Over the past decade, the high-tech industry has experienced an unprecedented period of growth. This period saw the Internet revolution, a multitude of new players, a flood of new products, and the surge of market valuations. Technology companies focused on revenue growth and market share gains and struggled to keep up with customer demand.

More recently, this trend has reversed as the technology industry experienced a traumatic downturn. Faced with customers slashing spending levels, overcapacity, cash shortages, and tumbling share prices, many vendors are undergoing serious crises. The industry is consolidating, and it is focusing on cost and operational improvements, instead of top-line growth, to drive earnings.

Going forward, successful technology firms will continue to need capabilities that allow them to deal more effectively with periods of growth and contraction. These capabilities will include understanding market dynamics and customer requirements, making the right choices for new businesses and technologies, managing ever shortening innovation cycles, leveraging partner-based supply chains, as well as managing toward a sustainable and attractive bottom line.

We have helped senior executives across every major segment deal with critical strategic and operational issues during times of growth and contraction. Areas of focus include especially international expansion, business strategy; sales, marketing & innovation; organization & change management; and operations.

Market insights: Examples from our industrial manufacturing practice

Pressure Sensors and transmitters in Europe: demand for higher performance for the same price

Increasing Price Pressure Necessitates Enhanced Product Offerings

In keeping with the advances in technology, pressure sensors and transmitters have continued to evolve over the past decade. While new generation pressure sensors and transmitters offer added functionality and greater intelligence, pricing is emerging as the foremost competitive factor dictating product success, especially in the lower end of the pressure-sensing spectrum. Hence, with the highly price-sensitive European pressure sensors and transmitters markets demanding higher performance for the same price, competitors will be required to enhance their product offerings with services that add value to the customer.

Siegle, Hu & Partners International conducted an analysis of the various stimulants and regressive factors that are at play in the European pressure sensors and transmitters markets – including revenue forecasts and market trends for the various products, applications, and geographic segments.

Growing Trend towards Combination Sensing Systems

With end users expecting greater functionality and intelligence from level sensing systems, manufacturers are developing systems, which offer combination sensing. These systems offer better accuracy, reliability, and functionality and are also capable of monitoring and transmitting data of more than one process parameter. Moreover, recent advancements have helped develop pressure transmitters that can monitor and detect leaks and temperature variations as well as provide feedback. Demand for such systems is expected to increase, thereby driving the European pressure sensors and transmitters markets.

However, as the need for online monitoring, better process control and greater reliability drives end users towards electronic pressure measurement, technologies such as capacitance, piezoresistive, and strain gauge are competing for use in similar applications. "While on the one hand, competition breeds technological advancements, it also cannibalizes the market for individual technologies," notes our team assigned to this industry. "Hence, the pressure to lower the unit price of the system could impact the revenue growth and profitability of many market participants."

Improvements in Manufacturing Technologies set to Expand Scope of Application

With the ongoing advances in manufacturing technologies, modern day pressure sensors are increasingly more versatile and robust. As a result, these sensors are capable of sensing a wider pressure range, thus expanding the scope of their applications. Further, refinements in the micromachining technology, advancements in thick and thin film deposition techniques, and electrical discharge machining (EDM) have made them producible on a larger scale at reduced overall costs. Coupled with these factors, the growing monitoring and information requirements within the European process industries are expected to create continued interest and demand for pressure sensors and transmitters.

With respect to the product segments, as end users migrate towards sophisticated pressure instruments, bourdon tube pressure sensors are gradually losing market and revenue share. On the other hand, microelectromechanical systems (MEMS)-based pressure sensors and transmitters have the largest revenue share among the various pressure sensors and transmitters and look set to show a healthy growth. "As the European pressure sensors and transmitters markets is nearing maturity, market participants are focusing more on sustaining their market share than revenue growth. In enhancing their market share and staying profitable, technological alliances are expected to be the focus area of most of the participants."

The Electric Drives industry in Germany: Achieving the optimum balance between innovating and maintaining profits

Increased R&D Essential to Remain Competitive in the German Electric Drives Market
Drive manufacturers are looking to increase R&D investments to remain competitive in a market characterised by market maturity, technology advances and globalisation. The challenge has been in achieving the optimum balance between innovating and maintaining profits. However, with production shifting to Asian regions, which are offering huge cost advantages, R&D is likely to take on increasing importance as technical features become a vital differentiating factor. Customer-focused R&D are therefore, expected to play an increasingly important role in protecting revenues and market share in the future. Manufacturers are also expected to differentiate their offer through value-added services, such as implementation, training and consultancy.

Siegle, Hu & Partners International examined the German electric drives market with a focus on the three key electric drives segments - AC standard, DC standard and AC servo. Our project outlined the prevailing challenges faced by drives manufacturers and gives strategic recommendations to benefit from the changing markets and obtain maximum return on investment.

Intelligent Drives to Spur Market Growth

Recently, technological advances in the German electric drives market have been focused on integrating components into single units to minimize costs. "The industry is witnessing growth in a variety of these new, intelligent, multi-functional products, as end users seem to be showing a preference for these units for reasons such as space and ease of installation," explains our team.

Electric drives manufacturers looking to supplement their margins from simple inverters are likely to find it very beneficial to increase investment in the development and enhancement of these integrated products. Such developments are also expected to have a significant impact on the growing trend of decentralization of drives, higher safety and security and integration of Ethernet in the communication process.

Move towards Sophisticated Drives Underpins the Key Growth Segments

Electric drives manufacturers that are able to determine application-specific and customer-oriented technological enhancements are most likely to gain in terms of market share and profit. Alternating current (AC) standard electric drives are at present the most popular drives solution and constitute the largest market segment in Germany. AC servo electric drives are the most dynamic market segment in Germany and are gradually replacing direct current (DC) systems. Further, DC standard drives have been losing market share over last years due to the development of new AC products, which are more accurate, reliable and attractively priced.

While AC standard drives are set to remain the single-largest market segment, their share of the total market is likely to see a slight decline, as servo products gain in popularity. The AC servo segment represented 28.7 per cent of the total German electric drives market in 2004. This share is expected to steadily increase to 34.5 per cent and register revenues of $305.1 million by 2011.