Adoption of Industrial IoT in the Global Test

and Measurement Market, Forecast to 2022

Test and Measurement Embracing IIoT Technologies to Enhance

Testing Measures and Make Use of Opportunities

Global Measurement & Instrumentation Research Team at Frost & Sullivan

K1D0-30
September 2017
 Contents

Section Slide Number

Executive Summary 3

Research Scope, Objectives, Background, and Methodology 9

IIoT for Test and Measurement 15

Market Drivers and Restraints 24

Forecast and Trends 31

Companies Ecosystem and Geographic Landscape 36

Key Opportunities in End-user Verticals 42

Mega Trends and Industry Convergence Implications 47

Growth Opportunities and Companies to Action 51

Key Strategies for Success 56

The Last Word 58

The Frost & Sullivan Story 62

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 Executive Summary

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 Key Findings

T&M Market in IIoT: Key Findings, Global, 2016

The landscape of test and measurement (T&M) is dramatically changing globally, with
1 increasing need for modular instrumentation and customizable test solutions to facilitate cost-
effective upgrades.

The emergence of Industrial Internet of Things (IIoT) and its implementation in T&I is expected
2 to reach new boundaries. Through digital connectivity, the use of test equipment can be
maximized, improving the quality of testing.

Clients are looking for new testing scenarios with high modularity, PC control, and software
3 upgrades due to advancements in technologies.

With test equipment becoming more software-defined and hardware slowly moving toward
4 commoditization, vendors are looking for ways to effectively use the massive volume of data
available through connectivity to add value through predictive analytics.

Replacement of T&M equipment with modular, compact, and smart testing systems will reduce
5 the operational cost and, most importantly, the cost of testing.

Source: Frost & Sullivan

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 Market Outlook
The value of the T&M market in IIoT is expected to be $104.8 million by 2022.

T&M Market in IIoT: Future Trends, Global, 2016

T&M Today T&M in Future

• Low opportunities with respect to IIoT, as OEMs
are still understanding the technology
• Limited entrants in the IIoT market
• High apprehensions with regard to security
concerns in IIoT-enabled test systems
• Low adaptable testing systems
• Integration of testing capabilities with high modular
form factor opening an ocean of opportunities
• By 2025, 80% of T&M vendors incorporating IIoT
technology into their testing systems
• Highly adaptable test systems

Source: Frost & Sullivan

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 Market Projection

T&M Market in IIoT: Competitive

T&M Market in IIoT: Revenue Forecast, Landscape, Global, 2016
Global, 2016 and 2022
CAGR = 6.7%
120.0 National
Instruments
*Others (market
100.0
60.0 leader)
Revenue ($ Million)

40.0
80.0

60.0

40.0 • The T&M market in IIoT is relatively new, with huge

growth potential due to increasing need for scalable
20.0 test solutions.
• New business models of cloud-based licensing and
0.0 software upgrades for providing new functionalities to
2016 2022
Revenue 71.1 104.8 commoditized hardware will be the way forward.

Year • By 2025, 80% of test vendors are expected to adopt

IIoT technology.

*Others include Keysight, Rohde & Schwarz, and Fluke among others.
Source: Frost & Sullivan

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 Transition Toward Digitalization

New Business Models Shift from traditional business models to

cloud-based licensing and software upgrades

Smart Testing Modular test systems tailored according to

changes in technology to achieve a high level
of re-configurability

Trends,
Opportunities,
and Challenges Value Chain IIoT providers providing Big Data analytics and
cloud services playing a key role in the value
in the T&M
chain
Market with IIoT

Security Enhanced security testing at the research and

development (R&D) and design stages

Skill Deficit Shortage of skilled workforce with limited

understanding of IIoT

Source: Frost & Sullivan

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 CEO’s Perspective

Many industries are adopting IIoT

1 technologies, and customers are looking for
better testing options.

Awareness needs to be created for T&M

2 vendors to understand the importance of
IIoT-enabled test systems.

Automation of equipment will become a key

3 requisite for customers.

Instruments need to execute quicker yet

4 accurate analysis, with reduction in the cost
of test.

Product differentiation and brand recognition

5 are important factors for test vendors’
success.
Source: Frost & Sullivan

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 Research Scope, Objectives, Background, and
Methodology

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 Research Scope and Objective

Base Year 2016

Study Period 2016–2022

Forecast Period 2017–2022

• North America—the United States and Canada

• Europe—Western, Central, and Eastern Europe
Geographical Scope
• Asia-Pacific—China, India, Japan, Southeast Asia, Singapore, and
Australia and New Zealand

The aim of this market research is to evaluate the opportunities in the

T&M landscape with the emergence of digital connectivity and the
Objective potential of incorporating IIoT technologies, such as Big Data analytics,
into test systems to drive business growth by enhancing testing systems
and identifying new avenues for revenue.

Source: Frost & Sullivan

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 IIoT—Emerging Themes in the Industrial Environment
New technology themes will influence the design and conception of future factories.

The Building Blocks of Industrial IoT

Sensors 4.0 Industrial Cloud

Virtual Reality Edge

Computing

Cognitive Intelligence

Mobility Big Data

Source: Frost & Sullivan

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 IIoT—Key Attributes of a Smart Factory
The broader technology themes will give rise to new scenarios in shop floor.

