ARC says Industrial Ethernet Switch market will recover | Automation.com

ARC says Industrial Ethernet Switch market will recover

ARC says Industrial Ethernet Switch market will recover
April 14, 2010 - The year 2009 cemented a sea change in the industrial Ethernet switch market as traditional automation sectors, such as automotive and machinery, faded into the second tier and infrastructure investments took leading roles. As private investment dried up in the face of the global economic downturn, governments and utilities were the primary investors in areas such as intelligent transportation, renewable energy, and other infrastructure projects. According to a new ARC Advisory Group study, double-digit growth is expected to resume in the switch market by 2011, but at a more restrained pace than experienced in past years.

Energy and infrastructure projects alike benefit from government stimulus efforts designed to not only upgrade infrastructure but also fuel spending and employment. This phenomenon is true on a global scale, with governments from the US to China participating. “The burgeoning security and surveillance market will likewise benefit from energy and transportation investments as infrastructure protection plays a prominent role in post-9/11 designs. Industrial switches can be easily justified for these frequently outdoor applications, whether at power plants, highways and transportation platforms, or water utilities,” according to ARC Vice President Chantal Polsonetti, the principal author of ARC Advisory Group’s “Industrial Ethernet Switch Worldwide Outlook.”

Infrastructure Applications More Ethernet-Friendly
More rapid acceptance of Ethernet-based networking in energy and infrastructure relative to manufacturing automation is furthering the shifting emphasis in the global marketplace. Ethernet acceptance in manufacturing applications is typically a displacement process, whereby Ethernet networks are used instead of serial-based device networks or other alternatives. This is much less the case in the energy and infrastructure segments, where Ethernet is more readily accepted as a replacement for original analog systems and whose main competition comes from wireless networks and fiber optics.

More Sector-Specific Strategies Required
As the industrial Ethernet switch market assumes a more vertical versus horizontal emphasis, products must be tailored to meet the requirements of target verticals. For example, ability to compete in the popular electrical substation automation market necessitates availability of products certified to comply with the IEC 61850 standard for electrical substation automation. This standard is being applied on a global basis, so suppliers targeting the electrical T&D market must include IEC 61850 certified devices in their product arsenal.

Asia, EMEA Is Where the Projects Are
Shifting fortunes by industry sector are mirrored in the prospects by geography. Asia in general, China and India in particular, and the EMEA nations will benefit the most from investments in key growth segments. The Smart Grid initiative in the US holds significant potential as well, but it remains to be seen what fraction of Smart Grid communications will use Ethernet as the network architecture of choice relative to alternatives, such as WiMAX, IEEE 802.15.4 and others.

About ARC: Founded in 1986, ARC Advisory Group is the leading research and advisory firm for industry. Our coverage of technology from business systems to product and asset lifecycle management, supply chain management, operations management, and automation systems makes us the go-to firm for business and IT executives around the world. For the complex business issues facing organizations today, our analysts have the industry knowledge and first-hand experience to help our clients find the best answers.
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