Oscilloscopes: Riding the Wave of Change

Published: 27 Sep 2003

By Kiran Unni, Research Analyst

Things will never be the same in the test and measurement world, in the aftermath of the downturn that the industry as well as its closest, related markets suffered in the past two years. The slowdown in the world economy was unprecedented in both its speed as well as severity and the test and measurement industry was as affected as any of the end-user markets that is caters to. In this grim scenario, the most commonly used general purpose test equipment, the quintessential oscilloscope, stood its ground, and faced the music with aplomb.

Oscilloscope manufacturers have long since realized that in order to remain at the crest of the technology wave, they would have to resort to some agile surfing, precarious though their positions might be. Customer requirement for test and measurement equipment and oscilloscopes in particular, have been changing rapidly. The communications, information technology, defense and aerospace and the electronics manufacturing industries form a circle of the most significant customers of this test equipment. Increase in complexity of the signals being used in these applications (with special respect to the communications world), has made the oscilloscope an even more valuable tool.

Also, gone are the days when one oscilloscope fitted all. Customized functionalities that cater to specific demands in different applications are more the order of the day. While performance and accuracy remain the mainstays of gauging oscilloscope quality, the fact that the vendors can tailor their scopes to suit different end-user applications, is what will distinguish the market winners from the others.

Communications: The Tsunami

The communications industry exploded with innovations, products and services in the late 1990s. Trickling down to hugely impact the test and measurement market as well, demand for oscilloscopes saw unprecedented rise and vendors that were able to meet the challenge with new and innovative products are still reaping the fruits of their labor today.

When the communications industry was challenged by the slowdown that made several participants meet its nemesis, the oscilloscope market too was impacted adversely, affecting many test and measurement manufacturers as well. Top industry participants such as Tektronix, LeCroy and Agilent Technologies also were under pressure to offer faster, high-resolution scopes that meet the demands of the ever-changing technology enhancements.

Introduction of third-generation (3G) mobile systems and the expected advent of the fourth-generation in these systems are factors that have greatly contributed to the demand for oscilloscopes. Electronic design manufacturers require scopes to debug designs of their latest microprocessors. Consumer electronics today have highly complex circuitry and the communications industry is teeming with high-bandwidth devices that require scopes of different architectures. To meet this demand, there are scopes that can perform 10-20 billion measurements per second.

Accounting for about 29.1 percent of the total revenue in the digital oscilloscope market, the communications industry which is on the verge of recovery, is expected to continue to remain among the most significant end-users for scopes in the next five years. However, the communications industry remains the second largest end-user segment for scope vendors the world over, surrendering its position to the electronics manufacturing industry that includes the whole gamut of information technology, and consumer electronics manufacturing. These customers increasingly require faster, more accurate scopes that can match their enhancements in product design and effectively test and debug them.

Sketch of the Competitive Landscape

Fifty seven year old Tektronix has maintained its position as the market leader in the oscilloscope market, leading its peers by a significant margin. Holding close to 50 percent of the total digital oscilloscope market, beating Tektronix at what it does best, is definitely an up-hill task for even its nearest competitors, LeCroy and Agilent Technologies. Success of the Tektronix brand image is evident in the fact that most engineers, who have been trained using Tektronix equipment, remain loyal to the brand all their life. Therefore fact remains that the LeCroys and the Agilents of the world have challenges galore.

On a scale of one-to-ten the rate of technology change as well as competition rank a high 8 in the oscilloscope market. From the low-end 8-bit resolution digital storage oscilloscope to the 16-bit resolution instruments, new innovations and incorporations into the seemingly simple general purpose test equipment. Increasingly complexity of the signals used in different applications further fuel the demand for more advanced technology in the oscilloscope as well. Not restricted to the three market leaders, every oscilloscope vendor is in the race to offer better, faster and more accurate scopes.

Watch Out for the Sharks

So how does the average scope vendor remain viable in an aggressive market place that is characterized by traditional leaders on one hand and innumerable innovations by start-ups on the other? We, in the market research and analysis business, would say, "FIND A NICHE". The oscilloscope sure is a common enough test instrument, whose end-user areas are as numerous as there are electronics applications. However, be it the communications, information technology, defense and aerospace, electronics manufacturing, industrial and automotive electronics industries, the scope takes on a different personality in each application.

Gone are the days when one scope suited all applications, irrespective of the final end-user industry and stage of design/production/maintenance. Customization is the name of the game today, with several customers demanding scopes that are tailor made for their specific applications. Vendors sit up and take notice! Those manufacturers that have heeded this unsaid prophesy, have benefited by focusing on niche applications. A prime example is Nicolet Instrument Technologies. Apart from offering a range of 8-bit and 16-bit resolution digital storage scopes, the company has strategized to focus on the high-end physical measurement applications market more than the conventional 8-bit communications and information technology segments. This conscious effort by the company has enabled it to create a niche for itself, taking it out of the traditional Tektronix-LeCroy-Agilent-led market into a more defined space where its peers including Yokogawa, offer customized and high-resolution scopes catering to the requirements of a niche market segment.

Finding focus will include having customer driven products that are easy to use, which meet the constantly evolving needs of the particular market and reducing product development time. Understanding particular demands of specific applications and meeting them with innovative technology are key factors that aid in maintaining valuable market share in the world oscilloscope market today.

For further information and queries please refer to the market report on World Oscilloscopes Market, which is due to be published shortly by Frost & Sullivan. In addition to the digital oscilloscope market, the report contains detailed research and forecasts of the analog and computer-based oscilloscope markets as well. You can also contact the analyst at kiranunni@frost.com.

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