Venture Development Corporation Embedded Hardware and Systems Practice. Multi-client Research Report

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1 Venture Development Corporation Embedded Hardware and Systems Practice Multi-client Research Report EMBEDDED COTS SYSTEMS IN MILITARY, AEROSPACE AND DEFENSE A MARKET DEMAND ANALYSIS VOLUME IV: EUROPEAN MERCHANT COMPUTER SYSTEMS MARKET ASSESSMENT JANUARY 2008

2 EMBEDDED COTS SYSTEMS IN MILITARY, AEROSPACE, AND DEFENSE: A MARKET DEMAND ANALYSIS VOLUME IV: EUROPEAN MERCHANT COMPUTER SYSTEMS MARKET ASSESSMENT Study Team: Eric Heikkila Eric Gulliksen Christopher J. Rezendes Production: Keisha Mabine January 2008

3 Copyright 2008 VENTURE DEVELOPMENT CORPORATION All data contained in EMBEDDED COTS SYSTEMS IN MILITARY, AEROSPACE, AND DEFENSE: A MARKET DEMAND ANALYSIS VOLUME IV: EUROPEAN MERCHANT COMPUTER SYSTEMS MARKET ASSESSMENT are proprietary to Venture Development Corporation, and may not be distributed in either original or reproduced form to anyone outside the client s internal organization within five (5) years of the report date without prior written permission of Venture Development Corporation. Venture Development Corporation has devoted its best efforts to obtain for and provide to its clients as accurate data as is possible. Nevertheless, we cannot be held responsible for incorrect information provided to us by vendors, users, or others that we interview. Nor can we be held responsible for forecasts of the future evolution of an industry, which, in retrospect, proves inaccurate. Our goal is to provide the best possible analysis of an industry, utilizing data obtained through a time-proven and rigorous research methodology, for our clients to employ in developing strategies to compete in an uncertain and ever-changing business environment. TRADEMARK ACKNOWLEDGEMENT: Many names of companies, associations, technologies, products and product types, etc. mentioned in this report comprise Trademarks, either registered or non-registered, owned by various entities. These are too numerous to mention individually. VDC acknowledges that ownership of these Trademarks exist, and requests that readers acknowledge this as well.

4 TABLE OF CONTENTS Click here to provide feedback on this research

5 Table of Contents v EMBEDDED COTS SYSTEMS IN MILITARY, AEROSPACE, AND DEFENSE: A MARKET DEMAND ANALYSIS VOLUME IV: EUROPEAN MERCHANT COMPUTER SYSTEMS MARKET ASSESSMENT I EXECUTIVE SUMMARY... 1 COMBINED NORTH AMERICAN AND EUROPEAN COTS INTEGRATED SYSTEM MARKET... 2 THE EUROPEAN COTS INTEGRATED SYSTEM MARKET... 4 LEADING EUROPEAN COTS INTEGRATED SYSTEM SUPPLIERS... 5 THE EUROPEAN COTS INTEGRATED PASSIVE BACKPLANE SYSTEM MARKET... 5 LEADING EUROPEAN COTS INTEGRATED PASSIVE BACKPLANE SYSTEM SUPPLIERS... 6 LEADING EUROPEAN COTS INTEGRATED VME SYSTEM SUPPLIERS... 7 LEADING EUROPEAN COTS INTEGRATED COMPACTPCI SYSTEM SUPPLIERS... 7 II SCOPE AND METHODOLOGY... 8 SCOPE... 9 Definitions of Terms... 9 Segmentation METHODOLOGY Supply-Side Research Demand-Side Research III INDUSTRY STRUCTURE HISTORICAL MILESTONES UNITED STATES ADVANTAGES OF COTS COTS DEFINITION AND CRITERIA VDC Definition Specifications and the Key to COTS What Isn t COTS? EUROPEAN CONSORTIA NATO AND OTHER TREATY ORGANIZATIONS THE EUROPEAN COTS PROCESS Stage I - Identification and Confirmation of Need Stage II - Specification Stage III - Quotation or Bid, Contractor Selection, Allocation of Funds Stage IV - Manufacturing through Delivery INDUSTRY PARTICIPANTS Specifiers and Decision Makers Technology Providers TRADE ASSOCIATIONS HyperTransport TM Consortium InfiniBand TM Trade Association (IBTA) PC/104 Embedded Consortium PCI Industrial Computer Manufacturers Group (PICMG)... 22

