While most metrology markets are being extremely challenged by the economic uncertainty, the global articulated arm machines market is positioned reasonably well and is expected to grow around 10 percent in 2012.
After a dip in growth in 2008 caused mainly by economic uncertainty in the world economy and elsewhere, the articulated arm machines market generated $201 million in revenues during 2011. The global articulated arm machines market is projected to grow and reach revenues of $312 million in 2016. Overall, the market is projected to attain a compound annual growth rate (CAGR) of 9.2 percent over the forecasted period.
High Demand for Mid-Range Articulated ArmsAs technology improves and the accuracy increases, end-users become accustomed to purchasing products with greater capabilities across a range of technologies. Prices have steadily fallen over the last few years, and concurrently, end-users have had greater needs in creating efficiencies and reducing unnecessary expenditures. This has increased pressure on portable coordinate measuring machines (PCMM) vendors to make products with high functionality available at lower prices.
The low-end segment of the articulated arm machines, which holds around 20% of the total market, has been commoditized over the years. Lack of technology innovation, low product differentiation and marginal revenue growth across most end-user applications are factors that have contributed in making the low-end segment a commodity-based market. The technical differentiation among the products of various suppliers is minimal; thus, customers are making their purchasing decision based on price. This poses a significant challenge for Tier 1 participants that, despite investing considerably in factors beyond price-such as aftermarket service, delivery and quality, are not able to compete effectively within this segment. Major demand from machine shops is observed in the medium segment and the overall mid-range segment holds around 60 percent of arms sales. Research indicates there is increasing demand for high-end product especially for the automotive and aerospace industries and these segments hold around 20 percent of the overall sales.
Research & Development (R&D) FocusAlthough the technologies related to articulated arm machines are well established, efforts are still being made for product enhancements and product introductions. Research indicates that R&D efforts are aligned towards providing advanced sensor technology, seamless integration to the accessories and providing enhanced connectivity through networking. Most suppliers maintain ongoing programs of research and development to remain competitive. The advancements in probe technology, software, accuracy and integration methods have helped the PCMM vendors to uniquely position themselves in their product offering. The end-user segments (including automotive, aerospace, military and defence) are in the forefront for demanding these advancements.
Scanners and Software Drive Articulated Arm SalesPortable arms with laser scanners are presently witnessing a growing awareness in terms of diverse products and their capabilities amongst its end-users. The market with scanners has grown quite rapidly during the past one to two years and is a primary reason for the increasing scanner capabilities. Research indicates that the sale of portable arms with scanners was around 25 percent in 2011 and is forecasted to reach around 50 percent by 2013.
Software also plays an integral role in the PCMM market penetration. It remains key to interpreting and analyzing the results obtained from the scanning technology. Original equipment manufacturer (OEM) software, along with competitive independent vendor software, is integrated to the PCMM based on the end-user requirements.
Optical Portable CMMsOptical CMMs increase the overall portable CMM revenues; however they are a growing threat to traditional articulated arm machines. With the increasing ease of use, the portability, freedom of movement and low maintenance; they are expected to replace articulated arm machines in a growing number of applications. With the presence of alternative technologies, there always exists a propensity on the part of the users to shift to such substitutes, when shortcomings in the product of interest are encountered. As advanced alternate technologies become more cost-effective, their adoption is promising.
“3D optical measurement technologies are driving the future of metrology, and not just because of 3D scanning. This is even true for portable CMMs. We can already see this trend in the market. The new generation of 3D Optical PCMM provides solutions for true shop-floor environments (with vibration and non-rigid measurement set-ups). It will provide huge benefits to manufacturing companies by helping their Quality control (QC) department to reduce all sources of measurement uncertainties and by speeding up the measurement process globally. Optical CMMs allow for powerful functionalities such as dynamic referencing (alignment which remains locked to the part, even if the part is displaced or slightly moves during the measurement process) and automatic alignment (as example - automatic recognition of alignment references on measurement jigs,” said Charles Mony, Ph.D., Founding President & CTO of Optical CMM Manufacturer, Creaform.
Competitive FactorsManufacturers are trying to mitigate price sensitiveness of the market by developing a core value proposition around service levels and supply chain efficiencies. With the emergence of a global marketplace, the importance of a well-established distribution structure has grown in prominence.
The role of supply chain efficiency and service levels of vendors remain key, as customers strive to synchronize global procurement to suit manufacturing in geographic regions to cater to global demand. This trend is likely to bring about consolidation in manufacturing and strategic alliances in marketing, sales and warehousing. Incumbent companies with global reach and diversified local strategies are likely to benefit the most, as price pressure is likely to marginally decrease to accommodate better supply chain reliability and flexibility.
Competitive LandscapeMost participants in this industry are veterans of the game, offering a myriad of other metrology products for several years. Industry giants such as Hexagon Metrology and Faro Technologies have maintained their leadership dominance in the articulated arm machines market even after decades of technology improvements and competitive pressure. However, market maturity, competitive pricing and the macroeconomic downturn have shifted the focus of several players in this market to more lucrative and technology-intensive products. While demand for portable CMMs has been maintained by the need for portability in several applications, manufacturers have indicated a shift in interest to optical CMMs, which they predict strong revenue potential for the future.
At the same time, vendors can hardly ignore the restrained, but constant demand for these traditional portable CMMs and the increase in awareness in several of its end-user applications.
“Demand for portable CMMs is on the rise especially for the reverse engineering and digitizing applications. Where there is need to measure extremely small parts like the mechatronica, semiconductor, we see a need for multisensory CMMs,” said Erwin Andes, regional Sales Manager for Hexagon Metrology in the Benelux region.
While manufacturers of portable CMMs are constantly looking for newer avenues and applications for their products, geographically, the trends in this market are a different story altogether. Traditionally the largest geographic markets for most metrology vendors, the United States and Europe, continue to lose ground to developing nations, as manufacturing continues to move away to Asia, particularly China, Japan, Malaysia, Thailand, Singapore and India. These emerging markets still have several new infrastructure-oriented projects and undertakings that can fuel demand for portable CMMs in the future.