Technology Themes

Virtual Reality Big Data Mobility Sensors 4.0

Edge Computing Industrial Cloud Cognitive Intelligence

Attributes of smart factory connected to tech themes

Wireless Sensor Additive

Networks Manufacturing

M2M Industrial
Connectivity Robotics

IP-based
Communication

Mobile Apps

Predictive
Maintenance
Smart
Connected Factory Drones
Logistics

Source: Frost & Sullivan

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 Research Aims and Objectives

• To research, analyze, and forecast trends for the T&M market in IIoT and discuss their impact on
the growth of the testing systems.
Aims • To provide a comprehensive analysis of different applications and types of equipment in the
T&M market, including electronic test equipment and data acquisition equipment, and the drivers
and restraints for the overall market.

• To provide an overview of the global T&M market for IIoT, focusing on key technology trends.

• To define IIoT for T&M and understand its impact from both a quantitative and qualitative
perspective and predict trends.

• To provide an overview of key trends and their applications in the end-user verticals.
Objectives
• To provide market scenario analysis by focusing on the penetration of IIoT in T&M and
understanding its growth.

• To understand the unmet needs or inherent business opportunities of relevant industries and the
future outlook of the T&M market.

Source: Frost & Sullivan

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 Key Questions this Study will Answer

What are the latest key technology trends in the market? What impact do these have on the
T&M market in IIoT?

What are the challenges that the market is facing with regard to adoption and market drivers?

What will the T&M market in IIoT look like in the next 5 years? What are the market
estimations and projections?

Are solutions offered meeting customer needs or are additional developments needed?

What are the growth opportunities for the T&M market in IIoT?

Source: Frost & Sullivan

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 IIoT for Test and Measurement

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 Why IIoT?

T&M in IIoT
• IIoT is a network consisting of a multitude of devices connected by communication technologies that results in systems
that can monitor, collect, exchange, analyze, and deliver valuable new insights in real time.

• This is an integrated approach to establishing remote connectivity for real-time monitoring and control. It is an action-
oriented approach with a vision of a connected industrial world.

• T&M systems have the potential to provide customers with more relevant, real-time, and higher-quality testing for
immediate needs.

Benefits of IIoT Major Trends of IIoT

• IIoT is being adopted rapidly across various • Big Data Analytics—emphasis on enabling real-
industrial verticals such as manufacturing, oil time decisions
and gas, aerospace, and energy and utilities for: • Mobility—greater accuracy and speed to
o Real-time data analysis production

o Improved operation and production efficiency • Sensors 4.0—Reduced unscheduled maintenance

o Predictive and remote maintenance • IIoT Gateways—emphasis on security, scalability,

and data reliability
o Smart industrial asset management
• Industrial Cloud—Real-time operational insights
o Remote equipment monitoring

Source: GE; Frost & Sullivan

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 Adoption Timeline

• By 2020, a number of IIoT-enabled test systems 80% of global T&M

are expected to be launched, catering to diverse Advanced vendors adopting IIoT
services and fields within the industrial ecosystem. implementation of IIoT within their test
technologies in T&M; equipment
• By 2025, the next generation of T&M systems would low cost of testing
have 'learned' from their past experiences, enabling services
advanced testing measures and outcomes.
Democratization of IIoT would lead to cheaper In- depth IIoT
Software-as-a-Service (SaaS) models, ultimately knowledge 'learned'
and applied, improving
leading to more than 80% of testing vendors
testing measures
adopting this technology within their test systems.
Increased adoption and
integration of IIoT-
Focus on reducing enabled test systems as
latency and bandwidth the world shifts toward
issues—adoption of IoT SaaS model
wireless New testing
capabilities through PC
Introduction of IIoT in
control and modularity
T&M-minor technical
enhancements, focusing
on supporting IoT
requirements

2014 2016 2018 2020 2022 2024 2026

Source: Frost & Sullivan

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 Product Innovation Matrix
Solutions with automatic testing, open scalable architecture, and accurate functionality will attract higher
investments.

Modular and Open Architecture Platform: Open, unified software, along with a flexible,
modular hardware, enabling software upgrades will give rise to a number of opportunities. There
is an ever-increasing need to adopt a platform-based approach to meet the IIoT requirements.

Modular and
Open Maximum Maximum Interoperability: Interoperability within test systems allows engineers the
Architecture Interoperability flexibility to adopt instrumentation from a number of specialized OEMs. Hence, a smarter
test equipment platform can meet the advanced requirements of the customers.
Platform

Automatic Software Testing: Test equipment that can be controlled through

remote terminals by automation software with a simple set up and analysis tools
Key
Hand-held would help ensure accuracy and repeatability. Emphasis on computer-controlled
Innovations modular solutions and rapid upgrades give rise to autonomy of equipment,
Equipment
increasing productivity.

Hand-held Equipment: Increase in mobility would encourage more hand-held/portable

devices to support IIoT applications.
Implementation Automatic
of Production Software
Test Testing Implementation of Production Test: A smarter automatic test equipment (ATE) platform’s
allows the same instrumentation in a different form factor—from characterization to
production testing—thus reducing test costs.

