Consulting-Specifying Engineer - November 2007 - (Page 51)

Management Report Controlling HVAC intelligently BY JARED MALARSKY, China business manager, ARC Advisory Group, Dedham, Mass. he HVAC controls market exceeded $10 billion in 2006 and is forecasted to continue growing at a compounded annual growth rate of nearly 4% over the next five years, hitting $13 billion in 2011. One of the key factors contributing to the growth is the drive to upgrade and efficiently operate the aging facilities in the mature markets of North America and Europe. In response to increasing interest in this market, ARC Advisory Group, Dedham, Mass., conducted a study to validate the trends and drivers affecting this market. Although the HVAC controls market is stable, it is nonetheless undergoing some significant changes, as ARC’s research identified. This article highlights findings in the report concerning manufacturers and buying preferences of owners that are of interest to the engineering community. System upgrades and replacement represent 28% and 25% of revenue, respectively, and these numbers are higher when only looking at the developed markets of North America and Europe, owing to their installed bases. Traditionally, once a supplier installed a proprietary system in a building, the supplier could count on many years of steady replacement and upgrade business. As today’s building owners become more sophisticated, they value the flexibility of pursuing best-of-breed solutions. However, at the end of the day, most building owners are cost-conscious and want to replace or upgrade only bad components, not the entire system. Owners also want to be able to place multiple buildings on a single network integrating systems from different suppliers. In this way, the installed base is driving the move toward open platforms and easy IT-based integration between newer systems and legacy systems. T With this shift, a dilemma crops up in the minds of suppliers. As the open systems that suppliers reluctantly have developed begin to allow existing customers to shop around when upgrading or replacing system components, more pressure is put on suppliers to differentiate in order to maintain the relationship with their customers. Suppliers have responded by offering innovative hardware. However, there will be less of a distinguishing characteristic going forward, because many of the controllers and associated hardware devices can be sourced cheaply as commodities from low-cost manufacturers in Asia. At your service Service is where leading suppliers can best leverage their decades of experience and engineering resources, and this is where most suppliers are making their most concerted efforts to differentiate themselves. Survey methodology This report looks at who are the leading suppliers of HVAC control systems, what challenges and opportunities are driving the market, and what the growth path is likely to be over a five-year forecast period. The market is broken down into segmentations including hardware, software, and services; world region; market sector or vertical; building size; and sales channel. Data for the report were gathered through interviews with senior executives of leading HVAC controls suppliers, secondary research, and from ARC’s extensive database. ARC’s report focuses on the intelligent control portion of HVAC systems such as controllers, software, and human-machine interface, and excludes equipment such as chillers, fans, and sensors. Consulting-Specifying Engineer • NOVEMBER 2007 61 51

Table of Contents Feed for the Digital Edition of Consulting-Specifying Engineer - November 2007

Consulting-Specifying Engineer Contents Editor's Viewpoint Letters In The News M/E Roundtable Emergency Power for Healthcare 2007 Products of the Year Industrial-strength Lighting Hazardous HVAC Codes and Standards Management Report Jobs/Classifieds Specifier's Notebook On-Peak Performance Contents Best Battery Selector in Engine Starting Applications NEC 708: Practical Impact on Backup Power Systems Protecting Power: Specifying Outdoor Generator Enclosures Investing in Backup Power Systems Coes, Consultants, Manufacturers, and Standby Power Systems

Consulting-Specifying Engineer - November 2007

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