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T&M: Getting Set to Go!

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VoicenData Bureau
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The demand for testing has always been a requirement of all market segments. Regardless of the end market, all products have to be tested before being delivered to the end customer.

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Hence going forward, with the exploding services and subscribers, the focus has finally fallen on Test and Measurement (T&M) equipments. As the delivery of next generation services becomes highly dependent on End-user Quality of Experience (QoE), it also helps the service providers to manage their customer retention and thus the focus has shifted to T&M solutions. T&M solutions are expected to give a competitive edge to the service providers.

With new types of technology like 3G, broadband wireless access, WiMax, FTTX, LTE, all-IP network or convergence concepts, the test equipment industry is expected to witness a newer demand.

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However failing to meet the expected growth that 3G and increasing mobile subscriber base was supposed to bring for the market, the T&M segment failed to taste the fruits of success and saw a marginal growth of 10.24%.

Market Dynamics

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Ever since the evolution of telecom services, market demand for Test and Measurement (T&M) has been in place. Test and measurement plays a very important role right from design to development to deployment for the maintenance and optimization of any telecom network.

Test and measurement industry in India continues to chart the growth. The VOICE&DATA 100 survey estimates the Test and Measurements (T&M) market to have gone up by 10% in FY 2010-11 with the market size totaling to `861 crore, against the previous fiscal's `781 crore.

Agilent Technologies maintained the lead in the market with its innovative product line. The vendor registered growth, clocking revenue of `287 crore in FY 2010-11 against `254 crore in

FY 2009-10. The company invested heavily on design, R&D, manufacturing, deployment and services. Agilent Technologies expanded its test and measurement portfolio into the modular domain with the introduction of 47 new PXI and AXIe products and new products which enhance solutions in aerospace, defense, communications, and electronic applications.

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The company also introduced the industry's highest performance HDMI 1.4a protocol analyzer and generator. The instrument allows designers and engineers to test their devices to ensure that they meet the requirements of the HDMI compliance test specification 1.4a (CTS 1.4a).

Spirent Communications, second in the ranking, grew by `118 crore in FY 2010-11 against `100 crore in FY 2009-10, witnessing a growth rate of 18% and a market share of 13.7%. The brand delivered innovative solutions in data center and cloud computing high-speed ethernet, wireless, applications and security testing, the areas that matter most to service providers and equipment manufacturers. The company also introduced various solutions across multiple technologies including LTE, mobile backhaul, mobile device performance, network performance monitoring, cloud computing, and virtualization.

To help accelerate the availability and verify the performance of these location services on LTE devices, mobile operators, technology developers and device manufacturers are also using a pioneering lab based LBS LTE test solution from Spirent Communications.

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For Rohde & Schwarz, the revenue growth was about `86 crore in FY 2010-11 against `77 crore in FY 2009-10. The test and measurement instruments company received orders uniformly from all sectors like defense, education, and wide base markets for spectrum analyzers. The company also succeeded in getting some strategic orders in A&D segment which helped the company to get repeat orders worth millions of Euros in the coming business years. The brand also grabbed other big orders from telecom MNCs for telecom protocol and RF test systems.

Recently, Rhode & Schwarz introduced oscilloscopes and expanded its portfolio. Conventional oscilloscopes capture signals ie, only 0.5% of the acquisition cycle. To address the efficiency issue, R&S has increased the acquisition time by a factor of 20. By the addition of oscilloscope, the company will be able to address almost 80% of the test instrument market from their own product range as well as also increase its growth rate from the current growth rate of 11.69% and a market share of 9.99%.

For Aishwarya Telecom, there was a minor dip in the revenue with `40 core in FY 2010-11 against the `45 crore in FY 2009-10. The company received major orders from defense data labs and are expecting more business from the defense sector. The company is focusing on selling 3G and LTE products from this year.

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Toshniwal Enterprises Controls churned around `21 crore in FY 2010-11 against `16 crore in FY 2009-10. The company has been successful with Agilent Spectrum Analyzer for EMF testing. It offers multiple solutions on mobile TV and also many other T&M solutions. It has also put in money in many 3G compatible equipments. They have invested heavily in terms of equipment and manpower for mobile TV.

