So far so good

The UPS market has moved from being a box solution to being an integrated element in an organisation’s IT plan. Faiz Askari reports

It is undoubtedly good news for the industry players that the Indian UPS market is experiencing rapid growth. In 2004-05, the UPS market grew by 48 percent over 2003-04. Till now, it has been experiencing more than 30 percent growth. The consumption pattern of 2004-05 shows a 70 percent increase in consumption in the top four cities and 42 percent in smaller towns. While the UPS market is still cluttered and disorganised at the lower end, the higher end of the market has organised players.

As per IDC, the branded UPS market in India grew at 35 percent in 2005 compared to 29 percent in 2004.

Says Pankaj Sharma, Country General Manager of APC, “The category growth was mainly driven by the increase in IT spends of key verticals like IT, BFSI, government, education and BPO. Increased IT spends led to deployment of datacentres to meet the growing business requirements and ensure data availability 24/7.”

"With PC sales crossing four million in 2005, UPS vendors can look forward to a robust performance in the UPS segment" -Pankaj Dubey GM, Sales and Marketing Intex Technologies (India)

According to IDC, (refer to the table on IT spending) BPO, government and BFSI are the verticals which will witness a substantial increase in IT spends this year and again be the key to growth of IT products and solutions.

Giving a view of market growth, Pankaj Dubey, GM of Sales and Marketing, Intex Technologies (India) says, “There is large-scale requirement of IT infrastructure in the government sector, railways, telecom, textile and glass verticals, and they are aggressively enhancing their IT infrastructure. This has led to high demand for UPS in those areas. With PC sales crossing four million in 2005, UPS vendors have benefited and will continue to do so considering the good performance of the desktop segment.”

In India, five cities—Mumbai, New Delhi, Chennai, Kolkata and Bangalore—have been the largest markets for PCs and UPS. However, there has been a shift towards B & C class cities such as Pune, Chandigarh, Lucknow, Hyderabad and Jaipur, to name a few. These locations are fast becoming global hubs in terms of R&D, BPO, retail and manufacturing. Given the criticality of operations undertaken in these sectors, there is an increasing need for comprehensive network uptime solutions. Besides, given the upward spiral in terms of PC penetration in these cities, there is marked growth.

Defining this growth, Deepak Sharma, Managing Director, Eaton Power Quality says, “Perpetual worsening of the power supply situation, coupled with increased power demand by industrial, corporate, SMB, SOHO and the home user segment, along with the need for a controlled shut down of computers, has fuelled the need for quality UPS products.”

Tushar Sighat, VP, Channel Business, D-Link India believes that the UPS market is showing a positive growth rate as the power management needs are increasing for both enterprises as well as individual users. “Along with this the UPS market is maturing and moving towards recognised brands which are gaining market share. They should dominate the UPS market in the days to come.”

Vertical growth

"Verticals that are fuelling the demand for UPS are telecom, IT, BPO, industrial, BFSI, processing and critical medical applications" -Sandeep Nair Managing Director Emerson Network Power (India)

Commenting on the verticals in the UPS business, Sandeep Nair, Managing Director, Emerson Network Power (India) says, “Verticals that are fuelling the demand for UPS are telecom, IT, BPO, industrial users, BFSI, processing and critical medical applications. One industry that is often underestimated but today accounts for a large portion of IT spending—and therefore critical infrastructure—is the government.”

Highlighting some other aspects of the UPS industry, Su-kam’s CEO Kunwer Sachdev says, “With people becoming IT-savvy, the market for UPS is at an all-time high. The current market is definitely opening new avenues for technology-savvy products. As against the earlier market trends, customer focus is now shifting from pricing to the latest technology.”

Greater PC penetration and the requirement for UPS as a power back-up tool for other products have been a driving factor for the growth of the Indian UPS market. New sets of applications will further drive UPS penetration.

Asserting the importance of potential segments in the UPS market, Dubey of Intex adds, “Keeping in consideration the growing PC market, we have been concentrating on solutions marketing. This is aimed at bundling the PC and the UPS together as one product which can provide all the computing solutions. It is quite effective in making the UPS sales match those of PCs.”

