The Rugged Market

Robust Growth Seen in Rugged Markets Through 2005
(July 2001 issue)


This forecast is from a recently published market study by Venture Development Corporation (VDC) conducted in cooperation with Pen Computing Magazine. The report, titled "The Global Markets For Rugged Mobile Computers: Volume 1ĞRugged Mobile Computer Products," makes a comprehensive and detailed assessment of rugged mobile computers usage in a plethora of industries and sectors.

The worldwide market for the rugged mobile computer products was valued at $3.1 billion in 2000. We expect the market to grow at a compounded annual growth rate (CAGR) of 14.1% through 2005, reaching just under $6.0 billion. Mobile computers are providing higher employee productivity and improved customer service levels in a wide variety of industries/sectors, and users in these industries/sectors are finding that purchase of premium priced ruggeddized versions rather than commercial units to be money well spent. The increasing adoption of wireless communications as a means to enhance operational efficiency and improve profitability will also propel demand for rugged mobile computers through the year 2005.

Due to the recent economic slowdown in the U.S., VDC is forecasting slower growth through 2001, and for part of 2002. Much of the slowdown has impacted growth in the larger sectors of field service (primarily telecommunications) and retail/distribution. However, VDC believes that action by the Federal Reserve to reduce interest rates will likely have a positive impact by the 1st quarter of 2002.

Therefore, the demand for rugged mobile computers is expected to be more robust from 2002 through 2005.

By Form Factors

There are eight types of rugged mobile computer products. Exhibit 1 shows the share of rugged mobile computer consumption by form factor in the year 2000.

VDC sees very robust growth on a percentage basis for PDA and wearable-type products versus traditional hand held computers. Hand helds will continue to comprise the vast majority of shipments, but PDA products are expected to make increasing inroads into emerging sectors such as field service, healthcare and field sales, as well as take some share from traditional hand held markets such as retail/distribution and manufacturing. The novelty concept of pen/touch input and having a PDA-like product will stimulate demand initially, but the ability to scan bar codes, access databases and spec sheets, and other such activities via a larger display and wirelessly will be main drivers in the adoption of the PDA form factors.

Although wearable products have been around for a while, I see robust growth as the cost of the products fall and large companies such as IBM, Hitachi, Symbol, Psion Teklogix, etc. begin to throw greater backing behind the wearable concept. I am very interested to see what comes of the pilot project with Xybernaut's Mobile Assistant IV wearable product going on with Bell Canada. If that goes as I expect, we will see increasing interest in such products.

As of result of some of these exciting developments, VDC foresees some significant changes in the market positioning of the form factors. The form factor products, in descending order based on dollar shipments in 2005, are:

  • 1 Hand Held
  • 2 Notebook
  • 3 PDA
  • 4 On-Board/Fixed Vehicle
  • 5 Tablet
  • 6 Wearable
  • 7 Luggable/Lunchbox
  • 8 Sub-Notebook
In addition, VDC broke out a sub category of the rugged mobile computer market that is comprised of computers that have been designed for, and/or tested to, the U.S. Department of Defense's (DoD) Test Method Standards For Environmental Engineering Considerations and Laboratory Tests - MIL-STD-810F. These computers were defined by VDC as being "fully rugged."

Worldwide shipments of "fully rugged" form factor products totaled just over $454 million in 2000. VDC forecasts that the "fully rugged" form factor products will experience slower growth than that of ruggedized products, reaching just over $734 million in 2005. A greater share of user applications require a less rugged, and therefore less expensive, mobile computer solution. The "fully rugged" form factor products, ranked in descending order based on dollar shipments in 2000, are: 1 Notebook 2 Hand Held 3 Luggable/Lunchbox 4 On-Board/Fixed 5 Tablet 6 Sub-Notebook

Consumption By Industries/Sectors

The ten largest industries/sectors based on total rugged mobile dollar shipments in 2000 are:
  • 1 Retail/Distribution
  • 2 Manufacturing
  • 3 Transportation
  • 4 Military
  • 5 Field Service
  • 6 Utilities
  • 7 Government
  • 8 Public Safety
  • 9 Healthcare
  • 10 Finance/Insurance
Exhibit 2 provides a breakdown of the larger rugged mobile computer form factors (consisting of notebook, on-board/fixed vehicle, tablet, luggable/lunchbox, and sub-notebook products) shipments to the major industries/sectors in 2000. Exhibit 3 provides a breakdown of the smaller rugged mobile computer form factor (consisting of hand held, PDA, and wearable products) shipments to the major industries/sectors in 2000.

Retail/distribution usage is primarily centered on warehousing, logistics, and in-store retail applications. In manufacturing operations, many are used in PLC programming applications, monitoring and data acquisition, and maintenance and troubleshooting.

  • Transportation usage ranges all across the board from short and long haul trucking, air cargo, railroads, etc.
  • The military usage is primarily spread across battlefield, logistics, and vehicle maintenance applications.
  • Much of the field service use is in maintenance and repair of telecommunications networks.
  • Utilities usage varies, but primarily is for maintenance and repair, meter reading, and general operational applications.
  • Government usage is among non-military departments for a variety of departments.
  • Public safety usage is primarily by police departments, followed by fire departments and EMS applications.
  • Healthcare usage is widespread but mainly centered on patient care and billing applications.
  • Finance/Insurance usage is primarily by claims adjusters in the field and in some trading floor environments.
The five largest industries/sectors among "fully rugged" mobile computer form factors based on dollar shipments in 2000 are:
  • 1 Military
  • 2 Field Service
  • 3 Public Safety
  • 4 Utilities
  • 5 Manufacturing

Product Features and Trends

Wireless Communications

VDC forecasts robust growth for shipments of all form factor products with integrated wireless communications. Reasons for expected growth include falling costs, improved coverage, and the growing awareness of the ability to increase productivity and improve customer satisfaction levels through real-time access to information.

