Electronics Instrumentation Industry: New Trends Provide Second Chance

Published: 31 Aug 2015

Most of us are focused on the future trying to figure out how our industry of interest will evolve over the next 5, 10 years, or more. From time to time, it is necessary to pause and take a look at the past to assess the effectiveness of our efforts and learn from it. For the electronics instrumentation industry, it is certainly disappointing to realize that the market for new test equipment in 2015 is about the same size or less than it was 10-15 years ago for many key product categories. While the industry has gone through two significant economic downturns and recovered from it, it is essentially the same size (in terms of revenue) as it was 15 years ago despite the electronics/connectivity revolution. What does this tell us and will the industry perform better in the future?

Within the realm of the electronics instrumentation market, not all is equal. Certainly, there have been areas of growth. Modular instrumentation (PXI in particular), for example, has witnessed phenomenal growth due to a greater focus from customers on lowering the cost of test, reducing time to market, and the growing need to address products that are increasingly multichannel in nature. New technologies on the horizon such as the much talked-about 5G will certainly continue to push the market in the direction of more automation and modular instrumentation in the future with notably Massive Multiple Input Multiple Output (MIMO).

Over the next 5-10 years, 5G and other technologies will take the electronics instrumentation market to higher frequencies spelling significant growth opportunities for test manufacturers. The move towards a more connected, zero-latency, and autonomous world will certainly provide room for growth for the electronic instrumentation market. Tolerance for latency and delays is reducing with consumers and in professional environments. With the Internet of Things (IoT), a myriad of devices will be connected to the Internet. While low latency will not be provided for all applications and devices in the short term due to costs, the desire for low or no latency for a number of devices and applications is here and will provide opportunities to test manufacturers. IoT is also expected to stimulate demand for electronic instrumentation in traditionally smaller end-user segments. While wireless communications and aerospace and defense will remain significant end-user segments for electronic test and measurement equipment, demand is likely to increase in smaller end-user segments such as industrial electronics due to the greater integration of wireless technology in various devices. The world is also on the path to become more autonomous with mobile robots, drones, and autonomous cars. While all of these technologies will translate into demand for electronic instrumentation, some, such as the autonomous car, will generate significant opportunities for test manufacturers due to the onus put on safety. Leading automotive OEMs are currently embracing automated driving translating into significant R&D opportunities for test manufacturers.

In addition to technological trends, other trends will provide growth opportunities for test manufacturers, one of which is the generational change in engineering with users typically more inclined towards automation and software than the previous generation of engineers. In addition, the emergence of millennial leaders who are more open to new technologies/approaches, value horizontal leadership, and encourage collaborative working will provide opportunities for product innovation to test manufacturers.

Companies across industries are striving for transparency with regard to data and processes aiming for greater accountability and liability of employees and partners. The use of Big Data Analytics that leverage test equipment is thus growing mainly to improve production yield and product quality while providing other benefits. While critical in automotive, aerospace and defense and medical devices for safety reasons, the importance of quality has spread across industries.

The hyper connectivity of customers will also call for a greater focus from test manufacturers on their go-to-market channels. While online channels have grown in importance for mid and low-end test equipment, this trend is also relevant to more high-end expensive test equipment from a digital marketing perspective. Mobile optimization will grow in importance as companies realize the need to optimize the digital experience on small screens. Accelerated connectivity is giving rise to networked communities that move beyond knowledge sharing and act as support groups or marketing forums, which can be used by manufacturers to interact with customers and identify product issues and unmet needs.

The next decade will not come without challenges for the electronics instrumentation industry. However, trends are favorable to the future growth of the electronic test and measurement market. Test manufacturers must not only be aware of the evolution of technologies and related test requirements but also expand their horizons to understand the impact of other trends on their business. In the past decade, the electronics instrumentation industry did not maximize the revenue opportunity coming from the move towards connectivity and the proliferation of electronics as most companies missed out on dramatic changes happening in the customer base. Fortunately, the major trends in the world continue to favor electronics, connectivity, and testing and are providing electronics test manufacturer the opportunity to redeem themselves. Cheers to a better decade (2015-2025) for the electronics instrumentation industry!

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