Power Conditioning

UPS market zooms ahead

As sales in B and C class cities pick up, the UPS category is booming. By Tanu Talwar

With the Indian UPS market witnessing a tremendous boom, industry leaders are working towards raising the bar by capitalising on current trends and practices. As per IDC India’s estimates, a total of 495,274 UPS units valued at Rs 3,601.4 million shipped to end users in the JAS 2006 quarter registering an increase of 20 percent over the AMJ 2006 quarter. However in terms of value, the market experienced a sequential growth of 63 percent, thanks to the rapid growth of higher capacity UPS.

After growing at 35 percent in 2005 compared to 29 percent in 2004, the industry is expected to touch Rs, 1,700-1,800 crores maintaining a steady growth rate of 30 percent this year. Technology wise the industry saw a definite growth in the sales of online UPS that grew to account for 6.5 percent of units up from the previous 5 percent. The report further states that capacity wise the industry saw
growth in the shipments of 5.1 KVA and above category units. Meanwhile, the other capacities that grew were the 1.1 and 2 KVA segments.

National brands continue to rule the roost with a 55.4 percent share of the overall Indian UPS market. Commenting upon the market scenario, Vasudevan Rajagopalan, Vice President, Solutions, Emerson Network Power India Pvt Ltd states, “While the UPS market is still cluttered and unsystematic at the lower end, the upper end of the market is dominated by organised players.” Throwing light upon the situation Rajnesh Sinha, Product manager, IT Hardware and Peripherals, Intex Technologies (I) ltd, says, “The market in India consists of branded and local players. The local players attract buyers who are price conscious. But when it comes to performance, reliability and after sales service, the branded players have an upper hand and they are gaining ground amongst buyers.”

Managing power effectively

Talking about the factors fuelling the demand for UPS in India, Rajagopalan states, “We are moving towards a borderless world where staying connected 24/7 is of prime importance. However, the unstable power situation in the country acts as a hurdle to this objective.” Seconding this opinion, Deepak Sharma, Managing Director, Eaton Power Quality Pvt Ltd states, “The increasing importance of business continuity has created a situation where businesses wish to avoid the high cost of a break in processes and the resultant loss of productivity. This worsening power situation in the country is inadvertently helping the growth of the UPS market.” Then again, with the device offering foolproof protection against voltage fluctuations, industries are looking at it as an answer to their backup power woes giving them adequate time to save files and run the shut down process.

According to Pankaj Sharma, Country General Manager, APC India, a direct relationship exists between the UPS market and the Indian economy. The buoyancy of the Indian economy is directly reflected in the growth of the UPS category. Sharma opines, “Growth in the economy has led to the growth and increase in IT spends among the major industry verticals—IT, ITES, manufacturing, BFSI, government and education. This has resulted in companies increasing their IT expenditure on the deployment of large scale data centres to meet growing business requirements and ensure data availability at all times.” 

However, an obvious factor that has led to an increase in the demand for UPS systems across the country is the ever-growing sales of PCs and servers. UPS sales are derived demand and an increase in PC or server sales has a direct impact on the UPS category. MAIT found that 2.96 million PCs and notebooks were sold between April and September 2006, 19 percent more than the same period in the last fiscal. PC sales are projected to cross 6.5 million units in fiscal 2006-07

Verticals for UPS

Looking at the verticals dominating the UPS market, one finds the BFSI, government, ITES and BPO segments witnessing a substantial increase in IT spends thereby causing a significant growth of the UPS category. Apart from these verticals, other segments reflecting good demand are telecom, software, hospitality, pharma, manufacturing, medical and textiles. Analysing the market, Sharma of Eaton asserts, “Of late, other segments like manufacturing set-ups, textiles and retail have also perked up chiefly because as the changeover time from a ‘no power situation’ to a ‘generator backed power’ situation becomes critical in these segments.”

According to Rajagopalan the verticals that show growth potential for UPS systems are the telecom, IT, ITES, industrial, BFSI and critical medical applications. Then again, a key vertical that has emerged as one of the major consumers of these systems is the government sector. The demand in this sector is chiefly fuelled by the large portion of IT spending in maintaining and creating critical infrastructure.