The company has made the Agilent Solution as industry standard and worked with all telcos within this solution. It is also in the final stages of acquisition of an engineering services company to make the footprints in SEA region and utilize its expertise in telecom engineering. Toshniwal is further bullish with its efforts in PIM testing learning investment that will help the telcos immensely. It has signed up with Ascom (new owner of TEMS drive test solution), Agilent and Nexus to provide quality improvement solutions.

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Empirix, a company that started its operations in India in mid 2010, is serving a vast set of verticals with a wide range of customers including network equipment manufacturers, operators and large contact centers. Its acquisition of Mutina Technolgies in June, 2010 provided the company with additional solutions in areas such as mobile broadband. Additionally, it has also increased its installed base of customers, especially in India, Malaysia, and Taiwan.

Growth Drivers

The constant evolution of networks is aimed at increasing the business opportunity and operational efficiency. User functionality has always been one of the most important factors responsible for growth in the T&M industry.

The impressive growth of the Indian telecom sector has also been stimulating the growth of T&M industry. The service providers are continuously investing in expanding their network to support the exploding number of mobile subscribers, giving rise to the demand for mobile and broadband testers.

The QoS being the key differentiator in the industry, telecom service providers are strategically investing in T&M equipment procurement as also leading the handset manufacturers.

The growth of wireless and broadband is driving the market and this will accelerate with new players coming in and the introduction of 3G. At the ground level, operators are preparing themselves by upgrading their backbone network for the launch of 3G services. This will generate an additional requirement for test equipment for fiber optic, NGN, and 3G.

WiMax is another opportunity which needs to be watched out for, as its success is directly related to the end-user experience. The migration of technology from concept to design to volume production demands efficient methods of authenticating the integrity and quality of subscriber handsets.

Migration of voice and video to IP, infrastructure development, growth in the mobile phone market and the advent of next-generation wireless technologies will fuel the growth of the test & measurement equipment market. It will further derive its growth from service assurance of IP networks, optical and synchronization quality of the network, and carrier and metro ethernet. India is a hub for Electronic Manufacturing Services (EMS), and the growing demand from this sector will add further impetus to the country's T&M instrument market.

Moreover, the increasing local manufacturing plants being set up by the vendors has also been fueling the growth of the industry at the steady place. QoS is also an important issue for service providers, who will raise their investments in T&M to tackle the problem.

Applications like aerospace and defense sector has been largely dependent on the T&M industry for confidential and critical needs.

Mobile Internet

Another growth driver for the test & measurement industry is the mobile internet. Large and small enterprises, as well as consumers, are now demanding anytime, anywhere, always-on internet access with increased levels of quality of experience from the numerous applications they use everyday. New mobile devices are driving the need for faster wireless networks such as 3G/LTE, while downloadable applications are increasing both revenue and customer loyalty. Examples include the extraordinary growth in smartphone usage, the introduction of affordable netbook and tablet devices and the download of billions of applications from online stores.

Moreover, cloud computing and virtualization is also driving the segment to a great extend. Service providers have shifted their focus to address the ever-increasing demand for wireless access, applications delivery and new enterprise offerings such as cloud computing and virtualization. To meet these growing demands, service providers must manage an increased level of complexity driven by the integration of legacy wireline, next generation wireless and outsourced content delivery networks. Equipment manufacturers have responded by moving resources to growth markets such as smartphones, higher speed wireless networks and the evolution of enterprise data centers with ethernet as the transport technology of choice.

