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The UPS, as a category in the IT peripheral space, has remained in dark corners with little attention paid in the past by market analysts. But during 2004, one of the much talked about back end IT infrastructure enabler was the UPS. And industry estimates pegged the UPS market numbers at Rs 1,200 crore (DQ has revised the number). But when we factor the huge size of the unorganized market, the market size would be much bigger. The escalation of the marketshare of branded players in the last two years, has stunted the growth in the unorganized sector. The UPS industry in India is highly fragmented-it consists of many unorganized players at the lower end and organized players at the higher end of the segment. Even then this segment registered a growth of about 17% to clock Rs 1,400 crore.

Just like computing devices are scaling up constantly, UPS devices, over the ages, have also renovated technologically. As we trace the evolution path of power back-ups, it is only post the 1980s that vendors have started realizing the business potential in this space. In the 80s, an age dominated by mainframe computers, power blackouts were predominantly managed through standby generators. This approach just kept the key systems up and running while the majority of terminal users were denied access. This lacuna acted as the catalyst for the emergence of defined segments in the UPS space. It was during this time that standalone PC back-ups came into being and created a new market altogether. Standalone UPS devices of various capacities have now become default PC peripheral devices.

Industry experts broadly classify the UPS market into three segments: Micro UPS segment (upto 3 KVA) largely caters to the SOHO, SME, and corporate sectors for stand-alone PCs, small network stations. The government is also a big customer of this segment. Small-medium UPS segment (3-20 KVA) caters to corporates, institutions, retail outlets, and hypercritical applications such as ISPs, ERP implementers, VSAT, email servers. At the top end, high-end UPS or enterprise segment (20 KVA and above) caters to segments such as Infotech, telecom, datacenters, BPOs, and industrial entities.

A key yardstick for the growing stature of the UPS industry is the maturing of the home segment and aggressive enterprise buying in the last two years. Some of the UPS vendors only cater to the SOHO, with their entry-level offerings. Here, with low price offerings, they targeted huge volumes last fiscal. Meanwhile, the enterprise segment brings in big revenues for a handful of big UPS vendors, and a typical large enterprise goes for a range of power back up devices. For instance, datacenters, BPO, and financial institutions go for huge capacity power backups, where downtime is totally not acceptable. Enterprises also went for UPSes placed in a networked environment where workgroups share a single UPS. In terms of consumption, the metros are the biggest markets and only in the recent times one is seeing a shift towards B and C class cities. However, most vendors are putting in place aggressive growth strategies to capture more market share from the higher end of the spectrum.

Market Realities
The growing UPS market clearly drives home the message that it is now treated as a mission critical equipment. The power conditioning market is getting more sensitive and mature to the evolving needs of the businesses. With India assuming a key role in the Asian economy, businesses have to become attuned to the fact that they need to be robust in terms of infrastructure, to attract and retain investors. Hence, network uptime is being viewed strategically. In line with the critical nature of power back-up devices, most of the vendors during the year pitched on 99.99% uptime. Interestingly, selling power back solutions assumed the path of the software services models by vendors giving SLA guarantees on uptime. This is the core USP of the UPS market, and a key differentiator.

A look at the vendors in the fray shows a highly divided market in India. The Indian UPS market can be divided into three-vendor categories-national, regional and local. Vendors like APC, Emerson, Eaton Power Quality, DB Power, Numeric, Microtek, TVSE, and Ingram Micro compete on an all India basis. Meanwhile at the regional level, players like Champion, Elnova, and the likes have good traction. The local players operate city-wise and provide assembled UPSes that mainly go with PC assemblers. The local UPS segment falls under the unorganized sector of the UPS market and numerous players dominate that space.

Performance-wise, during 2004-05, most of the frontline national players have grown well. For instance, APC found good movement of its offerings and also attacked SMBs and large enterprises with different power back up configurations. Numeric Power Systems also had a good run during the year with its product offerings moving up the value chain. In 2004-05, Numeric posted revenues of Rs 219 crore. Major chunk of it has come from the South, which summed up to Rs 77 crore. Numeric also made several product innovations during the year-its digital series UPS came with LCD display.

Another interesting trend over the last year was the market getting more defined in terms of entry level, mid and high ends. Vendors like Emerson majorely focused on the higher end of the spectrum and players like TVSE purely focused on the entry level in which it demonstrated lots of traction through its StartUPS range of UPS that vended with capacities starting form 600 VA to 1 KVA. TVSE pushed close to 38,489 units of its UPS during 2004-05 that garnered Rs 20 crore.

Vertical Demands
Every vertical has a unique set of demands. Given that most of the vendors during the year offered complete suite of power management solutions addressing different power back up scenarios. According to industry analysts, the key differentiators of each vertical have to be factored in. Take for instance a simple differentiator of industrial and office applications: There are unique demands of redundancy, usually met by the application engineers selecting the suitable configurations. Each vertical demands different service level agreements, depending on the location, available expertise, and spares policy, among others.

This is one market where there are very active small and regional players, even as the big guys strengthen their hold

In India, during 2004-05, high-end verticals that showed lots of traction were the process industries like BFSI, BPO, datacenters, and software development facilities. These segments assumed a large enterprise stature and big vendors like Emerson, APC, GE Digital Energy, Numeric, and DB Power have large mandates here. The high-end enterprise segment opted for three-phase UPS with optimum load performance and battery management systems. For instance, Internet datacenters went for redundant UPSes that enabled on-line maintenance and repair without impacting the processing operation. All the major vendors during the year targeted datacenters. APC, for instance, aggressively positioned its infrastructure (branded as InfraStruXure) power solution as the key component of the Network Critical Physical Infrastructure (NCPI) for datacenters. APC offered infrastructure solutions along with power products ranging from 500 VA to 4,320 KVA.

Outlook
Over the years UPS has evolved into a functionally rich product. During 2004-05, the leading vendor pitch was digital UPS. Today, these devices come with a slew of intelligent features in-built, which enable the user to better manage their power back-up needs. Going forward, the UPS market will get hotter, with vendors offering a slew of offerings cutting across all segments. While big players will gun for the big enterprise mandates, the entry level will see volumes growth. The outlook for 2005: Experts foresee the market will see a growth of 18-20% in value and 20-30% in volume terms. As far as technology goes, analysts foresee that more players will move to sophisticated transformer-less design, delivering higher efficiency to customers. Exciting days are ahead for the power back up market, and 2005 will firm up the market with branded players further edging out the unorganized sector.

Shrikanth G

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