Competition Intensifies in Vehicle Electronic Systems Market as Procurement Numbers Fall
Partnerships Become the Order of the Day to Combat Spiralling Competition
LONDON, September 13 -- The drive to modernise the land forces in Europe has never been stronger, with both the North Atlantic Treaty Organisation (NATO) and the European Union (EU) forces pushing ministries of defence (MoDs) to procure next-generation situational awareness tools at the vehicle level. With European forces keen to deploy 'networked' systems that support their network-centric aspirations, the role of vehicle electronics systems ("vectronics") in enhancing situational awareness in small-unit battlespaces cannot be underestimated.
"Battle management systems will provide the key connectivity factor for networked forces, by creating an information-sharing environment within which to incubate NCW," remarks Frost & Sullivan (http://aerospace.frost.com) Aerospace and Defence Analyst Christopher M. Dabrowski.
Increasingly, European procurement agencies are looking to endow commanders with the ability to locate, identify, track and engage enemy forces at ever-greater distances and to operate their units at night. The greater the situational awareness, the better are commanders able to target the enemy without being engaged first.
Political imperatives to minimise civilian casualties through improved situational awareness and well-protected forces are extremely strong and this is the biggest factor driving the vectronics market. Continued growth of this market is, therefore, clearly dependant on force modernisation and stock replacement programmes.
Estimated spending on the vectronics market is a staggering $5.5 billion for the period 2005-2014, making it the primary driver of the land systems market in Europe. Market revenue is expected to reach around $300 million in 2005 and increase to approximately $450 million by 2014.
"However, with procurement numbers diminishing, the period 2005-2014 will see intense competition in the face of a consolidating European defence market marked by commoditised product offerings," says Mr. Dabrowski. "Participants that are able to establish a leading position in battle management systems will be best-placed to provide solutions across the market."
Due to the tremendous emphasis placed by nations on the security of supply, the market is also seeing a number of forced partnerships that could potentially reduce a product's competitiveness while artificially inflating its costs for MODs.
To combat the dual challenges of cost sensitivity and falling procurements, the large defence primes are increasingly looking to move up the value chain and provide systems solutions in a progressively networked combat environment. This has opened new windows of opportunity for software manufacturers offering low-cost and scalable technologies that leverage strong IT backgrounds to provide top-quality, customised, yet affordable software solutions for battle management systems.
Added to the challenge of diminishing procurement is the increasing cost sensitivity and role of offsets among smaller and mid-sized nations. National industry has a strong presence in these markets, a fact that tends to restrict investment opportunities for interested 'foreign' or non-European enterprises. Therefore, the participation of such enterprises is usually limited to entering partnerships or setting up offset subsidiaries.
The way towards making this possible clearly lies in diversifying away from commoditised product offerings. While defence primes are already moving in this direction, second-tier suppliers that typically have lower-cost product bases and share excellent relationships with national suppliers are looking for opportunities beyond their home nation and creating an increasingly competitive market dynamic.
"Effective partnerships between defence primes and these companies is likely to provide a best fit for Customer #1, combining national industry, software expertise and years of defence experience into a potentially lower-cost package," says Mr. Dabrowski.
If you are interested in further information about the European land-based ISTARs: vehicle electronics systems, please send an e-mail to Magdalena Oberland, Corporate Communications, at Magdalena.Oberland@frost.com with the following information: your full name, company name, title, telephone number, e-mail address, city, state and country. We will send you the information via e-mail upon receipt of the above information.
Background
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Media Contacts:
Europe:
Magdalena Oberland
Corporate Communications
P: +44-(0)-20-7915-7876
E: Magdalena.Oberland@frost.com
Americas:
Tolu Babalola
Corporate Communications
P: +1-210-477-8427
E: tolu.babalola@frost.com
Asia Pacific
Donna Jeremiah
Corporate Communications
P: +603-6204-5832
E: djeremiah@frost.com
India:
Surbhi Dedhia
Corporate Communications
P: +91-22-2832-4705 Ext: 131
E: sdedhia@frost.com
Australia:
Gerry Eller
Corporate Communications
P: +61-425-272-546
E: gerry.eller@frost.com
List of Key Industry Participants: Amper Programmas, Aselsans, BAE Land Systems, BARCO, Chelton Defence Communications, Denel, DRS Technologies, ELNO, Espelsa, FNSS, Galileo, Avionica, General Dynamics, GMV, Indra, Intracomm, Jan Falck Schmidt A/S, Kollsmorgen, Krauss-Maffei Wegman, KVH Industries, Inc., Marconi Selenia, MOWAG, Northrop Grumman Electro-optical Systems, Patria, Patria Polska, Przemyslowy Instytut Telekomunikacji, Racal Acoustics, Rafael, Recon/Optical, Inc., Rheinmetall Defence Electronics, Rhode & Schwarz,Rockwell Collins, Saab Systems, SAGEM, Santa Barbara Sistemas, Sensors Unlimited, Singapore Technologies Kinetics, Steyr-Spezialfahrzeug, Systematic A/S, Terma A/S, Textron, Thales Land & Joint, TNO, WB Electronics
Media Contacts: Europe: Magdalena Oberland, Corporate Communications, P: +44-(0)-20-7915-7876 E: Magdalena.Oberland@frost.com Americas: Tolu Babalola, Corporate Communications, P: +1-210-477-8427 E: tolu.babalola@frost.com Asia Pacific, Donna Jeremiah, Corporate Communications, P: +603-6204-5832 E: djeremiah@frost.com India: Surbhi Dedhia, Corporate Communications, P: +91-22-2832-4705 Ext: 131 E: sdedhia@frost.com Australia: Gerry Eller, Corporate Communications, P: +61-425-272-546 E: gerry.eller@frost.com