6 Table of Contents vi PCI Special Interest Group (PCI SIG) PXI Systems Alliance (PXISA) RapidIO Trade Association VMEbus International Trade Association (VITA) VXIbus Consortium SIGNIFICANT RECENT MERGERS AND ACQUISITIONS IV DEFENSE EXPENDITURES EUROPEAN DEFENSE SPENDING NATO Military Expenditures V EUROPEAN COTS INTEGRATED SYSTEMS MARKET OVERVIEW COMBINED COTS SYSTEM MARKET EUROPEAN COTS SYSTEMS MARKET Product Types RoHS Compliance Life Cycles Distribution Channels Customer Classes Leading COTS board Suppliers VI EUROPEAN COTS INTEGRATED PASSIVE BACKPLANE SYSTEMS TOTAL COTS PASSIVE BACKPLANE INTEGRATED SYSTEMS MARKET EUROPE Leading Passive Backplane Integrated System Vendors VME INTEGRATED SYSTEMS End User Services Electronics Platform Classifications Electronics Mission Classifications VME Architectures Backplane Switch Fabrics Board Sizes Board Cooling Methods Ruggedization Classes Reliability Enhancements Power Supply Types Liquid Cooled Power Supply Use Primary Processor Use Number of Processors Used Operating System Use Appropriate Allocation of Revenues Leading VME Integrated System Vendors COMPACTPCI INTEGRATED SYSTEMS End User Services Electronics Platform Classifications Electronics Mission Classifications CompactPCI Architectures... 76

7 Table of Contents vii Board Sizes Board Cooling Methods Ruggedization Classes Reliability Enhancements Power Supply Types Liquid Cooled Power Supply Use Primary Processor Use Number of Processors Used Operating System Use Appropriate Allocation of Revenues Leading CompactPCI Integrated System Vendors ATCA AND MICROTCA INTEGRATED SYSTEMS End User Services Electronics Platform Classifications VII COTS INTEGRATED SYSTEMS USER DATA DEMAND-SIDE DATA Respondent Demographics Projects Begun, Team Sizes, Customers Electronics Platform and Mission Classifications Integrated System Sourcing Number of Computer Platforms Used Bus Architectures/Form Factors VME Platform Types Used in Systems CompactPCI Platform Types Used in Systems Backplane Switch Fabric Usage in Systems Switch Fabric Usage Between Boxes Functional Board Types Used in Systems CPU Usage on SBCs Used in Systems CPU Configurations on SBCs Used in Systems DSP Configurations on DSP Boards Used in Systems Ruggedized Board Usage in Systems VITA 47 Compliance Board Cooling Methods Used in Systems System Cooling Methods System Working Environment (Ranges) System Environmental Protection System Reliability Enhancements System OS/RTOS Use System Applications Software Software Development Tools Importance RoHS Compliance Sources for Learning about COTS Computer System Products VIII OBSERVATIONS AND RECOMMENDATIONS OVERALL MARKET SIZE AND GROWTH COTS

