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Within the power solutions segment, UPS continues to have a lions share. Today, components such as cooling, power back-up, management and monitoring, among others, are being bundled as solutions around the UPS category as a part of the solutions strategy that most of the large and tier-2 players are adopting. However, 2008-09 was a year of flat growth for the UPS industry simply due to the macro-economic factors and also certain shifts within the market and product costs. According to a recent study by MAIT, consumption of UPS declined 6% over 2007-08. While consumption in the first half of the fiscal was satisfactory, less than expected sales in the second half pulled down the overall growth into negative. The entire size of the UPS market across all capacities is estimated at Rs 2,360 crore for FY 09, which is a significant fall from Rs 2,500 crore in FY 08. Dataquest traditionally tracks the sub 5 kVA category which makes up almost 50% of the market and according to market estimates was 2.1 mn in FY 09 of the total market size of 4.6 mn units. The decline in this segment, was not as discouraging as the fall in overall UPS market revenues.

CyberMedia Research                            DQ Estimates

Market Segmentation
The organized branded UPS market is more or less dominated by APC, Numeric and Emerson, which are all capacity power back-up providers. According to a report by Netscribes, the sub 5 kVA category (small) makes up 50% of the UPS market while the 5-30 kVA (medium) and above 30 kVA (large) have 25% share each. APC, Numeric, and Emerson typically derive higher business from the high-end 5 kVA to 5,000 kVA category. In terms of revenue, it is estimated that Emerson holds about 52% share of the high-end UPS segment, whereas APC and Numeric hold 22% and 18% share respectively.

In the sub 5 kVA segment, also Numeric, Intex and APC are the large branded players that have significant market share after the unbranded and regional products which made up over 30% of the market in terms of revenue.

The UPS market in the low-end space, has been quite unpredictable in India for the past couple of years. While FY 08 saw a healthy 43% growth in revenues and a 27% growth in the number of units sold, this year it was just a stark contrast with vendors projecting flat and in some case no growth in revenues. There was severe pressure in end-user price points due to increase in battery prices, thereby putting margins under pressure. Anindya Das, industry analyst, energy & power systems practice, Frost & Sullivan, South Asia and the Middle East says, However, the situation has improved with prices of lead stabilizing in the second half of the financial year. In terms of revenues, ASPs of products have been falling gradually. Also, there is a lot of consolidation that is taking place among unbranded and small players within this sector. There has been consolidation at the peak density bringing down the need for multiple UPS. The higher uptake of blade centers also demands higher density solutions, which again consolidates the number of UPS deployed.

Market Uptake
End users are opting for UPS (in the 5.1-20 kVA power range) instead of using multiple number of smaller kVA (less than 1 kVA) UPS. Increased laptop sales at the cost of desktop sales has affected UPS sales in the less than 1 kVA segment. According to MAIT, desktop sales in the household and SOHO segment declined by 18% in FY 09, and consumption of UPS is highly correlated to desktop sales. All this reflected in a 25% decline in the household and SOHO segment, and pulled down the overall UPS sales to negative. Smaller towns and cities, outside the top eight metros, drove the UPS consumption registering a growth of 6% and accounting for over two-thirds of the overall UPS consumption in the country. The key verticals driving growth of UPS in India are IT/ITeS, BFSI, retail, telecom, manufacturing, and infrastructure. The government has been the biggest vertical driving UPS growth, as it continued to spend 25% more than last year. Further, the adoption of data center automation solutions is increasingly becoming critical for IT departments, which also helps in booming the requirement for power solutions. The rapid deployment of third-generation mobile phone systems like UMTS is createing new opportunities for UPS in base stations. The increasing computerization of banking services has also increased the business opportunity for back-up power supply.

Based on topology, the UPS market is segmented into standby or offline, line interactive and online categories. According to Frost & Sullivan, online UPS contributes about 80-85% of the market by revenue, whereas the standby or offline and line interactive UPS contributes the balance of 15-20%.

CyberMedia Research                            DQ Estimates

Vendor Moves
APC lost a bit of ground in the sub 5 kVA category mainly because certain product categories failed to suit the local demand and, hence, did receive wider market acceptance. This situation, however, is now being corrected and APC has revamped its product line with a slew of new products that have been developed specially for the India market. It also undertook a lot of channel initiatives as part of its market penetration strategy.

Emerson too saw marginal growth in the sub 5 kVA category. However, it continued to focus more on the high-end online UPS category. It also started focusing on working with SIs to scale up efforts to promote adoption of online UPS through its energylogic concept. While it has been focusing on the SMB segment apart from its traditionally strong enterprise approach, it also started concentrating more on the government, education, healthcare and telecom verticals.

Numeric continued to eat into the market share of other players, especially in the sub 5 kVA category and was at par with APC in terms of market share. It adopted an aggressive channel strategy and tied up with new distributors such as Inspan Infotech. It also extended its partnership with SES Technologies, which has appointed a dedicated team specifically for Numeric UPS products.

There was also a lot of enthusiasm from the traditional invertor players such as Luminous and Microtek in terms of expanding their channel strength. Their UPS products are beginning to see higher traction in the corporate space. Focusing more on launching newer and niche products, WeP Peripherals rolled out its new 690 VA special 415 Watt UPSm, which is compatible with modern gaming technology. It also invented and patented the Double Conversion Isolated Hi Frequency Boost (DCB) UPS technology which it believes will see high uptake especially in the SOHO and SMB segments. The year also saw many local players and even large brands, such as TVS Electronics, exiting the UPS market. On the other hand, international players such as Chloride and Socomec made key inroads into the high-end UPS market and enterprise segment. Whats more, HP too made a grand entry into the UPS market especially in the 1-3 kVA range and plans to sell the UPS as a bundled package along with x86 servers, networking devices, printers, and scanners.

Going Forward
The market is already showing signs of revival with the Q1 10 indicating growth in UPS shipments. According to IDC, the total UPS shipments recorded a sequential growth of almost 18% in terms of units shipped, and a growth of 33% in the online UPS market, compared to Q4 09. Going by the current rate of growth, one can safely say that the demand for UPS in the high density online category will continue to grow despite consolidation in enterprise deployments. If the battery and lead prices continue to remain stable, end-user pricing pressures will be eased out giving further fillip to uptake in the enterprise segment which has been feeling the pinch so far.

The future of the UPS market will be similar to that of the overall IT hardware market and we will be guided by the growth in the government, BFSI, and e-government sectors .

Priya Kekre
priyak@cybermedia.co.in

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