The test equipment market is expected to experience double-digit growth over the next five years due to a number of factors, such as the roll out of 3G and 4G networks, soaring data usage, rising demand for smartphones, and the launch of new handset manufacturing plants in Asia Pacific.
Frost & Sullivan predicts that the Southeast Asia and Australia/New Zealand T&M market will expand almost 20% annually until 2017.
The wireless test equipment market in the region reached $312.8 million in 2011. The market witnessed a slowdown across most of the segments during the economic crisis in 2008 and 2009. However, the market recovered in 2010 due to the expansion of the 3G business, the high growth of mobile subscribers and imminent LTE networks deployments.
Looking at the market by segment, mobile device testing equipment accounted for 33% of total spending, base stations 30%, portable drive tests 18%, mobile backhaul 12% and wireless core 7%.
Wireless core equipment will be the fastest growth area, with a 23.8% CAGR, due to the industry's shift to Ethernet and IP networks. The mobile backhaul segment is forecast to increase at a CAGR of 23.6% over the next five years. Mobile device testing is expanding at a CAGR of 23% while the 2nd largest segment, base station testing, is expected to grow at 16% per year until 2017.
Drive test equipment, which can conduct backward compatibility and services all major 2G and 3G wireless networking technologies, will still be in high demand because 2G networks will exist along with 3G and LTE. But it will lag behind the others with a 13% CAGR.
The increasing complexity of testing the network is creating new challenges for solution providers. Specifically, MIMO technology raises the complexity of networks when the requirements shift from 2x2 MIMO to 4x4 MIMO or 8x8 MIMO. And the trend toward small and low-cost base stations and femtocells creates the need for compatibility testing.
This requires testing equipment vendors to invest in developing integrated solutions that can solve complex issues and forecast unforeseeable causes.
APAC service providers account for about 60% of the total wireless test equipment market.
In the last few years Nokia and Samsung have opened manufacturing plants in Vietnam that produce mobiles phones for sale in the APAC region. This is expected to be one of the key drivers for growth in this region.
The wireless test equipment market in SEA and ANZ has not seen any significant presence of local brands, as the sector is dominated by major global companies. The scarcity of high-end T&M engineers in the regional is also a major barrier to local participation.
The top market participants in this region are Anritsu, JDSU, Spirent, Rohde & Schwarz and Ixia.
Tim Chuah is principal consultant for Frost & Sullivan's industrial division, Asia Pacific. For more information contact djeremiah@frost.com or Jessie.loh@frost.com