8 Table of Contents viii COTS OPPORTUNITIES Supply, Maintenance and Logistics The Captive Market ROHS COTS TRENDS, OBSERVATIONS AND RECOMMENDATIONS: PRODUCTS Platforms Passive Backplane Architectures Switch Fabric Use Silicon TECHNOLOGY REFRESH AND INSERTION, OBSOLESCENCE MANAGEMENT, DIMINISHING MATERIAL SUPPLY (DMS) AND MATERIALS SHORTAGES (MS) SALES AND MARKETING, DISTRIBUTION AND SUPPORT IX VENDOR PROFILES AITECH DEFENSE SYSTEMS, INC BAE SYSTEMS, PLC CRYSTAL GROUP, INC CURTISS WRIGHT CONTROLS EMBEDDED COMPUTING DRS TECHNOLOGIES, INC GE FANUC INTELLIGENT PLATFORMS GENERAL DYNAMICS GENERAL MICRO SYSTEMS KONTRON AG L-3 COMMUNICATIONS CORPORATION LOCKHEED MARTIN CORPORATION MERCURY COMPUTER SYSTEMS NALLATECH INC PENTEK, INC PERFORMANCE TECHNOLOGIES, INC TECHNOLOGY ADVANCEMENT GROUP, INC. TAG THALES COMPUTERS THEMIS COMPUTER VMETRO

9 LIST OF EXHIBITS Click here to provide feedback on this research

10 List of Exhibits x EMBEDDED COTS SYSTEMS IN MILITARY, AEROSPACE, AND DEFENSE: A MARKET DEMAND ANALYSIS VOLUME IV: EUROPEAN MERCHANT COMPUTER SYSTEMS MARKET ASSESSMENT I EXECUTIVE SUMMARY... 1 I-1 Combined North American and European Union COTS Merchant Integrated System Shipments and Projections, (US$ in Millions)... 2 I-2 Regional COTS Merchant Integrated System Markets, North America & European Union, 2006 & 2009 (% of Dollar Volume Shipments)... 3 I-3 European COTS Merchant Integrated Systems Shipments and Projections by Product Type, 2006 & 2008 (% of Dollar Volume Shipments)... 4 I-4 Leading Vendors of COTS Integrated Computer Systems, Europe, I-5 European COTS Passive Backplane Systems Shipments and Projections, (US$ in Millions)... 5 I-6 European COTS Passive Backplane Systems Shipments by Primary Bus Architecture, (US$ in Millions)... 6 I-7 Leading Vendors of COTS Passive Backplane Integrated Systems, Europe, I-8 Leading Vendors of COTS VME Integrated Systems, Europe, I-9 Leading Vendors of COTS CompactPCI Integrated Systems, Europe, III INDUSTRY STRUCTURE III-1 Process Flow III-2 Industry Structure IV DEFENSE EXPENDITURES IV-1 Year 2006 Military Expenditures by Country (includes "traditional" Western Europe and other countries now members of NATO) (Millions of Year 2005 Constant US Dollars) IV-2 Year 2006 Military Expenditures by Country: USA, Japan, China, Russia, India (Millions of Year 2005 Constant US Dollars) IV-3 Military Expenditures of Selected Countries and Regions compared to those of the United States, 1996 & 2006 (Percentages of US Expenditures) IV-4 Shares of European Military Expenditures, 2006 (Millions of Year 2005 US Dollars) IV-5 Military Expenditure Curves, Top 4 European Countries, (Year 2005 Constant US Dollar Expenditures, Normalized to Year 2001 Values) IV-6 Military Expenditure CAGRs, European Countries Spending More Than US$ 5 Billion Annually (Year 2005 Constant Dollars), IV-7 European countries with the Largest Increases in Military Expenditures, (Percent Increase over 2005) IV-8 NATO Equipment Expenditures, (Millions of Year 2005 Constant US Dollars) IV-9 NATO Equipment Expenditures, (Year 2005 Constant US Dollar Expenditures, Normalized to Year 2001 Values) IV-10 NATO Equipment Expenditure CAGRs,