Mobile WiMax, which supports high-bandwidth mobile services at a speed greater than 120 km/hour, is expected to grow substantially over the next several years. However the ultimate success of mobile WiMAX will be determined by the end-user experience. As the technology moves quickly from concept to design to volume production, it requires new and efficient methods of verifying the integrity and quality of subscriber handsets and similar products. Leading edge designers developing mobile WiMax chipsets, modules, and devices require a solution to quickly ensure standards-compliant design performance and accelerate time-to-market. With elements of design regularly developed in different places, it is important to have a common, industry-standard test tools that enable groups to share information and resolve problems quickly. The quickening rate of technology changes means a faster cycle time for new products entering the verification stage. With cutting-edge technology shipping as early as possible, interoperability, and conformance testing become increasingly important to ensure product quality and customer satisfaction is maintained. So as you take WiMax forward, Agilent clears the way.

Third-generation wireless systems, based on W-CDMA, are now being deployed world over. To ensure these systems remain competitive in the high-bandwidth future, the 3rd Generation Partnership Project (3GPP) is developing Long Term Evolution (LTE) specifications. The LTE specifications provide a framework for increasing capacity, improving spectrum efficiency, improving coverage, and reducing latency compared with current High Speed Packet Access (HSPA) implementations. First to deliver 3GPP LTE design automation tools and measurement products, Agilent gives design engineers working on LTE chip sets, modules, and systems the ability to design, troubleshoot, and evaluate performance of early prototype LTE transmitter and receiver designs.

Software based solution is also gaining prominence. T&M equipment manufacturers are placing greater emphasis on software to make measurements easier to use, faster, and more accurate. Since these software based testing equipment use PC based platforms, the same hardware can be used to test any of the standards like GSM, GPRS or CDMA by simply changing the software. In other words, PC is most likely to become the standard T&M instrument hardware in the near future with the integration of software testing tools into it.

Roadblocks

The T&M market needs to revamp itself because customers are becoming demanding and prices are reducing. The customers want lesser downtime, more servicing, and more support applications. The paradigm shift towards the packet-oriented network from traditional circuit-oriented network is resulting in an increased demand for the ethernet & next-gen based solution which will be predominantly using IP based MPLS networks. This indeed calls for an opportunity with the testing tools, especially the Multipro and Unipro series of testers.

With new technologies coming into place, the vendors are forced to replace their test equipments with new enhanced versions. The challenge for the industry is to lower down the cost of test at the same rate at which the companies are lowering the prices of their products. In India, the telecom space has seen excellent growth over the last couple of years. With price being the primary challenge, the Indian T&M manufacturers find high demand for their products, but at competitive price points. The demand for 3G testers is increasing, and at the same time the prices are moving southwards. Inspite of limited competition, the margins are low due to foreign exchange variations.

Even though there are not many policies or regulatory issues affecting the growth of the market, operators are not spending the required money for testers and are not testing networks periodically as desired. Also, the QoS of telecom operators is not satisfactory.

Highly scalable networks to support a huge density of subscribers pose major challenges in meeting the QoS and QoE requirements. The real challenge is to have the network that meets all these requirements, and this challenge can only be met with a sufficiently high-grade of testing equipment.

One of the biggest challenges is the growing complexity in the networks and devices, as well as the services being delivered. The complexity of the technology makes it hard to determine how prepared new technology is to deliver on its promise, before they are rolled-out to the users. This calls for testing equipment that is specifically designed to test the complex nature of emerging technologies while making it user-friendly for the test engineers.

An ongoing challenge is ensuring test equipment that delivers the maximum RoI and the greatest total cost of ownership. This calls for the development of test platforms that are futureproof as well as backward compatible so you can leverage any past investment. A big focus for our testing solution has been ensuring validated performance with enhanced realism at scale, while ensuring easy usage.

Thus, to conclude, looking at the overall supply and demand chain related to the end-user segments, the segment indeed is bound to see bright days ahead. The wireless subscriber base in India is growing at a very fast rate and the way broadband's growth is being projected it will further support the telecom growth story in the country. This clubbed with the newly auctioned 3G & BWA (WiMax or LTE), would fuel the growth for this sector. Hence the customers today are looking for an all-in-one T&M instrument that can cater to many technologies and requires less investment. However, looking at the future prospects, telecom industry's least glamorised but one of the most crucial segment-- T&M-- is for sure poised for its bright innings under the spotlight!

Ritu Singh

ritus@cybermedia.co.in

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