Coordinating GNSS growth in Europe

Even with a global recession, the installed base of GNSS devices has surpassed 2 billion and is predicted to rise to 7 billion by 2022, predicts European GNSS Agency (GSA) Market Report

On the 15th of October 2013 the European GNSS Agency (GSA) released the latest version of its GNSS Market Report. The Market Report brings an updated and enhanced view of the GNSS global market “as it is experimenting rapid developments”. It encompasses a larger scope than before, features an assessment of the GNSS Rail market segment, and for the first time provides easy cross-comparison between market segments. The GSA intends to constantly develop and update the market report, publishing a new edition every eighteen months.

The European GNSS Agency (GSA) was established by the European Commission in 2004 as a Community Agency, under its former name, the GNSS Supervisory Authority. The GSA is an official European Union regulatory authority and manages public interests related to GNSS. Lead by Carlo des Dorides (Executive Director), the GSA mission is exploitation and market development of EGNOS and Galileo systems. This means development of the downstream services based on the European GNSS. The Market Report is developed and published by the Market Development department, headed by Gian Gherardo Calini. This department aims at maximising EGNOS and Galileo penetration among users and stakeholdrs in the whole value chain, including chipset and receiver manufacturers.

Mr. Calini confirms that the Market Report is “A reference for the European Community to foster the uptake of European GNSS, by allowing stakeholders to understand market opportunities, companies to invest in business development and innovation”.

Currently, the Market Report divides the GNSS market into seven primary segments and identifies their individual predicted Cumulative Core Revenues as a share of the overall market for the period 2012- 2020. The identified market segments are: Location Based Services (LBS) with 46.9% of the market, Road/Automotive (46.2%), Aviation (1.0%), Rail (0.1%), Maritime (0.3%), Agriculture (1.4%), and Surveying (4.1%). Each market segment covers several categories of devices or applications, with the numbers of devices and applications being modelled in order to predict future growth. The market report provides information on the annual revenue, annual shipments, and installed base (the number of devices currently in use) for all the devices and applications within each segment. Although the market is divided into segments, it is clear that effects can be cross-cutting, with growth in some segments directly in uencing a recession in others. The various segments are monitored using a validated forecasting process.

The Market Modelling and Forecasting Process (MMFP) is a defined methodology used to predict the growth or decline of GNSS market applications. The tool uses advanced forecasting techniques, and detailed statistical analysis of the market, combined with a robust validation process that utilises industry expertise. These methods allow the tool to predict with reasonable confidence the future evolution of the GNSS market. The tool currently segregates the global market into three overall regions, Europe, North America, and the Rest of the World.

Across all markets segments, future growth is expected to be overwhelmingly positive. Even with a global recession, the installed base of GNSS devices has surpassed 2 billion and is predicted to rise to 7 billion by 2022; that is, almost one GNSS device per person worldwide. Factoring in the current expansion within the recent past global economic recession, growth is expected to accelerate over the next few years, especially for new applications. Currently the largest market segment is LBS which is expected to grow in dominance in the future.

The LBS Segment encompasses Smartphones, Tablets, Digital Cameras, Portable Computers, Fitness Devices and People Tracking applications. Smartphones currently dominate the LBS market segment in revenue, sales, and installed base. This is predicted to remain so for the foreseeable future. The installed base of tablets is predicted to increase rapidly, but this is not mirrored with a significant growth in revenue.

The LBS market has shown significant growth since the 2nd edition of the Market Report. Although the predictions made in the previous edition, relevant to Smartphones, were accurate, they predicted fewer shipments and that mobile data costs would be higher. In reality, the shipments of Smartphones have greatly exceeded expectations and this has enabled mobile service providers to reduce the cost of mobile data. This is great news for both the manufacturers, as devices have outsold previous predictions, and end users, as the cost to them is greatly reduced. It is also significant to note that the capability of LBS chipsets is evolving rapidly, with 70% being capable of utilising Satellite Based Augmentation Systems (SBAS) – such as WAAS/EGNOS – and 30% being capable of using the new European Galileo system. Part of the growth seen in the LBS segment may be attributed to declines in other market segments as application migrate from applicationspecific platforms towards multipurpose platforms such as smartphones and tablets – the Road/Automotive segment being the worst victim of this.

