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Evolving Needs of Warfare Spur Demand for Commercial Off-the-Shelf Technology and Increase Revenues in European Strategic Military Communications Market

Posted on: Tuesday, 17 January 2006, 06:00 CST

LONDON, January 17 /PRNewswire/ -- The reliance of militaries on commercial R&D and commercial off-the-shelf technology (COTS) in a bid to reduce R&D costs is driving the European strategic military communications market. This trend is, at the same time, encouraging non-defence firms to step into the European strategic military communications market and provide COTS technology and services.

Even as traditional European defence contractors grapple with the challenge posed by COTS manufacturers, they will also have to face intensifying competition from their US counterparts. "European militaries are awakening to the need for up-to-date information and communication technology," explains a Senior Frost and Sullivan defence analyst (http://defence.frost.com/). "However, the advanced nature of US technology is a cause for concern for European contractors, as in parts of Europe, such as Eastern Europe, US defence and non-defence firms have succeeded in creating a monopoly over the market through foreign military funding."

Despite these challenges, traditional market participants can still look forward to a host of growth opportunities. As European militaries increasingly focus on expeditionary operations and network-centric warfare (NCW), European nations are expected to boost investments in their strategic military communications markets to meet these evolving needs of warfare.

Developments in sensor technology, enabling the transmission of increasing amounts of data to create an efficient network in the battlespace, are also set to drive market expansion. These factors will fuel existent competition while pushing overall revenues from an estimated US$1.91 billion in 2005 to US$2.56 billion in 2014.

The switch from territorial defence to expeditionary warfare has resulted in greater need for data transmission, initiating an increased demand for military satellite communications (MILSATCOM). Accordingly, the MILSATCOM segment, which currently represents 50.0 per cent of the total market revenues, is projected to grow strongly over the next ten years, with estimated earnings of US$1,362.2 million in 2014.

"The MILSATCOM market will continue to mature due to the benefits of owning a dedicated military-specific communications satellite constellation," says a Frost & Sullivan analyst. "Countries such as the United Kingdom, France, Germany, Italy and Spain possess, or have plans to procure their own dedicated military satellites, while countries such as the Netherlands, Turkey and Greece have procured their own ground stations to minimise costs and reduce the involvement of commercial companies, in their SATCOM."

The SATCOM market is likely to witness significant growth due to several impending national procurement programmes, such as the acquisition of the 600 SYRACUSE III-compliant terminals by France by 2009. Multi-band terminals in the MILSATCOM market segment have also matured and the availability of the X-band will rise, with second-tier countries such as Belgium and Portugal aiming to secure peer-leasing deals with France and the United Kingdom.

With the majority of European nations seeking to upgrade their fixed communication networks, the fixed communications market- currently the second largest segment and one dominated by national telecommunication companies - will also generate increasing revenues.

"The level of funding, the number of stakeholders, the identification of decision-makers and the selection of strategic partnerships: all these, and more, are necessary to prevent failure in this expanding market," explains Mr. Buker. "Without a true understanding of the hurdles that they need to overcome, market participants will struggle to achieve competitive success."

Despite a small reduction in market size in 2011, the fixed military communications market will enable the armed forces to fully incorporate Voice-Over-Internet Protocol (VoIP) into the network, which will enhance cost reduction, improve efficiency and lead the market to projected revenues of US$1,042.9 million by 2014.

However, the long-range radio communications segment (comprising high frequency radios and associated networks), which represents the smallest of the sectors at 7.0 per cent of the total market, may experience a decline in revenues. This downturn is likely to take place once the majority of European nations approach the completion of their high-frequency (HF) modernisation undertaken to align them with their NATO peers.

Also, the anticipated uptake of software-defined radio (SDR) will contribute to the diminishing demand for sole HF band radios. However, being cost-effective, the HF band will continue to provide an effective back-up option network to SATCOM and fixed networks. Moreover, with an increase in the number of Special Forces in NCW, the need for greater bandwidth usage, particularly the extremely high frequency band (EHF), will prompt increasing long-range communication.

Ultimately, the trend of investments in military communications in countries such as France, Germany and the United Kingdom, which account for an overwhelming majority of the actual investments in the European military communications market, will prime other nations to invest in developing their own strategic communication networks.

If you are interested in a virtual brochure, which provides manufacturers, end-users, and other industry participants an overview of the latest analysis of the European Strategic Military Communications Markets (F233-22), then send an e-mail to Srividhya Parthasarathy, Corporate Communications, at sparthasarathy@frost.com with the following information: your full name, company name, title, telephone number, fax number and e-mail address. Upon receipt of the above information, an overview will be sent to you via e-mail.

European Strategic Military Communications Markets F233-22 Background

Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership services and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community, by providing comprehensive industry coverage that reflects a unique global perspective and combines ongoing analysis of markets, technologies, econometrics, and demographics.

List of keywords in this press release: strategic military communications, COTS, commercial off-the-shelf technology, satellite, MILSATCOM, VoIP, high frequency radios, NCW, long range radio, software-defined radio, bandwidth, military expeditionary operations, network-centric warfare, sensor technology, military satellite communications, SATCOM, SYRACUSE III-compliant terminals, multi-band terminals, X-band, fixed communication networks, fixed military communications, long-range radio communications, software-defined radio, SDR, NATO,

List of Key Industry Participants: Alcatel, Alesan, Astrium, BAE Systems, Boeing, BT Defence, Cisco, Cogent, Dateno, DLNS, EADS, EADS UK, France Telecom, General Dynamics, Harris, INDRA, Inmarsat, Intracom, Kongsberg, ND Satcom, NERA; NGITE; Nokia; NSSL SATCOM Solutions, Orange, Paradigm, Pararede, RACOMS, Rafael, Raytheon, Rohde & Schwarz, Selenia Communications, SWE-DISH, Terma, Thales Communication, VT Merlin.

Media Contacts: Europe: Srividhya Parthasarathy Corporate Communications P: +91-044-52044668 E: sparthasarathy@frost.com Americas: Tolu Babalola Corporate Communications P: +1-210-477-8427 F: +1-210-348-1003 E: tolu.babalola@frost.com India: Samantha Unnikrishnan Corporate Communications P: +91-44-42044667 E: sunnikrishnan@frost.com Asia Pacific Donna Jeremiah Corporate Communications P: +603-6204-5832 E: djeremiah@frost.com Australia: Sharmin Jassal Corporate Communications P: +61-2-8247-8900 F: +61-2-9252-8066 E: sharmin.jassal@frost.com

Frost & Sullivan

CONTACT: Americas: Tolu Babalola, Corporate Communications, P:+1-210-477-8427, F: +1-210-348-1003, E: tolu.babalola@frost.com

Source: PRNewswire

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