11 List of Exhibits xi IV-11 NATO Equipment Expenditures by Member Nations, 2006 (Millions of Year 2005 Constant US Dollars) IV-12 Shares of NATO Equipment Expenditures by Member Nations, 2006 (Percentage of Total Equipment Expenditures) V EUROPEAN COTS INTEGRATED SYSTEMS MARKET OVERVIEW V-1 Combined North American and European Union COTS Merchant Integrated System Shipments and Projections, (US$ in Millions) V-2 Combined North American and European Union COTS Integrated System Shipments and Projections by Product Type, (US$ in Millions) V-3 Regional COTS Merchant Integrated System Markets, North America & European Union, 2006 & 2009 (% of Dollar Volume Shipments) V-4 Regional COTS Merchant Integrated System Shipments, Normalized Growth Curves, (Dollar Volume Shipments Normalized to Year 2006 Levels) V-5 Regional COTS Merchant Integrated System Market CAGRs, V-6 European COTS Merchant Integrated Systems Shipments and Projections by Product Type, (US$ in Millions) V-7 European COTS Merchant Integrated Systems Shipments and Projections by Product Type, 2006 & 2008 (% of Dollar Volume Shipments) V-8 European COTS Merchant Integrated System Shipments by Product Type, (US$ in Millions) V-9 European COTS Merchant Integrated System Shipments, Normalized Growth Curves by Product Type, (Dollar Volume Shipments Normalized to Year 2006 Levels) V-10 European COTS Merchant Integrated Systems Shipments, Estimated RoHS Compliance, 2006 & 2009 (% of Dollar Volume Shipments) V-11 COTS Merchant Integrated Systems Products, Average Years Offered (% of Vendor Respondents Answering) V-12 COTS Merchant Integrated Systems Products, Average EOL Notice in Months (% of Vendor Respondents Answering) V-13 COTS Merchant Integrated Systems Products, Support After EOL (Years) (% of Vendor Respondents Answering) V-14 European COTS Integrated Systems Shipments by Distribution Channel, 2006 & 2009 (% of Dollar Volume Shipments) V-15 European COTS Integrated Systems Shipments by Consuming Customer Class, 2006 & 2009 (% of Dollar Volume Shipments) V-16 Leading Vendors of COTS Integrated Systems (all types), European Market, 2006 (Estimated Market Shares) VI EUROPEAN COTS INTEGRATED PASSIVE BACKPLANE SYSTEMS VI-1 European COTS Passive Backplane Systems Shipments and Projections, (US$ in Millions) VI-2 European COTS Passive Backplane Systems Shipments and Projections by Primary Bus Architecture, (US$ in Millions) VI-3 European COTS Passive Backplane Systems Shipments and Projections by Primary Bus Architecture, 2006 & 2009 (% of Dollar Volume Shipments)... 55

12 List of Exhibits xii VI-4 European COTS Passive Backplane Systems Shipments by Primary Bus Architecture, (US$ in Millions) VI-5 European COTS Passive Backplane Systems Shipments by Primary Bus Architecture, Normalized Growth Curves, (Dollar Volume Shipments Normalized to Year 2006 Levels) VI-6 European COTS MicroTCA Systems, Normalized Growth Curve, (Dollar Volume Shipments Normalized to Year 2007 Levels) VI-7 Leading Vendors of COTS Passive Backplane Integrated Systems (all architectures), European Market, 2006 (Estimated Market Shares) VI-8 European COTS VME Integrated Systems Shipments by End User Service, 2006 & 2009 (% of Dollar Volume Shipments) VI-9 European COTS VME Integrated System Shipments by Electronics Platform Classification, 2006 & 2009 (% of Dollar Volume Shipments) VI-10 European COTS VME Integrated System Shipments by Electronics Mission Classification, 2006 & 2009 (% of Dollar Volume Shipments) VI-11 European COTS VME Integrated System Shipments by VME Architecture, 2006 & 2009 (% of Dollar Volume Shipments) VI-12 European COTS Fabric-Enabled VME Integrated System Shipments by Backplane Switch Fabric, 2006 & 2009 (% of Dollar Volume Shipments) VI-13 European COTS VME Integrated System Shipments by Board Size, 2006 & 2009 (% of Dollar Volume Shipments) VI-14 European COTS VME Integrated System Shipments by Cooling Method, 2006 & 2009 (% of Dollar Volume Shipments) VI-15 European COTS VME Integrated System Shipments by Ruggedization Class, 2006 & 2009 (% of Dollar Volume Shipments) VI-16 European COTS VME Integrated System Shipments, Reliability Enhancements, 2006 & 2009 (% of Dollar Volume Shipments) VI-17 European COTS VME Integrated System Shipments, Power Supply Types, 2006 & 2009 (% of Dollar Volume Shipments) VI-18 European COTS VME Integrated System Shipments, Liquid Cooled Power Supply Use, 2006 & 2009 (% of Dollar Volume Shipments) VI-19 European COTS VME Integrated System Shipments, Primary Processor Use, 2006 & 2009 (% of Dollar Volume Shipments) VI-20 European COTS VME Integrated System Shipments, Multiple Discrete Processor Use, 2006 & 2009 (% of Dollar Volume Shipments) VI-21 European COTS VME Integrated System Shipments, With and Without OS, 2006 & 2009 (% of Dollar Volume Shipments) VI-22 European COTS VME Integrated System Shipments, Estimated Operating System Use, 2006 & 2009 (% of Dollar Volume Shipments) VI-23 European COTS VME Integrated System Shipments, Approximate Allocation of Revenues, 2006 & 2009 (% of Dollar Volume Shipments) VI-24 Leading Vendors of COTS VME Integrated Systems (all architectures), European Market, 2006 (Estimated Market Shares) VI-25 European COTS CompactPCI Integrated Systems Shipments by End User Service & 2009 (% of Dollar Volume Shipments) VI-26 European COTS CompactPCI Integrated System Shipments by Electronics Platform Classification, 2006 & 2009 (% of Dollar Volume Shipments)... 74