T&M vendors should start focusing on IIoT techniques and upping infrastructure for Big Data analytics
Key Point and mobility to facilitate seamless information flow in real-time and stay ahead of competition.
Source: Frost & Sullivan

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 Product Development and Evolution

T&M Market in IIoT: Product Development and Evolution, Global, 2016

Present Scenario Future Scenario

• Limited software-defined • Software-enabled and
instruments interoperable
• Limited modular chassis • Increase in software-defined
• Limited automated workflow instruments

• Stand-alone systems • Higher degree of modular form

factor
• Close architecture design
• Fully automated workflow
• Limited service offering
(limited service-based • Open and scalable architecture
business model) design

• Straightforward business • Focus on solutions with a

models involving OEMs and combination of instruments
system integrators • Increasing capabilities in hand-
held test equipment
• Comprehensive service-based
business models

Source: Frost & Sullivan

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 Realizing T&M in IIoT
Deployment of effective IIoT-enabled solutions and innovative technologies for testing measures will
eventually lead to proper management of test data and further improve the testing scenario.

Test and Key Outcomes IIoT

Measurement

Oscilloscopes Boosted Testing Output Rates

Mobility
Lower Operating Costs
Signal
Generators
Industrial
Enhanced Testing Quality Cloud
Network
Increased Manufacturing
Analyzers
Flexibility

Multimeter Big Data

Less Labor Requirements
Analytics
Spectrum
Analyzers Lower Inventory Capital Costs

Enhanced Employee Work Sensors 4.0

Power Meters Quality

Enhanced Workplace Health

and Safety

Source: Frost & Sullivan

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 Business Criticality of T&M in IIoT
The industrial revolution will play a fundamental role in keeping organizations ahead of global competition.

T&M Market in IIoT: Business Impact Chart, Global, 2016

Benefits

Customer Engagement Improved IIoT device

Sales and
Marketing management
After-sales Services
In-house Logistics
Types of Corporate Interactions

Quality Testing Accurate demand

Finance Functions
Business → Customer forecasting
Product Installation

In-house Logistics Factory Processes Enhanced productivity

Accounts and
Finance
Material Tracking Factory Maintenance
Product Design Improved efficiency
Business → Employee Inventory
Remote Testing
Management

Real-time information
Outbound Sales and Marketing access to vendors and
Logistics customers
Process
Engineering Market Share
Research and
Development Profit Improved testing quality
Business → Business

Low Impact Medium Impact High Impact

Source: Frost & Sullivan

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 Market Impact and Opportunity Mapping

T&M Market in IIoT: Opportunity Mapping, Global, 2016

High Higher Growth Impact

Hybrid Combination Manufacturing and Field

of Instruments (product installation and Software and
maintenance) Modular Form
Factor
Service-based
Business
Certainty for Hand-held/ Models
Growth Portable
Attractiveness Equipment

Traditional
Benchtop

Lower
Growth
Impact
Low Medium Growth Impact

Lower Impact Projected Impact on the T&M Market Higher Impact

Source: Frost & Sullivan

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 Market Impact and Opportunity Mapping (continued)

Software and Modular Form Factor: Wider acceptance of modular solutions will give rise to many opportunities. Need for software
tools to address business priorities such as reducing time to market, lowering test cost, and enabling open architecture platform are
expected to re-define test platforms to meet the challenges of today’s test applications.

Service-based Business Models: There is a need to adopt flexible business models. Enhanced service options such as cloud-based
licensing, increased penetration of cloud in real-time monitoring, and cloud-based test data management will give T&M providers a
competitive edge.

Manufacturing and Field: Requirements are increasing to incorporate wireless testing to support input-output of manufacturing and
field applications. In manufacturing and field testing, a hybrid test mode with a combination of on-field sensors and shared centralized
test systems will become the norm in the years to come.

Hybrid Combination of Instruments: A holistic test approach with a hybrid combination of instruments envisioned to attain hardware
and software interoperability is all set to revamp the T&M market for IIoT. OEMs have begun utilizing a combination of instruments.
Such instruments will be capable of achieving highly flexible testing measures that will also lead to massive cost savings. Incorporation
of IIoT in such models will enhance the testing measures providing optimum results to the clients.

Hand-held/Portable Equipment: Hand-held equipment require low capital cost and minimal maintenance requirements, when
compared to other form factors. The general purpose test equipment segment is showing potential for growth in field applications for
ease of use, direct results, and light weight. USB-based test products will gain importance due to their compact sizes, affordability, and
lightweight.

Traditional Benchtop: Technology growth is expected to pave the way for product development. As customers are quite comfortable
with the make and model of the benchtop instruments and are reluctant to change, the growth impact of IIoT is very niche.

