Real-Time Visibility, Operational Agility and Flexibility driving growth of Industrial Networks

  • June 03, 2011
  • Feature
June 2011
 
By J. Timothy Shea, VDC Research Group
 
VDC Research partnered with Automation.com to conduct an extensive initiative into the market for wireline and wireless industrial networking infrastructure product markets. Recently completed research from VDC’s 2011 Industrial Networking Infrastructure Products Market Intelligence program, largely based on feedback from over 600 respondents, found that the demand outlook for wireline and wireless industrial networking infrastructure products will be quite healthy through 2015. 
 
There are a number of different networking infrastructure products that customers rely on to ensure connectivity in serving their divergent industrial applications. The following industrial networking products were covered in the scope of VDC’s industrial networking infrastructure products market research:
 
Wireline: cables & cordsets, connectors, device servers, gateways, modems, routers, managed switches, unmanaged switches and network management software (non-bundled)
 
Wireless: antennas, access points, gateways, modems, repeaters, routers, switches, transceivers and network management software (non-bundled)
 
Industrial Networking – A Multi-Billion Dollar Market Opportunity with a Healthy Future
 
The total markets for wireline and wireless networking products exceeded $2.5 billion in 2010 and are forecast to grow to almost $6.7 billion in 2015, representing a 21.7% CAGR. Although wireless networking products comprised only about 15% of the market in 2010, this segment is projected to represent over 19% of the total networking market by 2015.
 
 
Strong growth in the adoption of wireline infrastructure networking in industrial facilities is driven by a variety of factors.
 
  • Improved efficiency, cost reductions, and increased productivity are all key factors driving adoption.
  • In order to best provide real-time data and information for better decision making, control and management, there is a trend in industrial operations to interconnect systems, equipment, machinery, and devices via networking. By having access to real-time data, managers are better prepared to make decisions that will improve performance, and improve quality and production. Greater operational agility and flexibility are critical to respond to rapidly changing customer and/or market requirements.
  • Networking provides the ability to monitor and control operations and machinery remotely. It provides the ability to incorporate device diagnostics and alarm reporting for operations, equipment, and devices. By using networking, troubleshooting and corrective actions can be accomplished remotely. These capabilities can enhance safety, increase productivity, and reduce the number of engineers, equipment operators, and maintenance personnel needed.
  • Networking reduces the majority of the point-to-point hard wiring, which is both expensive to install, difficult to troubleshoot, and hard to modify. Networking allows easier add-ons, changes and removal of functions. This is most valuable where changes or expansions are frequent and expensive.
  • Many users who seek plant floor automation often find wireline networking infrastructure products to be more reliable than wireless. Most industrial automation applications require monitoring and / or control equipment to work 100% of the time and users more commonly feel wireline products best guarantee this.
  • The growing acceptance of application layer network protocols used with Ethernet networks as the de-facto standard for wireline industrial networking infrastructure is primarily driving this aggressive growth. Improvements in industrial Ethernet-based network protocols around reliability, latency and improved real-time deterministic performance are all factors contributing to the growing adoption of Ethernet-based network protocols even in real control applications.
  • The adoption of Ethernet as the primary network of choice across many different industrial automation markets as spurred the need to develop industrial specific variants of open Ethernet-based network protocols such as EtherNet/IP, ProfiNet and Modbus TCP, among others.
There are several primary drivers behind the explosive growth outlook seen in demand for wireless networking products:
 
  • Strong growth in the adoption of wireless infrastructure networking in industrial facilities is driven by a variety of factors. Improved efficiency, cost reductions, ability for install where wired solutions impractical or impossible and increased productivity.
  • Wireless networking reduces the majority of the cabling required, thus the associated costs, which is can be more expensive to install in certain locations.
  • Wireless networking allows easier add-ons, changes and removal of functions and is perceived by many users as being more scalable. This is most valuable where changes or expansions are frequent and expensive. Greater flexibility in operations enables companies to run leaner and meaner and maintain responsiveness to changing customer and/or market requirements.
  • Increasing adoption of mesh networking and the self-healing capabilities provided therein.
  • Increasing trust in wireless networking and technological enhancements made to overcome previous concerns over reliability, latency and security.
  • Perceived ease of implementation and lower implementation costs as well as perceived lower maintenance and installation costs.
  • To obtain greater mobility in industrial facilities which provide benefits of real-time response to machine problems, real-time optimization of machine performance, reduce personnel required and increase productivity, and reducing downtime of both equipment and time to repair.
Broad Based Adoption of Industrial Networking Products as Need for Agility is Omnipresent
 