13 List of Exhibits xiii VI-27 European COTS CompactPCI Integrated System Shipments by Electronics Mission Classification, 2006 & 2009 (% of Dollar Volume Shipments) VI-28 European COTS CompactPCI Integrated System Shipments by CompactPCI Architecture, 2006 & 2009 (% of Dollar Volume Shipments) VI-29 European COTS CompactPCI Integrated System Shipments by Board Size, 2006 & 2009 (% of Dollar Volume Shipments) VI-30 European COTS CompactPCI Integrated System Shipments by Cooling Method, 2006 & 2009 (% of Dollar Volume Shipments) VI-31 European COTS CompactPCI Integrated System Shipments by Ruggedization Class, 2006 & 2009 (% of Dollar Volume Shipments) VI-32 European COTS CompactPCI Integrated System Shipments, Reliability Enhancements, 2006 & 2009 (% of Dollar Volume Shipments) VI-33 European COTS CompactPCI Integrated System Shipments, Power Supply Types, 2006 & 2009 (% of Dollar Volume Shipments) VI-34 European COTS CompactPCI Integrated System Shipments, Liquid Cooled Power Supply Use, 2006 & 2009 (% of Dollar Volume Shipments) VI-35 European COTS CompactPCI Integrated System Shipments, Primary Processor Use, 2006 & 2009 (% of Dollar Volume Shipments) VI-36 European COTS CompactPCI Integrated System Shipments, Multiple Discrete Processor Use, 2006 & 2009 (% of Dollar Volume Shipments) VI-37 European COTS CompactPCI Integrated System Shipments, With and Without OS, 2006 & 2009 (% of Dollar Volume Shipments) VI-38 European COTS CompactPCI Integrated System Shipments, Estimated Operating System Use, 2006 & 2009 (% of Dollar Volume Shipments) VI-39 European COTS CompactPCI Integrated System Shipments, Approximate Allocation of Revenues, 2006 & 2009 (% of Dollar Volume Shipments) VI-40 Leading Vendors of COTS CompactPCI Integrated Systems (all architectures), European Market, 2006 (Estimated Market Shares) VI-41 Projected European COTS ATCA & MicroTCA Integrated Systems Shipments by End User Service, 2009 (% of Dollar Volume Shipments) VI-42 Projected North American COTS ATCA & MicroTCA Integrated System Shipments by Electronics Mission Classification, 2009 (% of Dollar Volume Shipments) VII COTS INTEGRATED SYSTEMS USER DATA VII-1 System Purchasers' Involvement in COTS Military/Defense Market (Percentage of System Purchaser Respondents Answering) VII-2 Number of COTS Projects Begun (Percentage of System Purchaser Respondents Answering) VII-3 Average Number of Engineers per Project (Percentage of System Purchaser Respondents Answering) VII-4 Customers for Identified COTS Projects, System Purchasers Responding (Percentage of Identified Projects) VII-5 Electronics Platform Classifications Utilizing Identified COTS Projects, System Purchasers Responding (Percentage of Identified Projects) VII-6 Electronics Mission Classifications Utilizing Identified COTS Projects, System Purchasers Responding (Percentage of Identified Projects)... 94

