Service Contracts Assure Steady Revenue Flows for Southeast Asian UPS Service Providers
September 19, 2012
The existence of a US$305.3 million market for the Uninterruptible Power Supply, UPS, service in Southeast Asia ensures a steady stream of revenue for service providers, as UPS products are usually sold with extendable annual service contracts. These contracts keep the existing client base active and guarantee a continuous inflow of revenue.
New analysis from Frost & Sullivan of the Southeast Asian UPS Services Market found market-earned revenues of US$82.3 million in 2011. Frost & Sullivan estimates this to reach US$117.6 million in 2016. Between the commercial and industrial UPS services markets, the former accounted for the higher revenue share for 2011.
Despite the security of an assured inflow, service providers have to stay on their toes due to economic volatility, increasing market competition, and intensified price wars. Manufacturers with the capability to provide cheaper services can recoup their investments through economies of scale. But tier three manufacturers with niche service offerings have to fall back on product quality to stand apart.
Suchitra Sriram, program manager of Frost & Sullivan says: “Apart from original equipment manufacturers, several third party service providers are entering the market with competitive pricing. Nevertheless, the gradual rise in the spending capacity of customers have eased price pressures and enhanced the demand from large-sized banking and IT sectors.”
Spending on UPS services has improved as consumers become aware that backup power is a critical element of major infrastructure development. There has also been a surge in the demand for superior power quality and efficiency of systems. These have boosted the sale of UPS products and services in Southeast Asia.
“Almost all infrastructure designs factor in the need for back-up power. At the very least, they incorporate the most vital back-up power systems that can enable an orderly shutdown of all essential systems,” noted Sriram. “Furthermore, the overall increase in production capabilities, especially in high-technology applications, has spawned significant demand for UPS systems and services—keeping the market vibrant.”
Copyright © 2012 Singapore Institute of Management