Source: Frost & Sullivan

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 Market Drivers and Restraints

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 Market Drivers

T&M Market in IIoT: Key Market Drivers, Global, 2017–2022

Drivers 1–2 Years 3–4 Years 5–6 Years

Increase in data encourages the adoption of Big Data analytics

H H H
in T&M systems

Increase in mobility enhances test systems H H H

Lower time to market and lower cost of test drive the need
M H H
for incorporation of IIoT in the test systems

Improving efficiency through availability of real-time

M H H
information bolsters market growth

Impact Ratings: H = High, M = Medium, L = Low

Source: Frost & Sullivan

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 Drivers Explained

Increase in Data
• All industries are constantly witnessing an increase in the volume of test data, which is expected to
continue.
• The main driver for Big Data analytics in T&M is the increasing awareness of the potential of tapping
into enormous data. Historical data sets can be analyzed to identify patterns and facilitate real-time
decision making using the proficiency of analytics.
• OEMs have started to recognize the necessity of Big Data analytics as an inevitable part of the testing
process.
• Manufacturers view Big Data analytics as a strategic tool to improve efficiency.
Increase in Mobility
• Due to the increasing need for mobility (using cloud services or mobile devices) and the necessity to
access information anytime, anywhere, even the smallest devices have become smart.
• Additionally, the presence of hand-held devices, such as smartphones, has grown remarkably—almost
10 times in less than a decade.
• Distinct mobile applications for testing and the rising trend of remote sharing of information, allowing
users to access test information anywhere, aids factories in improving productivity and asset
maintenance.
Source: Frost & Sullivan

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 Drivers Explained (continued)

Lower Time to Market and Lower Cost of Test

• There is a need for smarter test systems to reduce the time to market and the cost of test for electronic
devices.

• OEMs recognize the necessity for reducing the test cost as an important part of the testing process.

• The manufacturing environment focuses not only on the cost of equipment, but also on all maintenance
costs including calibration, power, and space.

Improving Efficiency

• Industries across the globe rely on the efficiency of their manufacturing processes to create quality
products.

• Leveraging real-time data from remote locations enables these companies to view a real-time picture of
the operations despite lack of physical access.

• With continuous, real-time information available, companies can optimize equipment to eliminate
inefficiencies and identify bottlenecks, thereby making valuable and calculated decisions.

Source: Frost & Sullivan

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 Market Restraints

T&M Market in IIoT: Key Market Restraints, Global, 2017–2022

Restraints 1–2 Years 3–4 Years 5–6 Years

Requirement of huge investments for IIoT concerns many

H H H
T&M companies

The risk-averse nature of T&M vendors curbs market

H H M
opportunities

Economic uncertainty effects hinder T&M market growth H M M

Lack of knowledge about IIoT and clarity with regard to

M M M
business models deters adoption of IIoT in T&M

Impact Ratings: H = High, M = Medium, L = Low

Source: Frost & Sullivan

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 Restraints Explained

Requirement of Huge Investments for IIoT

• Heavy investment is one of the most critical factors for T&M OEMs to enhance their product offering
with IIoT.

• The market, still nascent, is yet to see substantial adoption. Despite a growing demand from end users,
there is still some hesitancy to invest in IIoT, as the implementation requires changes in the
infrastructure, hardware, and software.

• This is expected to restrain the market in the short, medium and long terms and will pose a challenge
for its adoption.

The Risk-averse Nature of T&M Vendors

• Since the advent of the IIoT era, there has been a lot of adoption of the technology across various
industry verticals. However, rather than recognizing it as a long-term investment, T&M vendors are
viewing its adoption as an additional expense.

• However, this perception is likely to change, as vendors are adopting a wait-and-see approach.

Source: Frost & Sullivan

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 Restraints Explained (continued)

Economic Uncertainty Effects

• Economic uncertainty has had an adverse impact on the global T&M market. It often increases
prudence among investors, causing a potential decline in capital investment or expansion plans due to
uncertain return on investment (ROI).

• With the need to cut costs and reduce overall capital expenditure, end users have significantly reduced
their investment in new test equipment.

• This is expected to hinder market growth during the forecast period.

Lack of Knowledge About IIoT and Clarity with Regard to Business Models

• IIoT has the potential to transform the way many companies function.

• Some T&M vendors have understood and recognized the importance of the technology. However, there
is a hesitancy to implement the technology, as vendors are unsure about the adoption of IIoT due to
lack of knowledge about service-based models.

• The impact of this restraint, however, is likely to remain moderate during the forecast period, as
companies get a better understanding of the technology and the SaaS model.
Source: Frost & Sullivan

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 Forecasts and Trends

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 Forecast Assumptions

The forecast was developed considering the following factors:

• IIoT is transforming traditional manufacturing processes with more connected devices.

• The global shift to IIoT with smarter machines will drive the need for advanced T&M equipment.

• Macro-economic factors such as gross domestic product (GDP), industrial production rates,
government regulations, and inflation rates of all countries in North America, Europe, and APAC affect
the market.

• With new evolving technologies and standards emerging, T&M in IIoT is expected to experience
sustained growth in 2017 and beyond.

• Market size and projected growth rates are based on a combination of primary interviews and
secondary research.

• Data points were also obtained from Frost & Sullivan’s internal databases and inputs from analysts
from other offices to validate market assumptions.

Source: Frost & Sullivan

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 Revenue Forecast—Total T&M Market in IIoT
Total T&M market in IIoT is expected to reach $104.8 million by 2022.

Key Takeaway: Revenue growth is fueled by the increasing shift to highly scalable and modular
testing solutions.