14 List of Exhibits xiv VII-7 Role of System Purchasers' Organizations for Identified COTS Projects (Percentage of System Purchaser Respondents Answering) VII-8 Design and Manufacture of COTS Integrated Computer Systems (Percentage of Identified Projects) VII-9 Number of Separate Computer Platforms (Systems) Included in Indentified COTS Projects, System Purchasers Responding (Percentage of System Purchaser Respondents Answering) VII-10 Platform Usage Within Identified COTS Projects, Segmented by Primary Bus Architectures/Form Factors (Percentage of Identified Projects) VII-11 VME Platform Type Usage in Identified VME COTS Projects (Percentage of Identified VME Projects) VII-12 CompactPCI Platform Type Usage in Identified CompactPCI COTS Projects (Percentage of Identified CompactPCI Projects) VII-13 Backplane Switch Fabric (point-to-point communication in the box) Usage in Identified COTS Projects (Percentage of Identified Fabric-enabled Projects) VII-14 Switch Fabric (point-to-point communication shelf-to-shlef and/or system-tosystem) Usage between Boxes in Identified COTS Projects (Percentage of Identified Fabric-enabled Projects) VII-15 Media Used Most Often to Communicate "Between Boxes" (shelf-to-shelf and/or system-to-system) (Percentage of System Purchaser Respondents Answering) VII-16 Board Functional Product Type Usage in Identified COTS Projects, System Purchasers Responding (Percentage of Identified Projects) VII-17 CPU Usage on Slot Single Board Computers or CPU Blades in Identified COTS Projects, SBC System Purchasers Responding (Percentage of Identified Projects) VII-18 CPU Configuration Usage on Slot Single Board Computers or CPU Blades in Identified COTS Projects, SBC System Purchasers Responding (Percentage of Identified Projects) VII-19 DSP Processing Configuration Usage on DSP Boards in Identified COTS Projects, DSP System Purchasers Responding (Percentage of Identified Projects) VII-20 Ruggedized Board Usage in Indentified COTS Projects (Percentage of System Purchaser Respondents Answering) VII-21 VITA 47 Compliant Ruggedized Board Usage in Identified COTS Projects (Percentage of Ruggedized System Purchaser Respondents Answering) VII-22 Board Cooling Usage in Identified COTS Projects, System Purchasers Responding (Percentage of Identified Projects) VII-23 System Cooling Usage, System Purchasers Responding (Percentage of Identified Projects) VII-24 System Working Environment VII-25 System Environmental Protection, System Purchasers Responding (Percentage of Identified Projects) VII-26 System Reliability Enhancements, System Purchasers Responding (Percentage of Identified Projects)

15 List of Exhibits xv VII-27 System OS/RTOS Usage, System Purchasers Responding (Percentage of Identified Projects) VII-28 System Applications Software Inclusion, System Purchasers Responding (Percentage of Board Purchaser Respondents Answering) VII-29 Importance of Software Development Tools to the Completion of Identified COTS Projects, As Rated by System Purchaser Respondents (Average Rating Received by System Purchaser Respondents on a Scale of 1 to 5, where 5 is the Highest Rating) VII-30 Purchased System RoHS Compliance Requirement Time Frame (Percentage of System Purchaser Respondents Answering) VII-31 Importance of Sources for Learning about Product, Technical, and Information Concerning COTS Integrated Computer Systems (Average Rating Received by System Purchaser Respondents on a Scale of 1 to 5, where 5 is the Highest Rating)