Articles by Asif Anwar, Program Director, Strategy Analytics

Strategy Analytics ADS service attended the IQPC Directed Energy Systems 2014 event to catch an update on the progress that Directed Energy Systems (DES) are making from laboratory concepts to workable solutions that can form a realistic addition to existing weapon system arsenals. The use of technology can have a direct impact on the force effectiveness and reducing casualties, and directed energy systems arguably represent the current leading edge of science and technology in the military domain comprising use of the electromagnetic spectrum across RF-based and laser-based technology solutions.

Following a sustained period of growth, overall defense expenditure is expected to flatten out over the next ten years. Global defense expenditure was estimated at $1.7 trillion in 2012 and will show an estimated growth of just 0.2% through 2022. While global expenditure will remain flat, individual regional trends are seeing some varying dynamics. North America, led primarily by the US, has led global expenditure on defense as the primary contributor to coalition action in theatres such as Iraq and Afghanistan. As these conflicts are drawn to a close, the US is expected to reduce spending on military budgets.

From a radar and EW perspective, DSEI 2013 demonstrated the strides that solid state technologies, with GaN in particular, have made in terms of performance, reliability and cost to become established enabling technologies for next generation systems. By being able to combine these technologies in modular solutions, we may see faster development and deployment of systems, coupled with lower through life costs. What will be the future for military RF technologies?

Military expenditure faces challenges with declining budgets impacting the introduction of new platforms. However, technology will be the differentiator for future global conflict scenarios, and budgetary constraints will not detract from the need to improve system capabilities through technology upgrades. Strategy Analytics forecasts the opportunity for RF technologies remains strong despite budgetary challenges as the focus shifts towards enhancing capabilities in the areas of radar, satellite communications and electronic warfare.

Seattle was the venue for IMS 2013 providing a platform for the industry to discuss industry trends and launch strategies, products and processes. Strategy Analytics hosted a lunch session to discuss RF technology opportunities from the defense sector as well as leading a panel session looking at the impact of competing technologies on the GaAs industry. Read this summary of defense products offered or released at IMS2013.

The beginning of 2013 started to see revenue results for companies. Most companies reported results that were essentially stable with minor increases or declines year-on-year. Boeing was the exception with revenues growing 19% year-on-year on the back of the company's commercial business. Company results reflected a slowing defense market, but contract activity was surprisingly good in January with new contracts across all sectors including radar, communications and EW. There were a number of international shows in February providing the stage for companies to establish strategic relationships, form joint ventures and highlight their capabilities as well as signing major contracts. Asif reviews these early year trends along with some briefings with various defense companies.

Strategy Analytics has released a series of reports, that bring together strategic analysis and commentary on twenty of the world’s major defense industry focused companies. The reports outline financial performance covering 2007-2012 and discuss activities within the defense sector, highlighting core strengths, perceived weaknesses and overall competitive positioning in the market.

Strategy Analytics presented at the 2012 Defence, Security and Space Forum during European Microwave Week on military satellite trends and future outlook. The use of space is increasing and becoming an essential component for infrastructure in communications, navigation and timing, agriculture and weather monitoring and disaster relief efforts. From a military perspective, space assets provide necessary resources to support troops including the provision of imagery, supporting communications, improving targeting and conversely reducing collateral damage. As a force multiplier, space assets can provide advanced capabilities and compensate for reductions in other conventional assets.

Despite the ongoing uncertainty with defense expenditure facing challenges and the threat of sequestration hanging over US companies there was positive news on the financial front as companies finished releasing results for the second quarter of the calendar year. Taking a snapshot of financial results and looking at quarterly revenue growth over the second and first quarters shows a turnaround with companies growing revenue as opposed to the quarter-to-quarter revenue declines observed after the first quarter of 2012.