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Mission critical is a clichéd term and a misnomer in the IT world. A misnomer because everybody associates it with software applications alone, failing to realize that there exist a host of back end peripheral components that actually drive mission critical applications. With that in mind, how critical are power back ups to an enterprise? The answer is "very". Even in highly evolved countries power back up devices are a key component of the IT architecture. Years of evolution of IT has fostered the market for these back end peripheral devices. Today, the UPS is considered to be IT's lifeline, and has become a critical infrastructure component, more so because of the 24/7 nature of the operational domain provided by Internet connectivity.

At the same time, in a developing economy like India, most of the downtime is the result of power blackouts. If companies need to guarantee 99.99% uptime and reliability, the first step is to take stock of the power back up facilities it has in place. Experts agree that a power back up architecture has to be fault-tolerant and able to respond within seconds of a power outage. While, traditionally, large manufacturing companies across verticals banked on diesel generators (DG), huge associated costs permit the companies to distribute DG power only to very critical operations. Hence UPSs of varying capacities are a must in effectively reducing the DG running costs and optimizing the enterprises' overall power back up demands. With the benefits of power back devices becoming clearly defined, there is growing degree of awareness from across the buying segments-SOHO, SMB, and other large enterprises. Since each segment has its own unique set of demands, the leading vendors are aggressively pursuing the UPS market with a slew of offerings.

Market Realities
The UPS market in India is probably one of the least understood and least documented in the IT peripherals space. Thanks to the composition of the market, which has hundreds of players to source components, like batteries, assemble a UPS and then sell it, this segment is in the unorganized sector, which typically offers low-end back up devices with capacities ranging from 0.5 VA to 3 KVA.

While no clear numbers are available on the size of the unorganized market, the industry estimates that more than 800 companies across the country are involved in the power back up and conditioning business, and provide devices like UPS, inverters, spike and surge protectors, and CVTs. However due to the unorganized nature of UPS market, they serve only selective segments in a localized region.

As a matter of fact, the UPS industry came to be known as one only after the MNCs came to India and APC launched its Indian operations in mid 1990s. With the market potential inherent, others followed suit and today the branded segment has the mix of both MNC and Indian companies. According to Dataquest estimates, the total UPS market in India is estimated at Rs 1,400 crore for fiscal 2003–04. Says Subodh Tagare, marketing manager, APC India, "Traditionally the five cities of Mumbai, Delhi, Chennai, Kolkata and Bangalore have been the largest markets for PCs and UPS. These markets act as the feeder zones for surrounding markets and hence make up the largest chunk of the IT business. However, a shift is becoming evident over the last 12 months. The share of B- and C-class markets is growing, as the distribution and logistics of multiple IT vendors has spread across the country and is reaching out into the heart of India."

With the market spilling out from urban areas and metros, the emerging up-country areas are becoming the markets to capture. In terms of consumption, the entry and mid-end back up capacities are consumed by the SOHO and the SMB segments. Also the entry level UPS is slowly becoming a volumes segments with low cost sub Rs 20,000 desktops becoming a reality today. Of all the peripheral devices, the home user opts for a 0.5 VA to 1 KVA UPS because a PC in the sub-Rs 30,000 price range a year ago now vends just at about Rs 19,000.

Also unlike other peripheral devices investment on a good UPS yields maximum RoI, as it does not involve recurring costs and moreover the battery life of a 1 KVA UPS is about four years. Meanwhile, on the SMB and large enterprise side, power back up devices are becoming a default element of the IT infrastructure, and depending on the complexity of the business environment, various back up scenarios are being implemented in the enterprise segments. Given these market dynamics, the UPS industry in the country is poised for big growth in the days ahead. For instance, the findings of the MAIT-IMRB quarterly study of the UPS market for Q1 2004–05 shows a 43% growth as against the corresponding quarter in the previous year. The demand drivers were the BFSI, ITeS, and the BPO sector and these verticals will continue to drive growth in the ensuing quarters through the year.