The type of wireless network used depends on the applications within each major industry and sector. Wireless LANs are found to be the more dominant network of choice across all form factor products, except for notebook and sub-notebook products. Users of these products had applications that require wireless WANs. Users in public safety and field service sector applications were more reliant on notebook and sub-notebook products. The 802.11 standard is expected to become the dominant wireless LAN network by 2005. As for which wireless WAN network will dominate in the future, VDC believes the most likely successors will be W-CDMA and GPRS (GSM next generation network).

Operating Systems

Among products shipped in 2000, the most common operating systems were:
  1. Windows 9X for larger rugged and "fully rugged" form factor products;
  2. DOS for hand held and wearable products; and
  3. Palm OS for PDA form factor products.
VDC expects Windows NT/2000 and Windows CE/Pocket PC to be the most common OSs for larger and smaller form factor products shipped in 2005, respectively. Palm OS for PDA form factor products is expected to be the second-most used OS in 2005.

Level of Ruggedization

Ruggedized form factor products are forecast to have faster growth than products deemed "fully rugged." VDC believes ruggedized products present a large opportunity for growth since they are "rugged enough" for many applications and are less expensive than "fully rugged" products. PRODUCT AND VENDOR SELECTION CRITERIA Users surveyed by VDC indicated that the following criteria is most often considered when selecting a larger form factor rugged mobile computer:
  • shock/vibration resistance
  • drop capability of 3 feet or more
  • water/dust resistance
Heat/cold resistance and daylight readable displays were also mentioned by a large number of users. For users selecting smaller form factor rugged mobile computers, important selection criteria are:
  • ruggedness/durability; and
  • drop capability of four feet or more
  • a more ergonomic design and lower weight were also identified as key criteria by a number of snaller form factor users.
Wireless communication is the most-often identified product feature that users of both larger and smaller form factor products desire, but is not currently available with their rugged mobile computer product. More processing power, smaller size/weight, and better resolution/viewability were also cited by many users of larger form factor products as features desired, but not currently available. Users of smaller form factor products indicated that smaller size/weight, easier interfacing with the Internet, and compatibility with their current system are also important features that are not currently available.

The most identified non-product vendor selection criterion for both larger and smaller form factor products is technical support. Price was the second-most-often cited criterion for larger form factor products and the fifth-most-identified criterion among users of smaller form factor products. This is not surprising since larger form factor products are typically more expensive than smaller form factor products. This indicates that there is a growing need for vendors to enhance their technical support programs/infrastructure.

Other non-product vendor selection criteria cited by users for larger form factor products are turnaround time on repairs/maintenance, customer service/support, warranty, and availability/delivery of product and parts. Other non-product vendor selection criteria cited by users for smaller form factor products included customer support, availability/delivery of product and parts, and turnaround time on repair/maintenance.

COMPETITIVE ENVIRONMENT

Leading Vendors Worldwide, the five largest suppliers of larger rugged mobile computer form factors in 2000 were:
  • 1 Panasonic
  • 2 tied: Itronix, Symbol
  • 3 Siemens
  • 4tied: Litton, Dolch
  • 5 Intermec
Worldwide, the five largest suppliers of smaller rugged mobile computer form factors in 2000 were:
  • 1 Symbol (includes Telxon shipments)
  • 2 Intermec
  • 3 Psion Teklogix
  • 4 DENSO-ID
  • 5 Fujitsu-ICL Systems
Worldwide, the five largest suppliers of "fully rugged" mobile computer form factors in 2000 were:
  • 1 Itronix
  • 2 Litton
  • 3 Getac (Mitac Group)
  • 4 DRS Technologies
  • 5 DAP Technologies

Strategies and Recommendations

The following are just some of the comprehensive recommendations VDC made for vendors of rugged mobile computers:
  • Vendors believe that the primary competitive factors in the market are related to product pricing, functionality, dimensions/sizing, and technology enhancement. In general, the better a vendor is able to satisfy these, the better they are likely to do.
  • In general, users want the size, and weight of rugged mobile computers to be reduced, even though they, at the same time, want larger screen sizes, and more functionality. Vendors should strive to satisfy this desire to reduce computer sizes to the extent possible.
  • VDC found that many users of the form factor products under study desire to have wireless communications capability that can be used to improve their business operations and customer service levels. Vendors should consider the costs of developing integrated wireless communications into their products. It should be noted that vendors taking, or that have taken, such a course of action should make a concerted effort to educate and inform the customer as to the many benefits of integrated wireless communications.
  • Vendors of rugged mobile computers are faced with the task of educating and selling customers, such as end users, VARs, distributors, and systems integrators, on the benefits of:
    1. Mobile computing to their operations 2. Rugged mobile computers 3. Their rugged mobile computers
Vendors should consider developing customizable ROI and cost of ownership (COO) models that they can use educate end users as to the tangible benefits of using their rugged mobile computing solution. This is of particular importance for those vendors offering rugged mobile computers with integrated wireless communication. These models should focus on the tangible cost savings, or the improved productivity, offered to the user when utilizing a rugged mobile computer. -

About the Author: J. Timothy Shea is a project manager/industry analyst for Venture Development Corporation, a technology market research and strategy firm. Tim is an analyst in VDC's Embedded Computer Group, and has conducted extensive market studies on ruggedized/industrial computers, data acquisition products, device/sensor buses, monitors, operator interfaces, and distributed/remote I/O products, among others. He holds a BS in marketing from Bentley College (Waltham, MA), and an MBA from the F.W. Olin Graduate School of Business at Babson College (Wellesley, MA). Contact: info@vdc-corp.com


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