Electronic Design

Megatrends Of The Future Will Feed Off Industry Hype

Industry analysts see key gains in store for several market sectors, thanks to revolutionary leaps in technology.

Afaltering economy hasn’t slowed the electronics industry. According to many independent market research organizations and other sources, most market sectors will experience strong growth over the next five to 10 years.

In fact, what has become a digital universe is expanding more rapidly than any original estimates. Updated projections based on research by IDC suggests that with a compound annual growth rate of almost 60%, the digital universe is ballooning at a faster clip. All told, it’s expected to be nearly 1.8 zettabytes (1800 exabytes) in 2011, a tenfold increase over five years.

This expansion largely will come as a result of worldwide shipments of digital cameras, digital surveillance cameras, and digital TV. Another aspect of this extraordinary growth is all of the digital information generated about the populace on a daily basis, which now surpasses the amount of digital information individuals actively create themselves.

WIRELESS EVERYWHERE
Virtually everyone tracking the wireless market sector says that the transition from wired to wireless applications is only beginning. Global mobile phone use passed the 3 billion mark—equivalent to half the world’s population—in 2007 thanks to the booming cell-phone markets in China, India, and Africa.

Meanwhile, the introduction of new models like the upgraded versions of Apple’s iPhone, which accounted for about 10% of total smartphone sales in 2007, and Wi-Fi-enabled digital cameras from Nikon and Panasonic expected to arrive this spring will push the market even higher globally.

Popular online applications, such as social networking, are also going mobile. Nielsen/ NetRatings says that about 45% of active Web users have already visited these Web sites via mobile devices.

Adoption of next-generation specifications is expected to substantially boost the market for wireless multimedia networking, prompting growth in excess of 50 million wireless network devices by 2010, according to Parks Associates (Fig. 1). Parks predicts annual sales of wireless multimedia-capable devices, including home networking gear, personal computers, and fixed and mobile consumer electronics, will grow from 2.5 million units in 2006 to nearly 52 million by year-end 2010, due largely to standardization in the market.

“Multiple factors are driving the move by both manufacturers and service providers in embracing wireless connectivity,” says Kurt Scherf, vice president and principal analyst with Parks Associates.

“Service providers are looking for greater ownership in developing home-networking solutions. Operators need to reduce CAPEX (capital expenditure) costs in deploying home-networking equipment. New content services are on the rise. And, consumers are invariably a factor in eliminating cables,” says Scherf. “These are all positive signs that the IEEE 802.lln and WiMedia solutions— among the many home-networking options—will continue to drive growth in new home-networking applications.”

Infonics Research says worldwide sales of wireless local-area network (WLAN) equipment, including independent and dependent access points and WLAN switches and controllers, hit $1.9 billion in 2007, up 20% from 2006, driven by the increased rollout of enterprise WLAN and an acceleration of upgrades to the IEEE 802.11n standard. Infonics forecasts that the WLAN market will reach $3.4 billion in 2011.

WiMAX also shows good growth, at least outside the U.S. The WiMAX Forum is projecting more than 133 million WiMAX users globally by 2012, a forecast based on the results of an independently commissioned study published in April. Data from the study estimates that approximately 70% of WiMAX users will access broadband Internet services via mobile and portable WiMAX devices by 2012.

DEFINING 4G
The biggest transition in wireless will be to 4G, which is only beginning to take shape. The International Telecommunications Union (ITU) is expected to release the official definition of wireless 4G later this year. But In-Stat, another market research group, expects the primary 4G technologies to include Long Term Evolution (LTE), Ultra Mobile Broadband (UMB), and IEEE 802.16m WiMAX.

“Companies are extremely uncomfortable talking about 4G technologies since the ITU has not defined 4G yet,” says Gemma Tedesco, an In-Stat analyst. “However, each of the contending 4G technologies has a cheerleader, with Ericsson touting LTE, Qualcomm preferring UMB, and Intel toting 802.16m WiMAX.”

