Generating about $1.5 billion globally in 2016, the data acquisition (DAQ) market is on the path to generate close to $2.1 billion by 2023, experiencing a compound annual growth rate (CAGR) of 4.8% from 2016 to 2023.
Growth will be driven by the greater complexity of DAQ systems as more measurements of different kinds are needed to address the convergence of technologies in just about any new product. Looking to shorten time to market (TTM), there is also increasing pressure in companies across industries to reduce development time. Thus, design engineers want to measure more signals at the same time, which increases the number of measurement channels in DAQ systems.
Another key factor expected to fuel growth in the DAQ market is the growing demand for distributed applications. Prominent in industries dealing with large objects such as aerospace, the demand for distributed applications is expected to rise further with the Internet of Things (IoT). With IoT, DAQ has the potential to being put on a lot of devices including white goods such as washing machines and refrigerators, cars, industrial machinery, and power generation equipment such as wind turbines. Beyond maintenance purposes, such data represent a gold mine for laboratory engineers looking to fine-tune their product designs.
With increasing complexity, engineers are facing challenges with set-up and use of DAQ systems. They are also particularly concerned with the source of the data they are using and the conditions those were taken under. Time pressure and lack of expertise are spelling out opportunities for DAQ market participants for software solutions and services. The value of DAQ systems has moved from acquisition to analysis. Engineers want direct answers and are no longer interested in acquiring a bunch of data. This is driving growth in the global DAQ market.
At the same time, a number of factors are slowing the growth of the global DAQ market now and over the next few years. First and foremost, the market is developed and mature with the United States and European countries, essentially being replacement markets. The influx of new technologies in end-user industry verticals such as automotive spurs growth but does not necessarily translate into a sudden large number of new DAQ system purchases. For large systems, customers typically make significant capital investments that they look to recover over several years and expect upgrades. Frost & Sullivan also finds that the growing engineering gap in companies across industries is restraining growth as expertise is needed to customize, configure, and program DAQ systems and customers lacking internal expertise refrain from purchasing.
Over the next 5 to 7 years, the global DAQ market is set to undergo several transformational shifts. The growing emphasis on analysis will drive higher growth in software compared to hardware. Software market share is set to gain several percentage points as a result. Most market participants are working actively to develop their software offering organically and via strategic partnerships.
The face of the DAQ industry will also gradually change from an application perspective. Historically heavily dependent on research and development (R&D) applications, IoT is set to spur growth in manufacturing and field applications, increasing the contributions of those segments to the overall DAQ market revenue, while the share of R&D will still be the largest but reduce by about 5 percentage points from 2016 to 2023.
Aerospace, automotive, and energy will remain the key industry verticals for DAQ systems during 2017-2023. However, Frost & Sullivan expects heightened competition in the automotive industry due to the increased focus from market participants on this sector that are attracted by the opportunities stemming from the autonomous and connected car.
Established leaders in the global DAQ market include National Instruments (NI), Keysight Technologies, VTI Instruments, HBM, Bruel & Kjaer Sound & Vibration (B&K), and Siemens PLM LMS. Some of these companies have been targets of recent acquisitions such as VTI Instruments by AMETEK in 2014 and LMS International by Siemens PLM Software in 2012. Yet, these were made by companies that were not active in the DAQ market previously thus did not translate into higher industry consolidation. In 2016, over half of the total market revenue was contributed by other companies, providing plenty of opportunities for mergers and acquisitions.
NI continues to lead the pack in terms of market share. After a strong 2014, its DAQ revenue performance suffered in 2015 and 2016 due to the PC decline and currency exchange challenges. However, the company experienced strong sales performance from CompactDAQ and PXI due to growing demand for system-level DAQ systems. Currency exchange issues have subsided in 2017 and industrial growth is providing a more positive outlook for NI’s DAQ business.
Siemens PLM LMS is another participant that stands out in the market. With a solution play and a heavy focus on automotive, the company has consistently performed above market level. Over the years, it has expanded beyond sound and vibration into durability. With the growing demand for single systems consisting of hardware and software and covering a multitude of sensors and signals yet a broad range of applications with different requirements, Siemens PLM LMS’s strategy consists of focusing on specific high-value engineering applications.
HBM and B&K are two other key participants to watch for. Both companies belong to Spectris plc and represent the great majority of its Test & Measurement segment, which generated over $0.5 billion in revenue in 2016, experiencing with decent growth over 2015.
Strong in noise and vibration, B&K is putting emphasis on software and services and made strategic acquisitions to capture the growth opportunities stemming from manufacturing applications and services in the past few years. In 2015 and 2016, it acquired Discom, which specializes in testing and quality assurance at the end of production lines, and 2 engineering services companies – Sound & Vibration Technology and Sound Answers. B&K is also innovating on the services front to capture the business of customers that do not have the financial means to acquire DAQ systems or for which DAQ is not core to their business.
HBM boasts off deep expertise in structural durability testing and provides the complete measurement chain to customers including sensors, cabling, DAQ hardware and software, and services. This positions the company well to capture the growing opportunities in the DAQ market stemming from the growing lack of expertise in customer organizations and pressure on resources. With the PMX system, HBM is also working to expand beyond its traditional customer base and tap into manufacturing applications.
A complete analysis of the global data acquisition market is available from Frost & Sullivan. For more information, please contact Jessy Cavazos, Industry Director, at jcavazos@frost.com.