However, a key factor driving the growth of the Indian UPS market is the growing vertical penetration into B and C class cities. Till recently, market growth was chiefly coming from major cities like Delhi, Mumbai, Bangalore, Hyderabad and Kolkata. Things seem to have changed. After capitalising on the major metros, industry players are now moving on to the B and C class cities that are untapped. “In India, the major cities like Mumbai, New Delhi, Kolkata, Chennai and Bangalore have been the largest markets for power products. However, there has been a shift towards B and C Class cities such as Pune, Chandigarh, Lucknow, Hyderabad, Jaipur,” adds Rajagopalan.

One of the chief reasons for this shift is the fact that these locations are being looked upon as investment destinations for setting up ITES, BPO, R&D, retail and manufacturing units. With penetration of the IT/ITES sector, the usage of technology has increased tremendously in smaller cities such as Chandigarh, Kochi, Lucknow, Jaipur, Pune and in the future these are going to be the markets to watch.

According to Col Balwinder Singh, Director, Targus Technologies, the BPO sector is the major growth driver of the UPS market in B and C class cities. “BPOs are opening centres at cities like Bhopal, Indore, Gwalior, Chandigarh, Ahmedabad and therefore the demand for enterprise-scale UPS systems is trickling in from these cities too. We must not forget the vertical pockets like Kanpur, Ludhiana etc which have exhibited heavy industrialisation.” Furthermore, with big players such as Reliance and Bharti venturing into the retail space by opening outlets across the country, the demand for UPS systems from the tier 1 and tier 2 cities is sure to fuel up. ‘No store wishes to lag behind in terms of customer foot-falls and therefore, they arrange for backup of their entire power needs now, and not just critical operations as was the trend earlier. They use applications for inventory management, billing etc., and therefore power outages are absolutely out of the question,” he explains.

SMB and SOHO propel the market

As per IDC the most prominent sectors prompting an exponential growth of the UPS market are the SMB and SOHO segments. With over 1.7 million organisations that can be classified as SMBs or Small Office Home Office (SOHO) set-ups, spending in the region of Rs 3,400 crore on IT products and services, the sector undoubtedly is a major growth booster.

With the SMB space growing rapidly, a large number of small businesses and shops are looking at adopting IT to simplify their day to day functioning, reduce dependence on manual database management and streamline their accounting processes.  Pankaj Sharma of APC, asserts, “In the SOHO segment, growth is driven by the increase in PC sales. An exponential rise in PC sales has in turn led to increased UPS sales.” Then again, the industry has experienced an increased awareness of the need for a reliable and superior brand of UPS in both SOHO and SMB segments. Above all with advanced software programs and applications targeted towards these sectors, the IT usage of the sector has gone up tremendously resulting in the increased deployment of branded UPS.

According to Rajagopalan, the Indian SME market is a gold mine waiting to be tapped. With a market value of Rs 900 crore, over 54 percent of the IT spend in the country came from this flourishing segment. These exponential growth figures have made these two segments an important focus area for vendors. With the demand for mission critical applications and saving energy on the rise, the sector has shown a keenness for enhanced systems.

However, even though the segments are fast realising the importance of network uptime, they continue to remain price conscious causing branded players to design and offer the best possible power conditioning equipment by keeping the cost factor in mind. “The upsurge experienced by the SOHO segment has been responsible for the rapid 75 percent growth in UPS consumption over the past year. Seeing the influence of the segment on the market we offer different UPS models to suit the requirements of these enterprises,” explains Deepak Sharma. In order to further capitalise on the segment, the company recently launched a 600 VA product for the sector.

Enhancing technology

Today a UPS is not looked upon as a box but is seen as a solution. In order, to sustain in a highly volatile competitive market, it has become imperative for vendors to offer and upgrade to best possible technology. As networks are becoming more complex, far-flung and are managed from remote locations, UPS need to be equipped with support for heterogeneous network management protocols and be flexible enough to incorporate diagnostics and predictive failure technologies, such as SNMP, RS-232, HTTP, JMODBUS. Deepak Sharma states, “One heartening trend which we have observed in the enterprise UPS market is that people want to embrace new technologies at par with the worldwide trends. Transitions from transformer technology to transformerless technologies, or for that matter, DSP (Digital Signal Processing) technology that was first introduced by us, have been rapid.”