T&M Market in IIoT: Revenue Forecast, Global, 2014–2022

120.0 Revenue CAGR = 6.7% 9.0
8.0
100.0
7.0
Revenue ($ Million)

Growth Rate (%)

80.0 6.0
5.0
60.0
4.0
40.0 3.0
2.0
20.0
1.0
0.0 0.0
2014 2015 2016 2017 2018 2019 2020 2021 2022
Revenue 64.4 67.5 71.1 75.1 79.6 84.7 90.5 97.1 104.8
Growth Rate - 4.8 5.3 5.6 6.0 6.4 6.8 7.3 7.9
Year

Note: All figures are rounded. The base year is 2016. Source: Frost & Sullivan

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 Revenue Forecast Discussion

• The overall T&M market for IIoT recorded a revenue of $71.1 million in 2016 and is expected to grow at
a compounded annual growth rate (CAGR) of 6.7% during 2016–2022.

• There is always a need for advanced T&M techniques.

• The continuously increasing focus on automated workflow drives demand in this market.

• The future is about test solutions being offered at a lower cost, but highly sophisticated and easy to
use.

• In recent years, IIoT has enabled machines with super-human abilities directly related to predictive
maintenance, leading to huge cost savings, reduction in downtime, and, as a result, improved overall
operation efficiency. There is immense potential for smart testing systems and this will lead to huge
interest in the T&M market for IIoT in the coming decade.

• The growing need to adhere to quality assurance, along with fast and accurate testing, and comply with
regulatory standards will sustain market growth during the forecast period.

• In the long term of the forecast period, the emerging 5G network will increase opportunities for IIoT-
enabled test systems.

Source: Frost & Sullivan

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 Key Application Projection

T&M Market in IIoT: Revenue Growth, T&M Market in IIoT: Competitive

Global, 2019–2022 Landscape, Global, 2016
Revenue Growth Rate
Year ($ Million) (%)

2019 84.7 6.4 National

Instruments
2020 90.5 6.9 *Others (market
60.0 leader)
2021 97.1 7.3 40.0

2022 104.8 7.9

CAGR (2019–2022): 5.6%

Which are the Successful Companies in this

What are the Key Opportunities and Risks in this Market?
Market and Why?
Opportunities Risks • Successful
Notable Companies
• Relatively new market with a huge • T&M vendors are partnerships with IIoT
growth potential due to increasing concerned about the National Instruments participants
demand for faster and better testing. increase in security • First to enter the niche
Keysight Technologies
issues related to IIoT. market segment
• Continuous monitoring of critical
components providing opportunities • Many vendors lacking Fluke Corporation • Brand recognition
for T&M providers. sufficient knowledge • Strong customer base
Rohde and Schwarz
• Remote monitoring to increase about IIoT.
demand for T&M data acquisition Bruel & Kjaer Sound & Vibration
(DAQ).

*Others include Keysight, Rohde & Schwarz, and Fluke among others.
Source: Frost & Sullivan

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 Companies Ecosystem and Geographic Landscape

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 Competitive Environment

T&M Market in IIoT: Competitive Structure, Global, 2016

Number of Companies in the Market >10

Time-to-market, speed and ability to reduce the cost of test,

upgradeable and customized solutions, integrated testing solutions,
Competitive Factors
predictive maintenance capabilities, support for a wide range of
standards, repeatability, scalability, security, performance

Industrial/manufacturing, oil and gas, aerospace, energy, automotive,

Key End-user Groups
and healthcare

Keysight Technologies, Rohde & Schwarz, Fluke Corporation, National

Major Market Participants
Instruments, Bruel & Kjaer Sound & Vibration

Other Notable Market Participants Tektronix

Source: Frost & Sullivan

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 Top Competitors

T&M Market in IIoT: SWOT Analysis, Global, 2016

Company Strengths Weaknesses Opportunities Threats

Leadership in PXI Expansion of smart devices and

connectivity across industries Increase in competition,
High integration with No major presence in
from other market
third-party hardware and the hand-held market Increase in adoption of modular participants
software instrumentation

Renewed focus on electronic

Strong brand name and T&M market Strong competition from
No major presence in
a great market share in National Instruments and
the hand-held market Expansion of smart devices and
the T&M market other market participants
connectivity across industries

Increasing penetration of
Market leader for Customer perception Expansion of smart devices and
PXI and modular
one-box testers of products as costly connectivity across industries
instrumentation

Market leader for the

No presence in data
manufacture and service Expansion of smart devices and Strong competition from
acquisition equipment
of electronic test tools connectivity across industries other market participants
market
and software

*Key: RF—Radio Frequency; MW—Microwave

Source: Frost & Sullivan

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 Game Changers in the T&M Market—Companies to Watch

• National Instruments has established its IIoT Lab, focusing on intelligent systems and the
interconnection of Information Technology (IT) and Operational Technology (OT).
• The lab houses test beds for industrial applications such as predictive maintenance and
advanced control of manufacturing, time-synchronized industrial networking, microgrid control
and communication for renewable energy, and asset monitoring for heavy equipment.
• Major participants such as Analog Devices Inc., Cisco, Intel, and Hewlett-Packard are working
with National Instruments to sponsor the IIoT Lab. Additionally, IBM has partnered with National
Instruments for the predictive maintenance test bed.

