IMS Research Analyst Blog

Alex Hong, Market Research Analyst, Asia Pacific Automation 

A major component of any modern industrial automation system is the controller. No automation system can get rid of a controller, or it cannot be called an automation system. Engineers program the controllers which then relay instructions to the actuator, and this governs the accuracy and precision of overall system.

Looking at the market data, PLC’s (programmable logic controller) represent the most important controller for factory automation, whilst DCS (distributed control system) is the most important one for process automation. Demand from within the respective automation fields in 2011, resulted in World market revenues for PLC hardware and DCS hardware reaching approximately $8bn and $5bn respectively during the year. Two very sizeable markets.

While these components are, for the large part, independent of each other, there is a product that is common to both, I/O modules. The scope and flexibility of an entire automation system can be greatly enhanced with the addition of I/O modules. These include general I/O modules that can be used with both PLCs and DCS controls, or dedicated I/Os modules that are designed specifically for one type of controller.

Looking at the market for these I/O modules, the global recession resulted in PLC and DCS hardware revenues decreasing by 20% from 2008 to 2009, and this fed through directly to both PLC and DCS I/O module demand which decreased to the same extent. However, since 2010, the I/O modules markets had shown a strong recovery, at a surprisingly rapid rate. Market revenues increased by over 20% in 2010 alone and this strong growth continued into 2011 as revenues increased by a further 12.3%. At this point total I/O module market revenues exceeded those of 2008 by around 8.5% (or approximately $650 million).

This is strong growth, and largely a result of the recovery of machine builder markets within the leading economic countries, particularly Germany and China. Within these regions, machine tools, food and packaging machinery represented the leading application markets for PLC I/O products. However it was not just machine builder demand that exhibited such high growth. End user markets showed similarly high growth rates, and factory projects within automotive and power related applications also generated large demand for PLC I/O modules, contributing heavily to the growth of this market.

Conversely, recovery of the DCS I/O market was somewhat slower. Unlike PLCs, DCS is more heavily used in larger projects, such as power generation, or oil & gas production. These projects typically involve high levels of investment and involve longer project lifecycles. As a result, the impact of the recession was effectively delayed, as investment capital having been secured years previously. When 2009 came, the DCS market was not as heavily impacted, as budgets had already been planned and secured. But, when 2010 came, this market then began to experience decline as investments started being cut off or delayed. As a result, the market for DCS products experienced the effects of the downturn in 2010 instead of 2009. Since then, the DCS I/O modules’ market has exhibited a growth rate much lower than that of PLC I/O modules.

So what have we learned? It is apparent that the outlook for the I/O modules market is directly linked to the health of the market for controller hardware. Current market data shows that that factory automation sector is recovering much faster than process automation for I/O modules. Looking forward, PLC demand will be much higher than that of DCS, and this is expected to remain the case for next few years. So vendors who are providing I/O modules, there is still a lot of opportunities to grow the business in the PLC sector, whilst DCS I/O suppliers will face a harder time.  

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