Then again the enterprise segment has shown a keen interest in taking up new technologies like 0.9 Input Power factor, which ensures more usable power per KVA and results in sustaining more load per UPS. Ram N Agarwal, Managing Director and CEO, WEP Peripherals Ltd states, “Enterprise customers have moved to higher capacity UPS as their loads have increased. A typical example is the shift from 3 to 5 KVA units in bank branches. Also, many enterprise customers have now moved from line interactive to online systems as a result of increased consciousness among the users to recognise a UPS as a business critical product rather than just a backup device.” 

However in case of individual customers, there is a trend towards high performance, reliable products with good backup and service support in case of power cuts. As per Sinha, one of the notable technological trends is the enhanced usage of centralised power backups in enterprises. Custom backup solutions, are also coming into the picture. Another trend is the increased usage of Dual Power Servers, whereby the customer can have two power sources at his disposal. This reduces the possibility of a single point of failure offering enhanced efficiency.

Understanding the consumer’s mindset

Analysing factors affecting the user’s choice of UPS one finds optimum backup time to be the most important feature that is considered by the maximum number of customers before purchase followed by brand name, after sales service, pricing and reliability. Commenting on the customer’s mindset, Agarwal of WEP Peripherals states, “Today, customers are looking at systems that offer them the maximum backup time. Our UPS assures 15 to 20 minutes backup during which users can finish their work, close their files and shut down their PCs during a power cut.” Then again, the reputation of the vendor in the market as well as after sales service plays a key role. Pankaj Sharma adds, “The brand name is a primary factor since brands stand for a certain level of assured quality as well as service. Today customers are looking at immediate, 24/7 support and it’s important to assure them that if anything happens to the UPS it will be taken care of immediately.”

Furthermore, with the corporate power requirements varying, the vendor’s ability to offer customised solutions has become a major attraction. The trend clearly reflects that customers have started to view their vendors as solution providers and not as mere box pushers. The backup time and technology requirements of business vary as per the nature of work and usage from client to client. “Customers are increasingly going in for vendors that can help them analyse their problems and offer business critical continuity solutions specially devised for working under their severe power conditions,” explains Rajagopalan.

Then again, promotions and schemes play a key role in influencing buying decisions during the final stages of selection. However, with consumers becoming more style and image conscious, the UPS is changing from a square box to adopt curvaceous and trendy designs.

Looking ahead

Going by the current rate of growth the industry leaders remain optimistic and aspire to raise the growth rate by 5 to 10 percent in the near future. Talking about the future challenges, Pankaj Sharma states, “Today it is critical to ensure the availability of a company’s mission critical applications. Hence, the challenge for all UPS vendors is to innovate and manufacture UPS that ensure minimum downtime along with robust service and support.” Thus, customers will be seeking out solutions that are serviceable, can be managed remotely and provide predictive failure alerts.

Furthermore, with the increasing use of technological applications, emergence of heterogeneous IT set-ups, increasing need for state of the art power backup to comply with quality and other trade related norms, the industry will experience a positive trend for mid and high-end UPS. Sinha elaborates “The coming trend will see verticals demanding fast recharging abilities whereby the high-end UPS manufacturers have a lead.” This demand for quick recharging will be accompanied by features that give advance notice of the end of battery life, helping prevent battery corrosion.

According to Rajagopalan, the future of the UPS market will be similar to that of the overall IT Hardware market and we will see tremendous growth because of growth experienced by the telecom, BFSI and e-governance sectors. Then again, the industry is prepared to offer the end-to-end solutions that provide data centres-on-demand thereby enabling organisations to ensure high availability for their mission-critical data centres and networks. The demand for these data centres is sure to rise as they enable organisations to accelerate the speed-of-deployment and adapt to evolving needs of their business and operations. The scalability and modularity of these solutions enable a pay-as-you-grow approach, cutting out waste and reducing TCO.