• Fluke is expected to have a stronger foothold in this market in the near future.
• The company’s potential to increase its customer base can be accredited to its strong focus on
hand-held test instruments wirelessly connected to smartphones and the cloud.
• Fluke Accelix (Accelix) is an open cloud platform that connects maintenance software,
equipment, and critical plant systems. Accelix integrates Fluke’s portfolio of wireless tools and
condition monitoring sensors to eMaint, Fluke’s SaaS Computerized Maintenance Management
System (CMMS), and shares information with enterprise solutions of choice.
• Hence, it can gather historic performance data and establish valuable performance baselines.

Source: National Instruments; Fluke Corporation; Frost & Sullivan

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 Case Study—Jaguar-Land Rover Partnering with NI for Big Data
Analysis
This collaboration will facilitate the adoption of IIoT-based solution in the T&M market.

Challenge Solution

Building a system
Manual data National
based on DIAdem
collection and T&M Instruments
software
Lack of
Creating a workflow
standardization to
to search, inspect,
analyze 500GB of
analyze, and report
time-series data per
data 20 times faster
day

Automates uploads,
Less accurate combines metadata
results from multiple
Jaguar-Land
sources, and loads
Rover Only 10% data
more than 1,000
analyzed
data files

Jaguar-Land Rover could analyze more than 95% of its data and reduce test costs. The solution has an option
of loading more than 1,000 file formats. The solution interactively creates analytical dashboards without
Key Result programming. National Instruments not only provided T&M equipment, but also offered data management
software tools to tackle the customer’s challenge of organizing and accessing Big Data.

Source: NI; Frost & Sullivan

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 Case Study—London Underground Using NI Solution to Improve
Reliability This collaboration with NI improves London Underground’s reliability for 200 million annual
passengers.

Challenge Solution

CompactRIO hardware
National
Predicting London combined with NI
Underground track
Instruments
LabVIEW software to
circuit failures that transport data to a central
cause disruption to condition monitoring
the traveling public server in real time using a
lightweight transfer
protocol

A set of touch-screen
Increasing signaling devices displaying the
asset uptime and CompactRIO data
London through a smartphone
scheduling
Under- or tablet
appropriate
ground
maintenance

National Instruments delivered a reliable remote condition monitoring system that empowered maintainers to
Key Result proactively respond to failures before they could occur. The system is predicted to reduce lost customer
hours by 39,000 per year with an estimate of saving £350,000 per year.

Source: NI; Frost & Sullivan

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 Key Opportunities in End-user Verticals

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K1D0-30 42
 Emerging Opportunities—Automotive Industry

Key Trends Future Outlook

Autonomous Cars—Vehicle-to- Real-time production optimization through

Vehicle (V2V) and Vehicle-to- integration with simulation techniques
Everything (V2X) communication,
along with advanced driver Fully intelligent transport
assistance system (ADAS) installed systems

Intelligent and Sustainable Automatic capturing, modeling,

Mobility—safe commuting and
and optimizing of production
automated driving capabilities
systems

Connected Car—intelligent
transport systems enabled with Advanced wired and wireless
telematics and communication data transfer system
modules

Key Opportunities for T&M Smart

Communication
Testing
Combined measurements
Advanced simulation of all aspects of
testing by simulating real Continuous monitoring of
critical components using infotainment systems into
scenarios one chassis
sensors 4.0
Simulation Testing Infotainment Testing

Source: Frost & Sullivan

K1D0-30 43
 Emerging Opportunities—Aerospace Industry

Key Trends Future Outlook

Advanced networked flight controls

Air Traffic Management—
digital equipment having Innovative launch systems for
centralized control centers driving down costs

Advanced aeronautical
telecommunications network
Connectivity-embedded
for air-to-ground data transfer
Computing—reduced costs of flight information
and prediction and
management of maintenance
issues to optimize fleet
utilization Integration of unmanned systems

Key Opportunities for T&M

Connected Test
Systems
Modern spectrum monitoring
Continuous monitoring of to capture, process, and
critical components Analysis of multiple product record wide signal bandwidths
types with in-depth data at a broad range of
analysis frequencies
Smart Sensors-
enabled Test Modern and Scalable
Systems Test Systems
Source: NI; Frost & Sullivan

K1D0-30 44
 Emerging Opportunities—Healthcare Industry

Key Trends Future Outlook

Connected Healthcare— Error-free care delivery

accurate diagnosis and early
detection of health issues
Anytime/anywhere care
Prevention and Wellness—
industry-wide shift toward early
diagnosis and prevention
Predictive health disorder/
predictive medicine
Personalized Medicine—
diagnostic techniques such as
radiology allowing investigation
deep into the body Automated healthcare

Key Opportunities for T&M

Product Variation

Portable testing of Minimized scope for

Robust test modules,
healthcare devices defects and achieving
automated wireless
‘right at first time’
testing, and analysis of
Wireless Test healthcare data
Systems Investment Cost

Source: GE; Frost & Sullivan

K1D0-30 45
 Emerging Opportunities—Smart Energy Industry

Key Trends Future Outlook

Reduced energy consumption

Transition Toward More
Renewable Energy—focus on Advanced energy data
diversified supplies management

Dynamic, smart, and

Efficient Energy
automated energy systems
Management Platform—
simple, ubiquitous connectivity
to all energy assets Complete integration
with legacy systems

Key Opportunities for T&M

Service-based
Test Models
Advanced testing of smart Cloud-based services for
grid and energy meters remote monitoring and
predictive maintenance
Connected Test for smart grid network
Systems
Improved end-users
assets and material
visibility across the
value chain
RFID-based Test
Systems/Sensors

Source: Frost & Sullivan

K1D0-30 46
 Mega Trends and Industry Convergence Implications

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K1D0-30 47
 Mega Trends Driving the Future of T&M
Transformative Mega Trends define the future of T&M, with convergence expected to have the maximum
impact.

