IHS Markit has published its latest findings on the world merchant market for embedded computing valuing it at an estimated $2.54 billion in 2015 and a forecast growth for the next 5 years of 3.7% (CAGR). While growth in the embedded computing market varies markedly by the different standards or form-factors, there is an overall trend towards smaller form-factors aimed at the Internet of Things (IOT) market which has the potential to create a large and growing demand for devices using the latest microprocessor technologies.
The greatest challenge for the traditional embedded boards market lies in the growing end-user appetite for software-centric solutions rather than hardware-based solutions on which the embedded boards market depends. In 2014 and 2015, the popularity of software defined networking (SDN) and network functions virtualization (NFV) transformed the commercial communications sector. According to the latest research from the IHS Markit Embedded Computer Boards, Modules and Systems Annual Service, world revenues for xTCA boards in 2015 fell by 13% from 2014, while xTCA systems revenue fell by 29%. IHS Markit believes that software technologies are likely to have a negative impact on the xTCA board and systems markets for the foreseeable future. IHS forecast a CAGR of -11% for xTCA boards from 2015-2020 and a CAGR of -16% for xTCA systems.
Sales in 2017 typically depend on design wins made in 2014 and 2015 and grow at different rates for different form-factors because of varying sector exposure. Commercial communication projects, for example, have typically become “run rate” business faster than defence, civil aerospace or railway projects. System-level technologies typically reach run rate business faster than board-level business.
For system-level ATCA, for example, 2014 was a reasonable year for design wins. However, vendors report that the outcome of these wins has not materialised into the production runs originally forecast. In some cases, system vendors would offer both ATCA-based and software-based products simultaneously and the latter outsold ATCA systems by far. As a result, ATCA vendors may have to transition away from a focus on hardware and telecom platforms to a more software-centric one, for example, by investing in new product lines to enable the transition to SDN/NFV environments.
In other board technologies, IHS Markit has identified both declines and growth opportunities:
COM will become one of the most popular solutions in coming decades driven by the needs of industrial automation and Industry 4.0. Over the next 5 years IHS forecast growth in COM of 8.6% (CAGR). The smaller modules in particular are perfect for OEMs with medium/large project quantities requiring high flexibility in a limited space.
COM in general is capturing more industrial board solutions from other industrial standards, such as Compact PCI which chiefly addresses the defence and industrial automation sectors. Vendors reported declining revenues in 2014 and 2015 and IHS believes that Compact PCI classic will continue to decline as OEMs move on to new technologies.
Like COM, Standalone Boards target the industrial automation sector whose growth is linked to the industrial internet of things and IHS predict growth in standalone boards of 7.7% to 2020.
PICMG has a relatively small overall market share and revenues in 2014 and 2015 for PICMG boards have not grown and IHS predicts a similar trend going forward although there is still some opportunity for growth in PICMG systems with PICMG 1.3 dominating.
Sales of VITA standard board and systems are reported by vendors to have been depressed in 2014 and 2015. The majority of VME and VPX boards and systems are sold to defence companies that in turn, sell to governments principally the United States. The US budgets for defence procurement and research are both increasing which will help to fund new design wins and sales growth which IHS estimate at 3.2% (CAGR).
Figure: The world market for embedded computer boards, modules and systems by product type.