The global market for building automation equipment will be one that is increasingly driven by the use of maintenance and remote services, as system design and installation become less influential factors in spurring industry growth, new research from Omdia shows.
With close to 35% share of revenue, maintenance and remote services formed the largest sector of the building automation equipment market last year. When coupled with revenue associated with building automation equipment, the combined equipment and services sector made up more than 61% of total industry earnings last year.
The remaining 39% went to the system installation sector, comprising the segments of installation as well as analysis and design.
Overall, the building automation equipment market in 2019 was valued at $31.6bn, up approximately 4% from $30.5bn a year earlier, as shown in the chart below.
Omdia had initially forecast the industry to grow another 4% this year, but the appearance of COVID-19 has completely upended markets around the world, bringing both consumer purchasing and industrial activity to a standstill. The impact of the coronavirus is likely to be severe, and market prospects will necessitate recalibration and adjustment as more data becomes available.
These findings are contained in Building Automation Equipment Report – 2020
, an annual report on the market on systems governing interior climate control in buildings.
System design and installation take a back seat
In the world’s developed markets including the US and Western Europe, the pre-installation analysis, design, and engineering stage of building automation projects is becoming a smaller component, as the market for new construction projects has declined and as the need to individually design customized system architectures has dwindled.
Instead, contractors and system integrators are increasingly submitting standardized designs for new building projects, especially in the small and mid-sized sector. They are also adopting a more proactive role in preserving building automation systems, using predictive analytics to maintain and repair equipment rather than resorting to broad and indiscriminate replacement of entire systems.
The growing prominence of wireless equipment will also serve to reduce the once-preeminent role enjoyed by the installation segment. As the cost of wireless equipment becomes more competitive with wired counterparts, many building owners will take advantage of the lower labor costs associated with installing wireless equipment. This represents a potential threat to systems integrators, as a proper installation of wireless equipment requires much less time and expertise.
Maintenance services rise to the fore
Meanwhile, compared to the equipment market, the market for maintenance projects and contracts is much more competitive and includes hundreds of internal solutions providers, systems integrators, and contractors. This part of the industry is gradually evolving from a reactive, task-based approach, in which individual devices are checked physically; to a predictive services approach, where data is analyzed to identify future issues and to proactively engage end-users.
The market for maintenance and services is strongest in the Americas, as owners of enterprise-level buildings in North America tend to invest in the most comprehensive and expensive maintenance contracts. Globally, the market for building automation services is expected to grow at over a 5% CAGR over the next five years, while the market for installation and design is expected to collectively grow at only 3%.
Products, trends, and markets
Of the six building automation product types utilized today, controllers dominate, with their revenue this year projected to reach $3.3 billion, or 55% of the total market. Purpose-built devices that regulate and manage the climate of a building, controllers command a market more than double that of sensors, the second-largest building automation product. Other equipment types that Omdia captures in its report include actuators, gateways, HMI screens, and building automation software.
The emergence of building automation software as an important component of building automation systems has been one of the more distinctive trends in the market over the last two years. Vendors have begun to transition their product offerings to emphasize their software as the average selling price of hardware has gradually declined over the past decade.
The rising use of building automation software is related to the proliferation of digital twins, a technology that creates an accurate digital reconstruction of the physical systems, devices, and architecture in a building. Although implementation costs are high. Digital twin technology will dramatically impact vendor approaches to building automation services, with licensed software enabling facility managers to obtain greater visibility into a building’s performance and to address issues with immediacy.
The building automation equipment market remains dominated by four corporations: North Carolina’s Honeywell, Siemens from Germany, Irish-headquartered Johnson Controls, and French-based Schneider Electric. Collectively, these four companies comprise nearly 50% of the total global market for building automation equipment. Each of these four companies also holds more than twice the market share of the company in fifth place, Ingersoll Rand of Ireland.
The Building Automation Equipment Report – 2020 is offered under Omdia’s Industrial research pillar. Omdia subscribers also have full access to our Building, Home & City Technologies research service and its four research categories, namely Lighting, Smart Building & Building Automation, Smart Cities, and Smart Home & Appliances.