“UPS” and downs in backup power market

While it is customary to see sales decline in the first quarter of the new year as a result of the seasonal post-holiday slump, UPS sales were especially slow in 1Q 2012.

07/18/2012


IHS has acquired IMS ResearchWhile it is customary to see sales decline in the first quarter of the new year as a result of the seasonal post-holiday slump, UPS sales were especially slow in 1Q 2012, resulting in only 2% growth in the global market year-over-year. IMS Research (recently acquired by IHS Inc.) recently reported in its quarterly tracking of the global UPS market that UPS hardware revenue growth continued to slow after a rather sluggish second half of 2011. While little growth isn’t too surprising given the state of the global economy, the fact that large-system UPS sales dropped 2% year-over-year this quarter only provides further evidence of the struggles that the market will face in 2012.

After a rather upbeat beginning to 2011 in UPS sales, Western Europe still faced a struggling economy and overly cautious consumers because of the unresolved economic problems of Greece, Spain, and Portugal. As a result, the region’s sales began dropping off as early as 3Q 2011 and continued to shrink in the first quarter 2012. Single-phase sales fell 5% and the >100 kVA market contracted more than 15% year-over-year. IMS Research’s senior analyst Lori Lewis explained: “The ongoing struggle in Western Europe has really forced many in the region to restrain from making any kind of large financial decisions and to suspend purchasing new UPS. What’s even more troubling is that the market doesn’t appear to be turning around any time soon without any kind of resolution on the underlying economy. Adding further to the woes of Europe, Middle East, and Africa (EMEA), the emerging markets in both Africa and the Middle East, where hopes of UPS market growth were high, also fell short of seeing growth in 2011 over 2010.”

After experiencing a less-than-average 5% year-over-year growth in 4Q 2011, Asia’s sales continued to remain slow in 2012 with just under 9% growth year-over-year in the first quarter. China’s struggles intensified as interest rates climbed and lending froze; resulting in declining >100 kVA UPS sales. Lewis revealed: “The Chinese Government’s attempt to control an overheating economy by raising interest rates came at a time when the global economy was cooling off as pre-recession pent-up demand was satisfied. Slowing exports to Europe combined with the difficulties securing the financing needed for businesses to buy equipment had a dramatic impact on China’s growth. Now, China is dealing with slowing exports and limited growth to internal consumption that is needed to keep the country’s GDP growing.”

Japan’s growth also slowed after experiencing a dramatic pick-up in the single-phase market shortly after the tsunami in March 2011 hit. Meanwhile, other regions dependent on China have also felt the impact of China’s increased labor costs and slowing economy with little growth as well.

With economic struggles of its own, the U.S. has managed to keep sales moving in the positive direction at just under 5% year-over-year growth in 1Q 2012. The 10 kVA to 100 kVA range contributed to most of this, thought to be the result of increased demand for digitizing everything from programs and processes to information once available only as hard copy. The >100 kVA market remained steady continuing to pick up data-center projects; while the single-phase UPS sales remained flat. Further emphasizing the state of the economy, Brazil’s rapid growth even simmered down after its tremendous 2010. Even though a slowdown was expected because of worries from over saturating the market, the 5% annual growth seen in 2011 was anything but impressive for this promising BRIC country.

“Ever since the recession hit, the UPS market has been on a roller-coaster ride of ups and downs,” stated Lewis. “After making the climb to recovery in 2010 and part of 2011, sales have unfortunately headed back downhill and are forecasted to stay on that path until the issues weighing on Europe, China, and the U.S. are resolved.”

With two consecutive quarters of slow-to-no growth, the UPS hardware market will to continue to struggle for much of 2012.

IMS Research regularly analyses all aspects of the data center infrastructure market. More information regarding these detailed reports can be found here.



No comments
Consulting-Specifying Engineer's Product of the Year (POY) contest is the premier award for new products in the HVAC, fire, electrical, and...
Consulting-Specifying Engineer magazine is dedicated to encouraging and recognizing the most talented young individuals...
The MEP Giants program lists the top mechanical, electrical, plumbing, and fire protection engineering firms in the United States.
High-performance buildings; Building envelope and integration; Electrical, HVAC system integration; Smoke control systems; Using BAS for M&V
Pressure piping systems: Designing with ASME; Lab ventilation; Lighting controls; Reduce energy use with VFDs
Smoke control: Designing for proper ventilation; Smart Grid Standard 201P; Commissioning HVAC systems; Boilers and boiler systems
Case Study Database

Case Study Database

Get more exposure for your case study by uploading it to the Consulting-Specifying Engineer case study database, where end-users can identify relevant solutions and explore what the experts are doing to effectively implement a variety of technology and productivity related projects.

These case studies provide examples of how knowledgeable solution providers have used technology, processes and people to create effective and successful implementations in real-world situations. Case studies can be completed by filling out a simple online form where you can outline the project title, abstract, and full story in 1500 words or less; upload photos, videos and a logo.

Click here to visit the Case Study Database and upload your case study.

Protecting standby generators for mission critical facilities; Selecting energy-efficient transformers; Integrating power monitoring systems; Mitigating harmonics in electrical systems
Commissioning electrical systems in mission critical facilities; Anticipating the Smart Grid; Mitigating arc flash hazards in medium-voltage switchgear; Comparing generator sizing software
Integrating BAS, electrical systems; Electrical system flexibility; Hospital electrical distribution; Electrical system grounding
Cannon Design’s blog is a place for the many voices of the firm to share thoughts and news related to current projects...
As brand protection manager for Eaton’s Electrical Sector, Tom Grace oversees counterfeit awareness...
Amara Rozgus is chief editor and content manager of Consulting-Specifier Engineer magazine.
IEEE power industry experts bring their combined experience in the electrical power industry...
Michael Heinsdorf, P.E., LEED AP, CDT is an Engineering Specification Writer at ARCOM MasterSpec.