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Test and Measurement Industry: IoT Provides Significant Opportunity to Anritsu for Customer Base Expansion


Apr 27, 2016

9af2b03b8d51b85f94a7bb429b927de9.jpgAnritsu is a significant participant in the global test and measurement market. Heavily focused on the wireless communications industry, the company witnessed stupendous growth in 2012. However, the past couple of years have been a challenge for the company. In 2015, the company reached about $600 million in test and measurement (T&M) revenue, which is the largest business area for the company typically representing between 70% and 75% of its total revenue in any given year.

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The consolidation of companies in the semiconductor and mobile device industries translated into a serious headwind for Anritsu in 2015. Although it experienced increased demand for protocol conformance testing, carrier acceptance testing, and testing of devices for the transmission and reception of signals, this demand was not sufficient to compensate for the lower demand experienced for wireless manufacturing test.

From a lifecycle perspective, Anritsu benefits from a strong position in manufacturing applications, especially in the one-box testers market, which is the largest product category in the electronic test and measurement equipment market for manufacturing applications. The higher percent of revenue coming from Asia-Pacific region is testament to that fact. Asia, excluding Japan, generates about one-third of the total company revenue. This market has been severely affected by the slowdown in the growth of the smartphone manufacturing market. The growth of smartphone unit shipments reduced sharply in 2015 to mid-teens and is expected to reduce further over the next 5 to 7 years. This translates into a huge challenge for growth for Anritsu with its mobile business representing about half of its T&M segment revenue.

Anritsu is also known for its strong position in deployment applications with a developed portfolio of portable and handheld wireless test equipment, and benefits from a high market share in this space. This business line called Network Infrastructure represents about 30% of its overall T&M revenue. However, buildout of LTE networks in North America has slowed down affecting the company’s business in the past year. In addition, the company has been facing stronger competition on this front notably from Keysight and Rohde & Schwarz. From a T&M market perspective, field applications represent a smaller percent of the total market revenue compared to other applications with instruments that typically costs less than those used in laboratories and production plants. As a result, there is a lot more competition from a variety of companies, as the technology barrier to entry is lower in this part of the T&M market.

In research and development (R&D), Anritsu showcases significant product innovation capabilities but is mostly a tier-2 player. This part of the T&M market is largely dominated by Keysight and Rohde & Schwarz. However, the company has a relatively strong offering in the signal generator and spectrum analyzer market segments and distinguishes itself in the bit error rate tester (BERT) and network analyzer market segments, which are all core instruments for electronic design engineers.

With unfolding of the Internet of Things (IoT), there is an opportunity for Anritsu to expand its reach beyond wireless communications customers and use its wireless testing capabilities to address the needs of other industries. The increasing number of devices incorporating wireless technology offers Anritsu significant potential for customer base expansion. Even though the company’s products do not have as high performance on key specifications like frequency and bandwidth as its top competitors, they do cover current market needs as well as those for the foreseeable future. In the longer term, 5G and other technologies will change this and also represent a significant opportunity for the company in wireless communications and critical applications like autonomous driving. Anritsu took a leading role in the wireless industry when it moved to 4G and has potential to take on a similar role in upcoming transition to 5G. The 5G T&M market is emerging and will develop significantly over the next 3 to 5 years and could boost Anritsu’s R&D business. Other trends in the market are also opening up opportunities the Anritsu leadership team could target such as those stemming from new business models.

Information on Anritsu’s current markets and transformation trends in the T&M industry are available from Frost & Sullivan’s Test & Measurement program that features studies such as the recently published “Electronic Test and Measurement Market in Research and Development—New Technologies Bring Drastic Change” (NF6C-30) and “2025 Global Vision for Test and Measurement—The Impact of Evolving Business Models” (K098-30). For questions or feedback on this article or more information on Frost & Sullivan services, please contact the author at jcavazos@frost.com.



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