Capitalising on market trends

Vendors are bullish about capitalising on these trends. As a part of its growth strategy ‘Meet IT,’ Emerson announced plans to substantially enhance its current channel network. It intends to enroll Value Added Resellers (VARs) to boost its presence in the SOHO UPS market. With a base of about 500+ VARs after its recent entry in the SOHO UPS business with the ITON range, Emerson will be rolling out a nationwide registration programme to sign up between 800 to 1,000 additional nominees. Commenting on key areas of the UPS market, Su-kam’s Sachdev states, “Channel network, technology and after-sales-service are the main drivers as far as the UPS market is concerned. We are striving to strengthen all three. We have a dedicated team for the UPS segment and are tapping IT vendors in a major way. As regards technology, we had anticipated this need and have come up with innovative features like the Pure Sine wave technology for the line interactive UPS at competitive prices.”

Sharma of APC adds, “APC provides 24x7 after-sales support by way of its Marketing Access Group and also online support through its Web site and Web chat. Today, we have our service network across 300 cities and were the first to provide onsite swap warranty on all our products. Other players in the category followed.”

Changing customers’ perceptions

Today it is necessary to ensure the availability of mission-critical applications, hence the challenge for all UPS vendors is to innovate and manufacture UPS systems which ensure minimum downtime and user friendliness along with service and sales support.

Dubey believes that the user has realised its importance and hence is becoming more demanding as well as conscious while buying a UPS system. With this in mind, Intex is keeping pace with the changing preferences by incorporating user-friendly features like higher capacity power backups and sleeker and lighter structures, to name just a few.

Talking about the role of a customer’s mindshare in the UPS market, Sharma of APC remarks, “The enterprise segment UPS user was always brand-conscious and put a premium on the safety of his equipment. The evolving needs of this customer is mainly related to smaller footprints due to constraints of space, higher efficiency with the introduction of transformerless models, and advanced technology which can be scaled up as per his network requirements.”

Hurdles and challenges

The problems are rooted in the component industry, which is not equipped to meet the requirements of the UPS industry for high quality and performance components. According to estimates of the Department of Electronics, raw materials constitute nearly 50 percent of the value of the production of components. About 70 percent of the raw materials (in value terms) for producing components are imported, and only the balance 30 percent is indigenous. Another important fact is that indigenous components are priced between 50-150 percent higher than imported components, the average being around 80 percent.

Highlighting other hurdles of the UPS market, Nair says, “The UPS industry is highly fragmented with many disorganised players at the lower end catering to the SOHO segment. Conversely, the higher end of the market is typically dominated by organised players who cater to enterprises. These segments prefer the branded players whom they can depend on for complete tech solutions and after-sales-service.”

A high import duty on components makes the final product expensive. The low product quality, non- compliance with ISI standards, and no after-sales-service from the unorganised sector are also making things complicated.

The other hurdle is price. Though a small section of consumers are aware of the additional features of UPS, they are not willing to pay a higher price for them. Also, there is a gap in the development of battery-less and software-intensive UPS. Sachdev says: “The dealer network needs to be educated about the changing technology. They mainly sell UPS as combination packages with computers. The products, which come cheap to them, tend to give them more margins, hence educating them is the challenge of the day. They need to shift their interest from gaining more profit margins to selling branded products using the latest technology.”

"Increased power demand by industrial, corporate and SMB users, and the need for a controlled shut down of computers, has fuelled the need for UPS" -Deepak Sharma Managing Director Eaton Power Quality

"The enterprise user is looking for higher efficiency with transformerless models that can be scaled as per network requirements" -Pankaj Sharma Country General Manager APC

Shape of the future

Sharma of APC says that in the near future the emphasis will be on environment-friendly UPS. The UPS is no more seen as a box but as an integrated solution. “APC is the only company today that provides an end-to-end solution for data centre infrastructure. APC offers an end-to-end integrated, modular and scalable solution for designing Network Critical Physical Infrastructure (NCPI) for a data centre. NCPI includes power, its distribution, cooling, cooling distribution, service, and the physical infrastructure management systems that ensure the availability of your data centre and facilities,” he says.

On his part, Sighat believes that “The future trend is towards high frequency line interactive UPS. This UPS range will eliminate the need for a bulky transformer and thus make the product lightweight and compact. With higher backup times they will be the ideal solution for the SOHO segment.”

According to Dubey, trends like the use of Simple Management Network Protocol, along with digital signal processors, will certainly dominate the market in the future.

“IT companies are understanding the concepts and significance of earthing and grounding, and there is an increasing priority to ensure that proper measures are taken in the initial stages itself,” says Nair. “More than understanding the critical load requirements, businesses are beginning to pay special attention to the environment in which the application will run, and are thus demanding power quality audits.”

faiz@expresscomputeronline.com