years of experience in the industrial space are a great addition to our team. Over time, we intend to share technologies within our solution portfolio which will allow us to bring even more value to our customers.”

VDC is covering both Sixnet and Red Lion Controls in its upcoming 2011 Data Acquisition Solutions Technology Opportunity Analysis supply-side research. The pros and cons of leveraging acquisitions as a growth strategy will be analyzed in the research.

VDC believes that the expansion strategy via acquisition taken by companies such as Spectris, Beijer, Belden and others may lead to increased consolidation as other suppliers realize the benefits of building and developing more complete product and service portfolios, something industrial automation customers are increasingly demanding from their suppliers.

Based on VDC's own research it is increasingly more evident that customers seek out suppliers with which they can develop meaningful partnerships and want to deal with suppliers that really understand their business requirements and which are committed to helping the customer's improve and develop their operational capacities.

 

PAC Man Strikes the Data Acquisition Market - DynamicSignals Acquires Signatec

Back in May I posted a blog raising the issue of possible mergers and acquisition activity in the data acquisition solutions markets. Well it looks like my crystal ball was working pretty well that day as Dynamic Signals LLC has added to its small/mid-size, but growing, portfolio of brand names (including Gage, KineticSystems, Preston Scientific and Cyber Systems) by acquiring Signatec, Inc. at the end of August of this year. Dynamic Signals is a provider of high performance data acquisition and control solutions and its various brands also provide instruments and modules for PC-based test and measurement systems.

The two companies will be covered in VDC's 2011 Data Acquisition Solutions Technology Opportunity Analysis comprehensive regional supply-side analysis reports which will be published later in November as they both provide external chassis & modules such as data loggers, PC front ends and customized standalone systems as well as plug-in analog I/O boards across multiple platforms such as PCI Express/PCI, PCI, PXI, VXI and CompactPCI. These companies' solutions serve higher performance applications found in military and aerospace, communications, computers, automotive, research and educations. Applications served include lasers/LIDAR, spectroscopy, ATE, manufacturing test, testing of nuclear reactor tubing, etc.

In a recent WebCast I discussed two basic strategies that suppliers looking to succeed in the data acquisition solutions markets should consider - take actions needed to get bigger or stay small and remain focused on serving niche segments in which the firm has best in class application level expertise.  Dynamics Signals seems to be achieving both goals with its strategy of acquiring companies to gain economies of scale while also remaining focused on serving segments of the market which require higher performance data acquisition solutions.

I am keenly keeping watch to see what companies may become the next PAC Man merger that takes place as those savvier suppliers further capitalize upon the "clustered" fragmentation that comprises the $1.2 billion data acquisition solutions opportunity.

Isolation: A Smart Form of Insurance for your Data Acquisition Solution

Back in early March I blogged on the topic of isolation as it related to industrial networking products and the concept of investing in isolated network products as a form of insurance. It turns out the topic of isolation is also relevant to data acquisition hardware solutions. This topic is also relevant to a more recent blog in which we discussed the importance of accuracy and how that rated as the most important technical requirement cited by almost 600 survey respondents.

As the accuracy of a user's data acquisition measurements go up so does the need to protect their signals from noise as well.  The user needs to protect their signal on its entire path from the sensor input to the point of data conversion. In harsh environments such as those found in steel mills, automotive assembly, food & beverage and other applications in which the adverse impact of EMI, noise and other threats maybe more prevalent as is the need to protect against ground currents. Isolation eliminates ground loops between the measurement system and the signals you want to measure and protects the operator and equipment from effects of ground loops and high common mode voltages.

Isolation is defined as separation of one signal from another to prevent unintentional interaction between them. All multiplexed data acquisition systems contain a certain degree of channel-to-channel isolation; relay-based systems have galvanic isolation while solid-state systems do not. Galvanic isolation is the absence of any DC path. Most isolation methods eliminate all DC paths below 100 MΩ. Three major benefits of galvanic isolation are circuit protection, noise reduction and high common-mode voltage rejection, especially those developed by ground loops.

PC based data acquisition solutions makes possible an array of multiple channel measurements previously beyond economic reach of many applications. This has been accomplished by two major compromises, multiplexing and non-isolated inputs. Multiplexing is successful when the sampling rate is adequately high and the source impedances are sufficiently low. Lack of isolation places an entirely different kind of limitation on the type of input signals that can be connected.

If an application operates in an environment in which the need for isolation is prevalent VDC recommends users consider investing in a data acquisition solution with built-in isolation. Although there may be a cost premium associated to investing in a data acquisition solution with isolation, VDC believes that this will prove to be a wise investment in insuring that the data acquisition solution and equipment being monitored will provide a quick payback if the catastrophe of equipment failure is averted. 

Although the topic of isolation is not an integral part of the scope of VDC's 2011 Data Acquisition Solutions Market Intelligence Program we are always interested in covering topics which are germane to relevant research related issues or dynamics impacting the industrial automation world.