VDC found broad based adoption of industrial networking products and the demand outlook for most segments was quite robust as companies are being forced to find ways in which to enable their operations to provide the real-time visibility, operational agility and flexibility required to compete in a rapidly changing and increasingly competitive marketplace.
 
The five largest consumers of wireline networking products included companies involved in the following industries (ranked in descending order based on dollar shipments): automotive, power generation, food & beverage, water/waste water and oil & gas; combined these segments comprised almost 55%of the $2.132 billion market in 2010.
 
The five largest consumers of wireless networking products included companies operating in the following industries (ranked in descending order based on dollar shipments): oil & gas, power generation, automotive, water/waste water and food & beverage; combined these segments comprised over 59% of the $370 million market in 2010.
 
Data Acquisition and Monitoring Primary Applications for Industrial Networking Solutions, but...
 
Feedback from almost 500 respondents indicated that the primary applications which are served by wireline and/or wireless networking were data acquisition and monitoring.
 
 
Usage among wireless network users was skewed towards a larger share of data acquisition and monitoring application usage and is indicative of the continuing perception that wireless networks are only suited for monitoring applications rather than process controls, logic controls and certainly motion control. However that perception is eroding over time as the greatest growth in future application served by wireless networking products will come from in descending order based on respondent % growth increase: process controls (12%), HMI/operator interface (12%), Others (video, communications, security and safety 12%), logic control (9%) and motion control (6%).
 
Application usage among users of wireline networking products was far more balanced as this is seen as being one users are more familiar with (i.e. easily understood, known technology) and one that has been proven in the field. Motion control with its demanding and deterministic requirements comprised the lowest usage share among wireline networking survey respondents.
 
Growing Influence of/Cooperation with IT World
 
As the need to reduce costs through greater standardization and interoperability grows, and reliance on traditional proprietary based field bus networks continues to wane, the influence of the enterprise IT world on the factory floor is growing as well.
 
VDC asked survey respondents who were the key participants involved in the decision-making process to deploy their wireline and/or wireless networking projects. Given the importance networking connectivity can have on a company’s operational success, not surprisingly, VDC found that there are a number of different constituents which are involved in the decision-making process for deployment of an industrial networking infrastructure project (wireline and/or wireless).
 
The level of cooperation among the factory floor and the enterprise IT works seems to be greater than ever and is indicative and of the increasingly urgent need for companies to “turn over every rock” possible in squeezing out greater productivity and ensuring real-time visibility into the operational health of a company’s manufacturing operations.
 
 
What this author found surprising was the results of the question we asked respondents on who the key decision-maker was in the industrial networking products purchase process. Users overwhelmingly indicated that Corporate IT was the key decision-maker in their industrial networking solution deployments by a more than 2 to 1 margin.
 
In the final analysis, the market opportunity for industrial networking solutions is large yet fragmented, and there is gross margin potential. These segments will enjoy pretty healthy outlooks over next five years and suppliers of wireless networking solutions will be beneficiaries of particularly robust demand. This demand will be broad based and new application usage to networking will be the primary drivers along with the continued standardization around enterprise based standards and processes.
 
ABOUT THE AUTHOR
 
J Timothy Shea, Senior Analyst – Industrial Automation and Control Practice, can be reached at VDC Research Group, Natick, MA; 508-653-9000, x-132, tims@vdcresearch.com.
 
VDC Research Group (VDC) is a technology market research and strategy consulting firm that advises clients in a number of technology markets including: Industrial Automation and Control. Using rigorous primary research and analysis techniques, the firm helps its clients identify, plan for and capitalize on current and emerging market opportunities. Our products and services consist of research reports, annual research programs and custom research and consulting services. Founded in 1971, the firm is located in the Boston area.

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