The Road/Automotive Segment encompasses devices and applications such as Advanced Driver Assistance Systems (ADAS), Personal Navigation Devices (PND), Pay-Per-Use Insurance (PPUI) platforms, Road User Charging (RUC) platforms, satellite road traffic monitoring, and emergency call management systems – eCall.

Until recently, PNDs – known colloquially by consumers as “SatNavs” – have been a key component in the Road/ Automotive market in terms of installed base, shipments and, most importantly, revenues. With massive reductions in the cost of mobile data charges, smartphones are rapidly replacing PNDs in the road user environment as they can provide the same functionality for little or no added cost.

However, even with a large decline in PND sales, the outlook for growth in the Road market segment is positive. There is a number of applications that have extremely high growth potential. These new applications are likely to generate new growth for the GNSS market as a whole, as opposed to cannibalisation from other segments.

The In-Vehicle Systems market has maintained a Compound Annual Growth Rate (CAGR) of 13% over the previous four years, and with ever new inventive systems, is showing no signs of slowing.

A key driver for growth in the European road segment will be the mandatory installation of eCall within all new cars and light vehicles. eCall is designed to contact automatically emergency and rescue services, providing GNSS positional information, in the event of a crash. The system is usually activated when an airbag is deployed. The regulation is set to enter in force throughout Europe during 2015 and is expected to stimulate large revenue growth within the Road segment thereafter.

To summarise, the Road market segment has undergone significant changes recently due to the enhanced capabilities of smartphones. However, with innovations that are already being realised, such as PPUI, RUC, and ADAS, the future developments in the Road segment are likely to be exciting for both business and the end user. eCall could also be a game changer for the market if implemented. Whilst regulation is a novel concept for the Road/Automotive market segment other segments such as Aviation have been highly regulated for a long time, leading to far more stable and predictable market evolution.

The Aviation Segment is divided into four sub-segments. Three are heavily regulated; Commercial Air Transport (CAT), Regional Aviation, Business Aviation, and General Aviation/Instrument Flight Rules (GA/IFR). The other subsegment, General Aviation/Visual Flight Rules (VFR) is less heavily-regulated, although it must conform to airworthiness requirements. IFR equipment is heavily regulated and relatively expensive. Most IFR instrumentation has an intended life of approximately fifteen years, usually based on a forward fit when the airframe is procured initially, with a retrofit halfway through an airframe lifecycle. In the future, it is estimated that IFR sales will be dominated by newly-built aircraft.

General Aviation/VFR is the largest subsegment by both shipments and installed base. As pilots are operating using VFR, any GNSS device covered by this subsegment is not considered to be safety critical, and is not regulated in operational terms. This sub-segment will account for around 90% of all shipments to 2022. The majority of current sales are within North America. However, Europe and the Rest of the World have rapidly growing sales, particularly within the BRIC countries.

GNSS penetration rates within the Aviation market segment are very high. Currently standing at 80%, it is predicted to rise to over 90% by 2022. The Aviation segment is projected to maintain steady revenues through to 2022 and beyond.

Considering SBAS systems such as WAAS and EGNOS, there are several initiatives that provide opportunities to increase the use of EGNOS within the aviation segment. EGNOS can be used to provide instrument approaches with vertical guidance (LPV200 and APV-I) for all airports within Europe. The system can provide increased capacity and improved operations in poor visual conditions, especially in small airports. As IFR applications are heavily regulated, change within this sub-segment tends to be slow over time. Similar slow evolution is expected in other well-regulated market segments such as the Maritime segment.

The Maritime Segment of the GSA Market Report has been greatly enhanced since the 2nd edition. It is divided into a number of sub-segments, each containing a number of applications. The sub-segments identified are: General Navigation, Traffic Management, Marine Engineering, Homeland Security, Search and Rescue, Ports, and Inland Waterways. Although the Maritime segment is significantly enhanced relative to previous editions of the Market Report, it only encompasses the regulated maritime market, and not the unregulated leisure market.