T&M Market in IIoT: Mega Trends, Global, 2016

Everything Smart Connectivity and Convergence

Smart cars, smart cities, smart Convergence of technologies, such
energy, and smart factories will as 5G and IIoT, and convergence of
pave the way for new test equipment, will provide a
opportunities for T&M. plethora of opportunities for
customers on a single platform.
ASSIGN
Key
Trends

ALIGN

New Business Models

Innovation to Zero Defect
Innovative licensing models
Smart manufacturing, Industry
such as cloud-based licensing
4.0, and smart factories will drive
and SaaS-based model will be
zero downtime and zero defects.
the norm.

Source: Frost & Sullivan

K1D0-30 48
 Mega Trends Driving the Future of T&M (continued)

• Short product lifecycles and regular technology updates make it hard for T&M
Connectivity vendors to satisfy end-user requirements.
and
Convergence • There is a need for convergence of T&M instruments with technological trends to
make testing equipment more versatile and flexible.

• With rapid changes in technology, end users prefer a solution having software
upgrades with their changing test needs. New
Business
• Transformation of business models to cloud-based, static licenses, and software Models
upgrades will become the norm in the next 5–8 years.

• There will be more focus on achieving zero defects in products and therefore the
need for smarter test systems. Thus, no waste or rework will be caused, thereby
Innovation avoiding revenue loss.
to Zero
• There will be heavy focus on the R&D stage of the equipment to ensure zero
Defect defects. Continuous monitoring of equipment and IIoT technology will be the
most important aspects to achieving zero defects.

• The demand for higher quality and faster testing is pushing T&M vendors to adopt
new system architectures with self-adaptive modular structures.
Everything
• Smart cities, smart machines, smart cars—everything smart will drive new Smart
opportunities for T&M.

Source: Frost & Sullivan

K1D0-30 49
 New Business Models in T&M—Key Highlights

T&M Market in IIoT: New Business Models, Global, 2016

Rent or Share Remote Sharing and Software Upgrades Software-as-a-

T&M vendors could re-use
hardware in a rental model
with the advancements in
technology and test needs.
Predictive Analytics
T&M vendors would be able
to capitalize on the massive
influx of data with predictive
analytics.
Software upgrades will
provide features for
hardware to keep up with
changing test needs.
Service
Static licenses will be
replaced by cloud-based
licenses.

• Apprehension in Adoption of New Technology and Uncertainties Related to IIoT: The leap toward mass adoption of IIoT
in any application within the T&M market seems restrained. However, this is changing at a constant pace. The principal
challenges that end users face is the apprehension with regard to cyber threats, value, and ROI from the integration of
technology. With the ever-changing technology environment, this acts as a crucial restraint that can restrict the T&M market
from implementing IIoT, although manufacturers have started paying attention to this challenge in the last few years.
• An Appropriate Business Model: Change in the business model with considerable evident benefits such as lower test cost,
easily upgradeable test solutions, and remote testing might convince the T&M market as a whole to accept IIoT, thereby
creating larger opportunities and applications.

= Degree of Impact
Source: Frost & Sullivan

K1D0-30 50
 Growth Opportunities and Companies to Action

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K1D0-30 51
 Growth Opportunity 1—Solution/Service Enhancement

Applicable Energy and

Oil and Gas Aerospace Automotive
Segments Utilities

Applicable
North America Europe Asia-Pacific
Regions
Vision Transformation

Mega Trends Impact Context and Opportunity Call to Action

Disruptive Applications • IIoT deals with increasing
operational and production
Business Models efficiency and producing results in
real time.
Offerings
• It will provide immense
New Capabilities
opportunities for key participants
such as National Instruments and
Value-add Services
Keysight.
Vertical Integration
• New opportunities will be available
Geographic Expansion for T&M vendors who understand
the changing technological trends
Partnerships and customers’ shift to the
adoption of new technologies.
Investment/M&A
• Companies must be able to offer
solutions that optimize end-user
testing processes.
• They must partner with companies
to create innovative products that
enable customers to increase their
productivity and profit margins.
• Test vendors must be able to offer
solutions that reduce maintenance
costs and enable continuous usage
even in harsh environments, while
optimizing the product’s results.

Source: Frost & Sullivan

K1D0-30 52
 Growth Opportunity 2—Improving Production Efficiency

Applicable Energy and

Oil and Gas Aerospace Automotive
Segments Utilities

Applicable
North America Europe Asia-Pacific
Regions
Vision Transformation

Mega Trends Impact Context and Opportunity Call to Action

Disruptive Applications • IIoT improves production efficiency • Measurement and test systems
by inhibiting unplanned should focus more on the critical
Business Models maintenance and unscheduled data for analysis.
downtime. • Emphasis should be on providing
Offerings
• Companies are shifting their focus an increasing amount of
New Capabilities customization and flexibility for
from preventive maintenance to
predictive maintenance. Data IIoT-enabled test systems.
Value-add Services
analytics plays a vital role in
Vertical Integration achieving predictive maintenance.