Much of the wireless boom is being pushed through the incredible growth of consumer electronics (CE). Total U.S. factory-to-dealer sales of CE topped $160 billion in 2007, an 8% increase over 2006, according to the Consumer Electronics Association (CEA), with another increase in CE revenues in 2008 expected to top $171 billion.

“CE industry sales have exceeded our expectations once again, despite a challenging domestic economic situation,” says Gary Shapiro, CEA president and CEO. The average U.S. household spent $1405 on CE products in the past 12 months, $120 more than the year before, according to CEA research.

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“More than 50% of American homes already own a digital television and it looks like highdefinition, or HDTVs, have the potential to match that by the end of the year,” says Chris Ely, the CEA’s market research senior analyst. “With the transition to digital television coming on February 17, 2009, lower prices and an increased awareness of the benefits of high definition, many consumers are deciding to upgrade their televisions.”

The CEA expects consumers to buy more than 28 million digital TV sets this year. LCD TV sales in the U.S. are projected to grow 33% to 24 million units this year. Like so many other CE products, TV manufacturers hope innovative designs will help them gain market share. “Design is the next frontier,” says Michael Gay, vice president of marketing at Philips Consumer Electronics North America.

With mobile devices getting most of the attention, home networking may be the next battleground for CE marketers. Today, most people’s homes are a hodgepodge of electronics and appliances that work on their own. The CEA and others believe now is the time to make the transition by networking pretty much everything in a house that runs on electricity. Entertainment, communications, and security are obvious candidates.

Most market forecasters agree that the home is ripe for connecting everything, opening new market opportunities for CE and other sectors. The big trick for vendors (and one that may set them apart and count heavily toward their success or failure) will be ease of use—overcoming the complexities of installing and using networked home electronics.

Parks Associates, which has studied this market closely, believes the number of U.S. households with a connected entertainment network will reach 30 million by 2010. That’s a network comprising either a PC connected to at least one CE device or multiple interconnected CE devices, such as a whole-house DVR system.

In-Stat says more than 10 million U.S. homes already have at least one active Voice over Internet Protocol (VoIP) user. According to In-Stat, “client-based” VoIP providers like Yahoo! and AOL are benefiting from the growth of cable.

MORE THAN JUST A CAR
One of the best opportunities for the electronics industry going forward is the automobile. In-vehicle navigation and entertainment, obstacle detection, integrated wireless communications (with Internet connectivity), smart safety systems, and more sophisticated vehicle operation sensing devices are just the beginning. Several market analysts—and some auto manufacturers—predict that by 2010, more than 30% of the value of automobiles will be in their electronics.

“If the automobile was invented today,” said Rick Wagoner, chairman and CEO of General Motors in a keynote address at the International Consumer Electronics Show in Las Vegas in January, “it would have debuted at CES. Because more and more, that’s exactly what today’s cars and trucks are—highly sophisticated consumer electronics.”

Sales of in-vehicle CE products, including OEM devices in new vehicles, will grow at a rate of 13% in 2008 to more than $12.8 billion, according to the CEA. But the biggest opportunity for marketers may be in non-installed products. A CEA study found that 38% of drivers intend to purchase and install an in-vehicle CE product over the next year.

Topping their list are remote vehicle starters (15%), in-dash navigation systems (13%), and car alarms (12%). Satellite radio, HD radio, and DVD players also show up strong in the study. What’s behind the self-installed auto market?

“Consumers want the flexibility to take their CE devices in and out of the car. They also want to be able to switch out devices easily as technology shifts and advances,” says Steve Koenig, CEA industry analysis senior manager.

TAKING THE MARKET’S PULSE
Medical electronics is another significant if still evolving market. Consumer electronics companies are already exploiting the growing demand for remote—and that usually means wireless—and increasingly portable medical devices and services (Fig. 2). At the same time, several chip manufacturers, including Analog Devices, Intel, STMicroelectronics, and Texas Instruments, have formed vertical business units to respond to the demands of this burgeoning market.

In 2006, several industry and medical device and healthcare companies formed the Continua Health Alliance to devise interoperability standards for digital medical devices and to promote ways the government and insurance companies might pay for care enabled by technology.

