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Industry News

The Commercial Market

August 1, 1998
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The Commercial Market

US Utility Revenue Metering Markets Forecast to Reach $3.1 B

According to a recent Business Communications Company Inc. study, "RE-085, Metering for Utilities: Riding the Wave of Deregulation," the total market for utility metering equipment, which was valued at $2.4 B in 1997, is expected to grow to $3.1 B by 2002, representing an average annual growth rate (AAGR) of five percent. The markets are being affected intensely by the deregulation processes taking place currently in the electric, natural gas and telecommunications industries. The factor that is impacting the industry most profoundly is the retail competition being introduced to the natural gas and electric industries, which is creating new types of transactions to be supported by metering. New communications and data processing technologies also are playing a critical role in support of these new transactions.

The study forecasts that meter reading systems will have the highest AAGR of 16 percent over the next five years, rising from $254 M in 1997 to $525 M in 2002. In particular, wireless automated meter reading (AMR) system modules are expected to rise from $98 M in 1997 to $210 M in 2002. Operating economics offered by AMR systems (for example, revenue services, customer information and demand management), the information requirements of newly deregulated retail energy markets and new communications-enabled services will drive the market for AMR systems. Significant growth also is expected for electric meter sales, which are expected to rise to $449 M in 2002 from $264 M in 1997, representing an AAGR of 11 percent. With an AAGR of five percent, gas and water meter sales projections represent a more mature growth rate, increasing from $181 M to $236 M and $202 M to $255 M, respectively, over the next five years.

According to the study, the only area expected to experience a drop in sales is the electric meter reading (EMR) system sector due to the fact that manual meter reading (which drives EMR sales) is being replaced by AMR systems. To receive a copy of the full report, contact Business Communications Company Inc. at (203) 853-4266.

Loral Completes Acquisition of Orion Network Systems

In a transaction valued at approximately $479 M, Loral Space & Communications Ltd. has completed its acquisition of Orion Network Systems Inc. Orion shareholders received 0.71553 shares of Loral common stock in exchange for each Orion share, or approximately 18.3 million newly issued shares of Loral in the aggregate. According to Loral chairman and CEO Bernard L. Schwartz, the addition of Orion’s assets to Loral’s portfolio furthers Loral’s building block strategy, expands its value-added satellite services offerings and extends its reach into high growth international markets.

The new Rockville, MD-based Loral Orion is an international satellite communications company that provides high speed Internet connections. The division owns and operates the Orion 1 satellite, which began service in January 1995 to cover the European, transatlantic and US markets. Two additional Orion satellites, which currently are under construction, received substantial funding through the public issuance of debt in 1997. Orion’s transponder capacity will increase substantially with the launching of the Orion 3 and 2 satellites, which currently are scheduled to begin service in January 1999 (to cover the Asia-Pacific region) and June 1999 (to serve the Americas and Europe), respectively. The three-satellite constellation will be capable of providing services to over 85 percent of the world’s population by 1999. In addition, Orion has authorization for valuable domestic and international orbital slots, including certain slots for the provision of Ka-band service.

Wireless Propels Quartz Crystal Market to Reach $3.3 B

A recent Allied Business Intelligence analysis, "Quartz Crystals, Quartz Crystal Oscillators and VCOs: Frequency Control Markets, Competing Technologies & Vendors," reports that the serviceable available market for crystals and crystal oscillators is expected to grow at a compound AAGR of seven percent from $2.3 B in 1997 to over $3.3 B at the end of 2002. In addition, approximately $1 B to $2 B worth of the small components will be produced internally by large original equipment manufacturers for their own consumption. Although still considered a defense-sensitive mineral that has been stockpiled by the US government for years, quartz crystal has become ubiquitous; it is used in everything from the 40¢ clock oscillator in watches and computers to the $19 K oscillator in communications satellites.

The highest growth within this market is expected from voltage-controlled crystal oscillators (VCXO) and oven-controlled crystal oscillators (OCXO). The wireless market is expected to continue to be critical to complex oscillator module suppliers, representing 63, 41, 36 and 41 percent of the temperature-compensated crystal oscillator, OCXO, VCXO and VCO markets, respectively. Wired telecommunications also is expected to continue to play an important role, encompassing 41 and 17 percent of the VXCO and OCXO markets, respectively. In addition, the battle over the level of integration is forecast to continue, pitting the less expensive surface-mount oscillators against the more sophisticated devices designed for niche applications. For additional information, contact Tim Archdeacon at Allied Business Intelligence (516) 624-3113 or e-mail: info@alliedworld.com.

Paging Industry Rallies for Growth

A study conducted in February and March of 5000 US households reveals that paging has excellent growth potential, particularly among individuals under 30 years old (the age group that uses approximately 50 percent of pagers in North America). In addition, 21.6 percent of households have used a pager or messaging device for less than a year. One factor that demonstrated the value users attach to their paging service was that two-thirds of consumers who also own cellular telephones said they would keep their pagers even if the telephone provided short messaging service.

According to David Hughes, corporate VP and GM of Motorola’s Paging Systems Group, these results can be attributed to major strides in the paging industry that have been achieved over the past year in terms of business growth and new applications development. The study also revealed several emerging key trends that are creating positive industry movement, including the success by major North American paging carriers in deploying new services in fast-growing markets in Latin America, Asia, Europe, the Middle East and Africa.

First-quarter US Electronics Sales Increase 10.6 Percent

According to data released by the Electronic Industries Alliance, US factory sales of electronics equipment, components and related products totaled approximately $119 B for the first quarter of the year, representing a 10.6 percent increase over 1997’s figures for the same period. The totals are higher than forecast originally, indicating a continuation of the double-digit growth the sector has been experiencing over the past few years.

A breakdown of the first-quarter results includes an 18.1 percent increase in the computers and peripherals sector from $21.1 B to $24.9 B, a 16.6 percent increase in the telecommunications sector from $13.9 B to $16.2 B, an 11.4 percent increase in defense communications from $7 B to $7.8 B and a 10.2 percent increase in other related products from $16.8 B to $18.5 B. More modest growth was reported in electromedical equipment with a nine percent increase from $2.6 B to $2.9 B, electronic components with a 6.1 percent increase from $35.3 B to 37.5 B, consumer electronics with a 3.9 percent increase from $2.4 B to $2.5 B and industrial electronics with a 3.5 percent increase from $8.2 B to $8.5 B.

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