Says Shrikant Bapat, country champion, Uptime Solutions, Emerson Network Power India, "The Indian UPS market is highly fragmented. It consists of many disorganized players at the lower end and organized players at the higher end of the segment." According to Bapat, the market can be broadly classified into three segments. First, the Micro UPS segment (up to 3 KVA): these UPS systems cater largely to the SOHO, SME, and corporates for standalone PCs, small network stations and critical equipment. Second, the small UPS segment (3–20 KVA), which caters to corporates, institutions, and retail outlets among others. Third, the high-end UPS or enterprise segment (upwards of 20 KVA), which caters to industrial segments such as infotech, telecom, Internet data centers, call centers, etc.

In the Fray
"The UPS industry so far has been highly fragmented, but the trend is changing with customers becoming knowledgeable and vendors educating the customers. This has improved the pie of the branded UPS Players," says Tagare. With branded players bent on eating into the market share of the unorganized sector, the entry-level UPS market can expect major shake-ups in the ongoing year. For instance, players like TVSE and Ingram Micro, which cater only to the entry-level segment, have gone very aggressive in the last one year. Says Ingram Micro's COO SP Rajguru, "The UPS market in India is just opening up and the customers have begun to understand the importance of clean power to their desktops and servers. The largest segment today is the SOHO, which will contribute to 60% of the UPS market. As in any market or product, when the luxury becomes a necessity, the consolidation of the product or market is inevitable. The same is on the cards for the UPS Industry. We are already seeing that the end consumers in the SOHO segment getting more and more brand and quality conscious." Meanwhile players like APC, GE, Powerware, Numeric, and the likes cater to all the three segments-SOHO, SMB, and large enterprises. With the entry-level UPS market heating up and pure play players catering only to entry level, there will be intense competition between the niche and broad portfolio UPS players. With SOHO being extremely price sensitive, aggressive pricing and bundling UPS with PCs would be the preferred route, with vendors sure to try to increase their respective volumes here.

On the other side of the spectrum, the large enterprise and the SMB segments are dominated by a handful of players. Here the dynamics are totally different, with an array of back up solutions. Quips Deepak Sharma, MD, Powerware International, "Powerware holds over 65 patents in power protection solutions. Our remote power management solutions are truly generation next. Our remote management solutions cut down on unnecessary travel, which entail wastage of time and resources." With remote management come many benefits. For instance, in Powerware's high-end offerings are features like digital signal processing that reduce response time to less that one millisecond. Other technologies like hot sync parallel, load segmentation and battery management signify the technological maturity the UPS product of today has attained.

Other players like GE, APC, and Emerson also have large mandates from large enterprises. APC for instance is pitching hard with its InfraStruXure solutions that enable enterprises to build a modular power back up architecture as per their back up power requirements. Meanwhile players like Emerson leverage their offerings that revolve around the network uptime solutions concept and associated technologies.

The Shape of Things to Come
The UPS industry runs in close parallel with the PC business. Just like branded PCs are eating into the assemblers' slice, the same has begun for the UPSs. One can see consolidation in its formative stages here. Says Yogesh Bharadwaj, regional manager, GE Digital Energy, South Asia, "We strongly believe that the Indian market is also moving towards consolidation. With the speed of the changes in technology, it will be difficult for the small players to keep up with the latest. The market is still in the evolution phase. Presently we have a very good presence in all verticals of the industries across the country. India is one of the markets GE is focusing on, and we are investing quite a lot here."

"Educating the buying segments is the key to consolidation," says S Srinivasan, VP, IT and distribution, Numeric Power Systems. "Since branded players commit to uptime and clean power, we are seeing the buying segments reacting favorably to branded offerings. This will become a big trend in the coming years, and the unbranded slice of the UPS pie will start showing signs of decline," adds Srinivasan.

However, Powerware's Deepak Sharma has a different view of market consolidation. "Dropping import duty and increasing customer awareness will pave the way for market consolidation. Having said that, India is a very price-sensitive market. Though there is a perceptible shift towards quality nowadays, the sensitivity will remain."

Clearly the market today is a divided one, with players of all sizes. As branded players pitch on quality and clean power, the unbranded players USP will be aggressive pricing, though quality will still remain an issue.

Shrikanth G in Chennai

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