The Bluetooth Special Interest Group, which is part of the Continua group, formed the Medical Devices Working Group to create and ratify a Bluetooth Medical Device Profile. Its goal is to expand Bluetooth’s use in medical applications, such as bloodpressure meters, weight scales, pulse oximeters, glucose monitors, pulse monitors, and thermometers.

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InMedica, the medical electronics division of IMS Research, predicts exceptional growth in consumer medical devices. Estimates show manufacturer revenue reaching more than $5 billion by 2011, partly due to the aging population and its inherent chronic medical conditions, in developed countries. Several market analysts expect consumers will be able to log medical readings into a PC or even a smart phone for remote analysis by medical professionals.

Security is another strong market sector, particularly in software and with the transition to more ubiquitous use of biometrics, such as fingerprints, iris scans, and facial recognition. Growing awareness of the damage caused by security breaches, together with the increasing demand for a more mobile and remote workplace, will keep the worldwide market for security software buoyant, according to Gartner, a market research and consulting firm.

Gartner projects worldwide security software revenue at $1.5 billion in 2008, an 11.2% increase from 2007. The market is forecast to surpass $13.1 billion in 2012. Gartner also says that in the short term, prioritizing selection of security technologies in the current business environment continues to be the top issue for enterprises. That’s because companies and government agencies face greater pressure to demonstrate compliance under various regulatory requirements and show business value and cost-efficiencies for security measures.

On another front, rampant identity theft has pushed the development of biometric techniques to make transactions more secure. RNCOS Research predicts the world biometrics market will jump 6.5 times in 2008 over 2003. An RNCOS report also says the market of biometrics in point-of-sales equipment and services will climb to $440 million by 2010, up from $31 million in 2005.

As a result, Acuity Market Intelligence, another market research organization, says it’s beginning to see an interest in biometric technology development from companies outside the biometric field. Expanding homeland-security budgets are another reason why Acuity sees rapid growth in biometrics.

FIGHTING FOR DOLLARS
Don’t worry too much about the military and aerospace markets. They’re still huge. It’s the programs that count. And some of those could change with evolving world conditions and a different administration and Congress in the U.S. beginning early next year.

Also, some military roles may change. While the Army, Navy, and Marine Corps have been expanding their fleet of unmanned aerial vehicles (UAVs), the Air Force is being pressed to become more involved in the war in Iraq, including the use of pilotless drones. The number of these aircraft in use by U.S. forces has grown 25-fold since September 11, 2001, to a total of more than 5000.

There’s also a growing opportunity for satellite development, which had slowed significantly during the first half of this decade. According to the Teal Group, a defense and aerospace consulting firm, the emerging cycle within the commercial satellite market will coincide with an up cycle in the military satellite market, led by more than 200 new-generation U.S. military satellites valued at about $120 billion.

Many of these satellites, like so many other U.S. Department of Defense programs, have been delayed and are severely over budget. But Teal says that they will be built and launched because the requirements for them exist.

What won’t change much is the military’s use of commercial off-the-shelf (COTS) components and other hardware in systems. This has proven to be a very successful way for the Pentagon to not only cut costs tremendously, but also to get new and emerging technologies into its inventory more rapidly.

PERSONAL ROBOTICS
We’re also likely to see more robots in the home, taking over mostly simple but annoying tasks like vacuum cleaning. The Machine Industry Memorial Foundation, a Tokyo-based think tank, believes that robots could fill the jobs of 3.5 million people in graying Japan by 2025, helping avert worker shortages as the country’s population shrinks.

Japan faces a 16% dip in its workforce by 2030 while the number of elderly will mushroom, according to government estimates, raising worries about who will do the work in a country not used to large-scale immigration. The foundation says robots could fill the gap, ranging from monitoring the health of older people to performing basic household tasks.

Several Japanese companies, like Sony, Hitachi, and NEC through its Personal Robot Research Center, have developed robots that can find and identify people (facial recognition), interact with language (speech recognition), move around independently, and perform autonomous activities (Fig. 3).

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