PLC suppliers unbundle I/O and software

The global programmable logic controller (PLC) market will grow slightly during the next five years, according to a recent report, "PLC Worldwide Outlook," by Automation Research Corp. (ARC). Primary revenue growth will continue to come from unbundled I/O device and software sales, which have so far kept PLC suppliers out of the red as hardware revenues decline at a...

11/01/1998


Dedham, Mass. The global programmable logic controller (PLC) market will grow slightly during the next five years, according to a recent report, "PLC Worldwide Outlook," by Automation Research Corp. (ARC). Primary revenue growth will continue to come from unbundled I/O device and software sales, which have so far kept PLC suppliers out of the red as hardware revenues decline at a more than 2% annual rate.

As most Asian nations rebuild economies to regain past growth, increases in the world's PLC hardware business will rely on Latin America and other parts of Asia, such as China and India. Europe will continue to dominate worldwide PLC market share, but ARC's report adds that price erosion will decrease revenues. It projects that over the next five years Japan will experience the most rapid decline in PLC revenue due to slowed demand and dropping PLC prices.

Responding to the increased commodity nature of PLC hardware and related drops in price and profits, PLC suppliers have started selling I/O devices and software as unbundled products. The report projects that suppliers will unbundle offerings of PLC, CPU, and I/O devices even more in the near future. This trend will be fueled by rapid adoption of device networks, market acceptance of PC-based logic control software, and increasing competition from emerging third-party I/O suppliers.

I/O devices currently represent the largest share of revenues from the traditional PLC, CPU, and I/O combination. The I/O portion is also usually the most profitable part of the overall system. Consequently, as alternatives to traditional PLCs gain popularity, the report adds there will be an increasing market for unbundled I/O devices. Most suppliers are responding by creating separate I/O businesses within their organizations, and extending the most profitable part of business into new applications and industries.

Likewise, as the move from proprietary to open architectures accelerates, the number of potential hosts for I/O devices increases. Suppliers' ability to nurture this revenue stream will continue to be crucial to overall success. As a result, the report found there's more R&D money being spent on new product development and a jump in new I/O products introduced over the last couple of years.

In addition, PLC suppliers are also unbundling software to take advantage of the shift toward PC-compatible controllers. The report concludes that the PC-based logic control software market will grow considerably, providing a catalyst for the overall PLC market, and helping supporters offset some lost PLC revenues.

The report says this trend is further evidence of software's increasing importance relative to hardware in automation and control fields. It adds that software is increasingly seen as a way to add value and differentiate products from competitors.

For more information, visit www.controleng.com/info .





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