Ethernet Industrial Devices to Grow 84% Annually

Shipments of device-level industrial Ethernet products have been growing rapidly despite difficult conditions in automation markets. And the future remains bright. The worldwide market for industrial Ethernet devices is expected to grow at a compounded annual growth rate (CAGR) of 84.1 percent over the next five years. The market was 286.8 thousand nodes in 2002 and is forecasted to be more than 6.06 million nodes in 2007, according to a new ARC Advisory Group study.

”The market is now feeling the effect of the large number of Ethernet product introductions over the past two years. End users have been accumulating an experience base with these new products and volume should build substantially in 2003,” according to senior analyst Harry Forbes, the principal author of ARC’s “Ethernet at the Device Level Worldwide Outlook.”

Further penetration of Ethernet at the device level is a key factor that will profoundly affect the future architecture of manufacturing automation. End users have come to realize the potential offered by Ethernet with TCP/IP protocols to endow devices with Web-based access and similar services. Familiarity with the benefits and with Ethernet in general has no doubt propelled its growth in the automation space despite challenging times and competition from entrenched device networks.

The proof is in the shipments. During the last two years, the aggregate market volume for industrial Ethernet devices has grown at more than a 50% annual rate. This is quite different from the struggling worldwide market for automation equipment during the same period. These market conditions were so difficult that they caused outright volume shrinkage in some segments closely related to Ethernet devices, i.e., small PLCs and DCS hardware components. Most of the increase in shipments of Ethernet devices can be attributed to a very high level of product introductions during the past two years, especially by mainline automation suppliers. While these introductions have been ongoing, they are by no means over. We expect continued product introductions during the forecast period. Now, however, the growth rate of Ethernet at the device level is likely to be determined both by increasing user acceptance as well as by further penetration of Ethernet as the preferred device interface chosen by suppliers.

A large number of forces are contributing to the rapid growth of Ethernet networks at the device level. Many of these same factors have propelled its acceptance at higher levels in the automation hierarchy as well, where Ethernet is now completely dominant. Device-level industrial networks have requirements that in many ways are distinct. Not all of these requirements are addressed by today’s industrial Ethernet technology or products, which gives market strength to the various device networks. However, Ethernet technology is not standing still. In addition to ongoing research and development efforts within the IT sectors and academia, a growing number of suppliers are working to create Ethernet-enabled products tailored for industrial use. Also, some of the larger IT-related suppliers have a renewed focus on the manufacturing sector in the wake of the popping of the Internet bubble market that fed their growth through the late 1990s.

— ARC Advisory Group. ARC Advisory Group provides strategic planning and technology assessment services to leading manufacturing companies, utilities, and global logistics providers, as well as to software and solution suppliers worldwide. For more information, visit www.arcweb.com.

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