Embedded computer systems revenue in the communications vertical segment was responsible for the largest share of the total embedded integrated computer systems market according to a research study recently released by VDC Research Group. VDC’s 2008 Embedded Integrated Computer Systems (EICS) research covers the market for embedded computer systems sold as integrated system-level products across vertical market segments. The communications vertical, which today is comprised largely of captive systems produced by large network equipment providers (NEPs) such as Alcatel-Lucent, Cisco Systems, Ericsson, Huawei, Nokia-Siemens Networks and Nortel was over US$ 44.1 billion in 2007 and US$ 47.2 in 2008.
Captive EICS systems are embedded computer systems that are included or sold by the vendor in its own systems or subsystems. In this case, the vendor is usually an NEP or integrator and the systems or subsystems that they sell are end products, not compute platforms. The captive market represented 86.1% of the communications segment in 2008. Merchant EICS systems are embedded computer systems sold by a vendor whose primary end products are embedded compute platforms. Merchant systems are growing in share of the market and are projected to grow from a share of 13.5% of the market in 2007 to over 15.1% by 2012. Merchant systems are growing share of the market as NEPs attempt to reduce their internal design and development costs by outsourcing undifferentiated compute platform development.
Typical growth rates for this market over the past 5-6 years have been in the 9-10% range; this growth is projected to slow from ‘08 to ‘09 due to decreased investing by service providers due to the current economic downturn. The market is then projected to be nearly flat from ‘09 to ’10, before gradually returning to average growth rates in 2011. Service Providers (SPs) are unlikely to stop all investment because they will have to continue to invest in cutting-edge services, particularly wireless services (3G & LTE), to emerge from the downturn strong.
ATCA and Bladed Servers will continue to grow, albeit more slowly than the rapid growth rates experienced by these architectures over the past 3-4 years, which was driven primarily by network convergence. However, they should still manage smaller amounts of growth due to their usage in the newest services that SPs must continue to invest in if they want to exit the downturn strong and positioned to capture market growth once again. Crimping the growth rates is the likelihood that deployments of cutting-edge architectures such as ATCA and Blade Servers will be delayed. SPs are expected to be very conservative in selecting their innovation “bets” during the near term.
About VDC Research Group
VDC Research Group (VDC) is a technology market research and strategy consulting firm that advises clients in a number of technology markets including: Automatic Identification and Data Collection, Embedded Hardware and Systems, Embedded Software and Tools, Industrial Automation and Control, Mobile and Wireless, and Power Conversion and Control. Using rigorous primary research and analysis techniques, the firm helps its clients identify, plan for, and capitalize on current and emerging market opportunities. We strive to deliver exceptional value to our clients by leveraging the considerable technical, operational, educational and professional experience of our research and consulting staff. During our nearly four decades of ongoing operation, we have had the pleasure of serving most of the world’s leading technology companies, many high-profile start-ups, and numerous blue-chip early and later stage investors. Our products and services consist of research reports, annual research programs, and custom research and consulting services. Founded in 1971, the firm is located in the Boston area.