Global Three-Phase UPS Installed Base Forecast to Reach 1.4 Million Units by 2023: Omdia
- Single-phase UPS services accounted for $312.1 million of market revenue in 2018
- When combined, the UPS hardware and service markets are forecast to surpass $13.7 billion by 2023
The global market for three-phase uninterruptible power supplies (UPS) is expected to rise to 1.4 million units in 2023, up from 1.2 million in 2019, driving global revenue for associated service and support to more than $3.7 billion. Worldwide UPS service and support market revenue, as per a report by Omdia, will rise at CAGR of 2.9 per cent through 2023, up from $3.2 billion in 2018.
“Growth slowed in 2019 as a result of limited investment in UPS services during warranty periods from UPS units sold in 2018. Moreover, as enterprises transitioned workloads to cloud-and-colocation-provider-operated data centers, these data-center operators are changing their UPS service spending habits,” read Omdia’s report.
This expansion comes despite a year of slow growth in 2019, when the UPS service and support market—including single-phase and three-phase service types—rose by only 0.9 per cent annually, according to the Omdia UPS Service & Support Market Tracker. This compares to annual growth of 4.2 per cent in 2018.
New contracts less comprehensive than what enterprises commonly adopt
With an increasingly large installed base of UPS deployments, cloud and colocation data center service providers are paying particular attention to their operating expenditures (OPEX) that are servicing that installed base. This is resulting in service contracts with UPS service vendors that are less comprehensive than what enterprises commonly adopt. Instead of multiple preventative maintenance visits annually, cloud and colocation data center operators are opting for the bare minimum, usually once per year.
“In some instances, they are even forgoing contracted preventative maintenance visits altogether and are instead paying for them on a one-off basis. In certain cases, they may forgo a service contract on a UPS unit entirely while it is lightly loaded,” read Omdia’s report.
Cloud and colocation data center operators’ biggest motivation for adopting service contracts is securing an emergency response time totaling four hours or less. This has become a critical must-have, which is straining OEM UPS vendors’ service engineers because they need to be strategically located. Furthermore, the reduced number of services these end-users seek is exerting pricing pressure on UPS service contracts. Nonetheless, the sheer unit growth in UPS deployments from cloud and colocation data center service providers is generating revenue growth.
“Cloud and colocation data center service providers are flexing their muscles to get the UPS service they want—at the price they want,” said Lucas Beran, principal analyst, cloud and data center research practice at Omdia.
He added, “These efforts are working because UPS service vendors are eager to maintain and grow these key accounts as cloud and colocation operators continue to be significant growth drivers in the UPS service and hardware markets.”
UPS service and support market set to grow 2.9 per cent in 2020
Through 2023, Omdia expects continued revenue growth in the range of three to four per cent, even in a forecasted economic recessionary period in 2020 due to the coronavirus pandemic. With many enterprises delaying CAPEX-related projects, existing UPS life will need to be prolonged. This will materialise in the form of additional OPEX investment in UPS services, as seen in prior recessionary periods.
Additionally, a long-term growth driver for UPS services is the deployment of UPS systems supporting edge computing. These edge-computing deployments will primarily be in remote, lights-out locations. Without regular physical access to these locations, operators and owners of these edge-computing sites will have to rely on resilient architectures, remote monitoring, and management tools to ensure uptime. For UPS service vendors, this means regular maintenance checks, predominantly in the form of service contracts, and other services related to remote monitoring and predictive failures.