Adrian has been conducting research on, and managing teams of analysts covering, the technology industry for over 20 years. He has pioneered many data analysis techniques and methods that are used widely by analysts today, as well as having created frameworks for measuring numerous technology markets from industrial automation products to semiconductors.
The world market for low voltage (LV) AC motor drives reached a value of nearly $11bn in 2017, following a strong growth uptick since 2016. In the aftermath of consecutive years of contraction, with 2015 being a notable disappointment, a return to growth was surely welcome for the companies active in this market. So, who are the major suppliers of motor drives, and which ones generated the most revenues last year?
Below are our recently finalized market shares for the leading providers of LV AC motor drives in 2017, following more than 6 months of primary research with vendors. The figures only include AC drives used to control standard wound or high efficiency permanent magnet AC motors, and do not include software or service revenues.
Three Vendors Enjoy Double Digit Market Shares
Danfoss’s acquisition of Finnish drive manufacturer Vacon in 2014 elevated it into lofty market share territory. Since then, it has consolidated its position as the number two AC drive vendor in the world, closely positioned behind market leader ABB, and slightly ahead of Siemens. These three companies accounted for nearly 40% of revenues in 2017; however, one of these companies is quite different from the other two.
Siemens and ABB’s success in the drives market is built from similar strengths in the AC motor market: their leadership positions in the controls segment (ABB for DCS, Siemens for PLC), and their capability to provide comprehensive plant-wide infrastructure. They can be characterized as companies that can provide solutions across the board but thrive on the largest of opportunities. Indeed, these two companies dominate the systems drive segment, and have very healthy medium voltage drives businesses too (not reflected in these results).
Danfoss, in contrast, does not sell standard AC motors, instead preferring to let clients choose which motor vendor to pair with its drives. Additionally, the company does not sell a suite of products that provide a complete solution to all automation needs. Instead, its strength comes from its success at targeting energy saving applications, where it has a rich history. The company is renown for its building controls, HVAC systems, sensors, valves, and thermostats. Building energy-saving drives is an obvious extension of this capability, and the company has excelled at this. This success has led to Danfoss performing particularly well in segments where energy-saving is the primary focus of drive usage, notably HVAC, refrigeration, food & beverage, and with the help of the Vacon acquisition, in the marine industry.
China is Conquering and Dividing
While the AC drive market has clearly matured, and consolidation continues to take place, the growth of China as the largest market is serving to fragment and dilute market shares of established vendors and will continue to do so.
There are two factors at work here. First, and most importantly, is the presence of numerous domestic Chinese vendors that are gaining significant share in the region and beyond. Inovance and INVT are the stand-out vendors in this respect. Both appearing in the list of top 20 drives vendors, Inovance has carved out a healthy market share largely from domestic endeavors. Behind these two is a long tail of companies who collectively account for around a fifth of the China market and succeed at serving local machine builders in sectors such as packaging, metal products, machine tools, and printing.
The second factor, enabled by the emergence of these vendors, is the intense price pressure on drives. Our interviews with vendors revealed that Chinese drives can be purchased for as low as half the price of equivalent leading-brands. Competing primarily on cost, Chinese vendors have helped to drive down prices in general and win significant business at the lower-end of the market. As a result, many of the more established vendors are offering, or developing, lower-cost, low feature-set drives targeted at the Chinese market to help maintain market share in the region.
About the Low Voltage AC Motor Drive Study
Interact Analysis will shortly be publishing a new report examining the low voltage AC drive market. The report’s primary author, Adrian Lloyd, is a veteran analyst on this industry. Having published multiple studies on this topic over the last two and a half decades, Adrian is responsible for how the market is most commonly segmented to this day. The new study challenges the current status-quo in terms of how to segment and analyze the motor drive market. It was derived from extensive vendor research over a period of six months. If you’d like to learn more about the report or have any questions, please contact us at email@example.com.
“Low Voltage AC Motor Drives – 2018”, a highly-detailed report providing analysis of the market for low voltage AC motor drives. Click here