Geographic Expansion • Increased operational efficiency,

plant safety, and reduced overall
Partnerships testing costs impact the growth of
the market.
Investment/M&A

Source: Frost & Sullivan

K1D0-30 53
 Growth Opportunity 3—Advancements in Technology

Applicable Energy and

Oil and Gas Aerospace Automotive
Segments Utilities

Applicable
North America Europe Asia-Pacific
Regions
Vision Transformation

Mega Trends Impact Context and Opportunity Call to Action

Disruptive Applications • There is strong demand for the • IIoT is viewed as an additional
latest technology from customers expense rather than a long-term
Business Models to increase their productivity. investment. There is a need to
Customers are looking to do more change this perception.
Offerings
with the data collected from their • There is a need to build awareness
New Capabilities assets. There is huge scope of about IIoT and educate test
opportunity here. vendors on the benefits of IIoT.
Value-add Services
• Convergence of technologies, such
Vertical Integration as cloud computing and wireless
communications, is expected to
Geographic Expansion
enhance the growth of this market.
Partnerships

Investment/M&A

Source: Frost & Sullivan

K1D0-30 54
 Strategic Imperatives for Success and Growth

T&M Market in IIoT: Strategic Imperatives, Global, 2016

The market for T&M in IIoT is still at a nascent stage. Frost & Sullivan foresees great
opportunities for this market. There is a need to integrate test capabilities and anticipate
the changing system requirements.

T&M vendors must be willing to accept the transformational changes brought about by
IIoT to offer better testing methods for customers.

Critical
Success
Factors Faster and more accurate testing methods are needed to reduce the cost of test. T&M
vendors can provide functions with different levels of automation to facilitate pre-defined
measurement parameters, depending on the type of testing.

Data analytics analyzes historic and current data, predicting faults to give greater
accuracy. This provides a huge potential for clients to save billions of dollars and enables
T&M vendors to create opportunities in the changing competitive landscape.

Source: Frost & Sullivan

K1D0-30 55
 Key Strategies For Success

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K1D0-30 56
 Strategies for Building IIoT-centric Business for T&M

Potential Customers: With advancement in technology, there is

a rising number of potential customer segments that are in need
of advanced solutions. However, very few solutions are being
designed to meet their specific needs.

Solution Flexibility: As competition continues in the market,

solutions that have the flexibility and ability to adapt to the
advancements in technology and various use cases can witness
a stronger adoption in the market.

Simplicity: Many available IIoT solutions in other industries

suffer from over-engineering. An overwhelming number of
features and advanced functionalities lead to user confusion and
can delay or restrict usage.

Tangible Impact: Vendors, in order to witness the highest

rates of adoption, should provide innovative solutions to
ensure that ROI is short to recognize and translate to savings.

Identify the Right Partner: The critical battle for market

participants is to identify and establish partnerships with the right
stakeholders.

Source: Frost & Sullivan

K1D0-30 57
 The Last word

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K1D0-30 58
 T&M Market for IIoT—Challenges and Solutions

Current Future
More test systems with complete test design and
Limited test systems supporting IIoT technology solution supporting complex digital, analog, and RF
system issues

Advanced test systems fully integrated with current

High maintenance; lack of updates and traditional equipment; availability of regular
updates, requiring low maintenance

Fully automated end-to-end testing and analysis

Lack of adaptable and scalable test equipment and highly adaptable and scalable test systems

High adoption of modular approach with higher

Lack of knowledge about IIoT; price pressure on testing speed, reducing overall test costs;
T&M vendors integrated device communication and automated
analysis reducing test costs

Issues with development time for electronic Smarter ATE platform having full flexibility across all
devices and time-to-market form factors;

Source: Frost & Sullivan

K1D0-30 59
 The Last Word

IIoT will transform the T&M market, opening up a new era of economic growth and
1 competitiveness. For progressive test managers, IIoT is the opportunity to realize
rapid improvement, higher throughput, and lower test costs.

The market is expected to grow steadily. Big Data and predictive analytics will make
2 test systems intelligent, driving a competitive advantage.

Scalability beyond traditional product offerings and competing beyond just offering
hard assets (test systems) will be important, as more T&M providers will begin to
3 converge products and services. Consequently, the T&M market should be fully
prepared for smooth integration into an IIoT infrastructure.

Source: Frost & Sullivan

K1D0-30 60
 Legal Disclaimer

Frost & Sullivan is not responsible for any incorrect information supplied to us by
manufacturers or users. Quantitative market information is based primarily on interviews and
therefore is subject to fluctuation. Frost & Sullivan research services are limited publications
containing valuable market information provided to a select group of customers. Our
customers acknowledge, when ordering or downloading, that Frost & Sullivan research
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For information regarding permission, write to:
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© 2017 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan.
No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.

K1D0-30 61
 The Frost & Sullivan Story
The Journey to Visionary Innovation

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 The Frost & Sullivan Story

K1D0-30 63
 Value Proposition—Future of Your Company & Career
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 Industry Convergence
Comprehensive Industry Coverage Sparks Innovation Opportunities

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 360º Research Perspective
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