Market Focus
Growing commercially
 Previously propelled by demand from the consumer segment, the UPS market growth is expected to be driven by the fast-expanding SMB segment
By Tabrez Khan
The UPS market in India is estimated to grow at a CAGR of 14 percent through 2014, according to
research agency Frost & Sullivan. Estimated at $544.4 million in 2007, it is projected to touch $1.3 billion by 2014. The growth is expected to be driven by the fast expanding SMB segment, which is increasingly waking up to the need for power backup solutions. The sub-1KVAconsumer segment, which hitherto drove the UPS growth over the last decade or so, seems to be flagging. The growing popularity of notebooks, and their use in everyday computing inside homes and offices, has taken the sheen out of UPS devices in this segment.
Upbeat commercial segment
Growth is bolstered majorly by the commercial segment comprising 1-5KVA products, which currently accounts for 20 percent of the overall market.
According to Mandeep Gupta, Country Manager, Channel Sales, Channel Business, Emerson Network Power India, “Notwithstanding hiccups, demand for UPS devices in the commercial segment continues to grow. The Internet has given rise to the ever burgeoning remote data center market, resulting in an increased demand for UPS solutions of high density. As more and more SMBs deploy servers, the demand for UPS to back them up will also grow.”
Concurs Pradeep Sangwan, Country Manager, Socomec UPS India, “Demand for 1-5KVA category has seen healthy growth. The poor demand in the sub-1KVA segment has been more than offset by robust growth in the commercial segment with increasing numbers of SOHOs and SMBs using UPS over the last few years.”
UPS vendors are upbeat about growth opportunities in B and C class cities, apart from bigger cities and metros and are looking to innovate and expand in newer geographies and markets.
“The growth engine has shifted from A class cities to B and C class cities,” says Vinayak Joshi, Additional General Manager, Marketing, DB Power. “As information technology takes root in these cities and the telecom infrastructure spreads, further growth can be expected. Also SMB, SME, SOHO, BFSI and government (both State and Central) are all contributing in the demand rise pattern,” Joshi adds.
According to Sangwan, not only are the number of SMBs and SOHOs increasing, but more and more existing small businesses are realizing the criticality of power backup in the form of UPS. Even the economic slowdown last year could not take much sheen out of UPS growth, Sangwan claims.
“The slowdown had certainly impacted every IT-related industry but we never experienced negative growth because demand was sustained due to the government investment in education and healthcare. On the corporate front, although companies were tightening their purse strings, shifting of corporates to new SEZ’s around Delhi, Jaipur, Chennai etc created some avenues to sustain demand,” he says.
Changing customer preferences
Just as the market’s contours are changing, customer choices in UPS buying are also maturing. Brand awareness, service support, compact design, feature richness of products are all taken in consideration by customers while buying UPS solutions.
According to Sangwan, “Firstly customers increasingly prefer brand names to cheaper local products because they are keen on long-term quality and post-sale service. Also there is a lot of stress on compactness, power efficiency and the overall TCO of the solution.”
Another key trend in the UPS consumption pattern is the growing popularity of online UPS systems, as compared to line interactive and offline systems. An online UPS has an inbuilt inverter and works on a double conversion system so that the switchover in case of a power failure is automatic and with absolutely no time lags. In case of business-critical applications where a disruption of even microseconds could result in disruption of the entire process, use of online UPS has become unavoidable.
“More and more SOHOs are realizing the importance of their data and the criticality of their business processes and are opting for online UPS,” informs Sangwan.
Green UPS
As with every other IT solution, the trend in UPS is also toward going green. With a Green UPS the stress essentially is on energy conservation and the use of recyclable materials in manufacturing the product chassis.
Most vendors are responding with UPS devices that come integrated with master/controlled outlets, which reduce energy consumption. These outlets save power by automatically shutting supply to unused peripherals, such as printers, scanners and speakers when the host computer is shut down or in sleep mode.
“Power cost is increasing rapidly, so much so that today it is the single biggest operating expenditure inside data centers. Therefore energy efficiency realized through green UPS devices is top of the mind of customers while making UPS buying decisions,” avers Sangwan.
“In case of a 30KVA product, even a two percent incremental energy efficiency can lead to the customer recouping his entire cost on the UPS in just five years. Combine that with the benefits provided by UPS. The lower TCO and increased ROI make green a very sound proposition to the customer,” he adds.
According to Joshi, green is not just about lower TCO and increased ROI. Customers are also becoming sensitive to environmental concerns, he opines. “Customers have really become energy cautious and quite aware about the use of sustainable energy. UPS systems based on renewable energy sources, such as hybrid systems with combination of solar, wind, battery and normal supply power, are becoming a vogue with them,” he adds.
Partner expectations
But despite the growing market, some partners see the reducing margins, due to falling prices of UPS devices, as a constraint to growth. Ajay Dutt, CEO of Zodiac Computers a company that resells UPS devices, says, “Currently, profit margins in UPS devices are stagnant. There is a lot of saturation in the traditional market. We have not seen much growth in recent times.”
However, according to Sangwan margins are under pressure only in the case of box selling of UPS devices. “We advice our partners to take a solutions approach. There is a lot of support required by customers when you sell a solution. For instance beginning with site selection to MCCB rating, battery configuration, providing solutions for overheating of cable are all revenue generating
opportunities for partners,” he claims.
Sandip Vahi, Director of New Delhi-based solutions provider Compton Computers agrees. “In case of a turnkey project, where power management is a part of the overall project, the margins are healthy. It is the profit margins of UPS device box-sellers that take a hit,” he avers.
However, Vahi feels that though leading UPS vendors have the right kind of products, they lack a clear go-to-market strategy. “They should invest more in taking these solutions to the market by doing joint POCs and providing demo kits. In case of enterprise customers, it is very important to showcase these products and demonstrate to them what they can achieve,” adds Vahi.
Vendors on their part say they are committed to extending more training and support to channel partners for tapping the right opportunities. “We have launched the Channel NXiT series this month, which will serve as a networking and training platform for our partners,” says Emerson’s Gupta.
“Training the partners on understanding and servicing the unique requirements of every customer will be part of this program. In the near future, we visualize our channel community as informed partners that offer customized power management solutions to best suit every customer’s unique requirements,” he concludes. |