There have been a number of recent developments in the Maritime Segment that will drive growth in some subsegments. The tracking of fishing vessels is becoming increasingly important and GNSS is being used evermore to do this. Also, the e-Navigation initiative of the International Maritime Organisation (IMO), which is designed to reduce the complexity of bridge/command systems on-board ships, is expected to be a driver for GNSS multi-constellation uptake.

Current analysis indicates the device sales will be largely driven by search and rescue applications. Multiple search and rescue beacons are required to be installed on all vessels, including lifeboats. In addition, search and rescue beacons have a shorter lifecycle than other receivers, because of their safety critical nature, leading to a large number of device sales which drives overall revenues within the segment. Further growth in this sub-segment is likely to be driven by enhanced features delivered by Galileo. Galileo will introduce a return communications link within the system, notifying casualties that their call for help has been received and help is on the way.

General Navigation and Inland Waterways account for a large proportion of the sales and revenue of the Maritime segment. Currently, only GPS and GLONASS are approved for use by the IMO. Approximately half of all devices used in the Maritime environment are multiconstellation (GPS/GLONASS) system and this fraction is likely to increase once Galileo and BeiDou have been approved for use by the IMO by accepting them into the World Wide Radio-Navigation System.

With increasing accuracy and continuity, more applications will become available to the Maritime market. With this increasing accuracy the Ports subsegment is predicted to expand rapidly over the next ten years. Maritime surveying applications, which are included within the Surveying segment, are also expected to benefit from increased system navigation accuracy capabilities.

The Surveying Segment includes applications such as; Cadastral Surveying, Construction Surveying, Mapping, Mine Surveying, Hydrographic Surveys, and Offshore Surveys.

The Survey market segment is heavily dependent on the growth of general national economies and is correlates strongly with growth in the construction and mining sectors.

With the increasing accuracy of GNSS devices, and the added benefit that will be delivered by the GPS L1/L5 and Galileo E1/E5 signals, new applications are being developed by professional users. The Rest of the World area is set to outstrip Europe and North America for device sales and growth in revenues as the developing world grows at double-digit rates which drive domestic construction sectors.

An interesting growth area within the surveying segment is the use of GNSS for machine control with construction. In Canada road construction is being completed using real-time GNSS information to guide road laying equipment. This is similar to applications used in the Agriculture market where tractor guidance and control is ubiquitous in developed market sectors.

The combined use of surveying and earth observation techniques has allowed great improvements and new applications in the agriculture market. The Agriculture Segment for GNSS includes devices/ capabilities such as Tractor Guidance, Automatic Steering, Variable Rate Technology (VRT), and included in the 3rd edition of the Market Report for the first time, Asset Management.

The two Agricultural applications that are predicted to experience massive growth over the next ten years are VRT and automatic steering. VRT uses earth observation and other techniques to ensure the application of a locally-adapted supply of nutrients and fertilisers to best suit local conditions. The amounts applied can be varied across individual fields. Automatic Steering is the most advanced form of tractor guidance which allows the farm equipment to repeatedly manoeuvre on the same track, reducing wastage, and frees the operator/driver to concentrate solely on monitoring the overall situation.

The GSA is heavily involved in promoting GNSS within the Agriculture segment. The GSA awards a “Farming by Satellite” prize, which is targeted at universities, students, and young professionals interested in agriculture, with the aim of promoting GNSS benefits in agriculture. For more information please visit: www.farmingbysatellite.eu

The Agriculture segment is predicted to be one of the fastest growing segments covered by the Market Report. There is clearly scope for innovation and new business opportunities here! Another market segment that is expected to experience massive growth over the next ten years is the Rail segment as this highly-regulated marketplace begins to embrace GNSS technologies for train tracking, control and management.

The Rail Segment is featured for the first time in the 3rd edition of the Market Report. It includes applications such as Asset Management, Passenger Information systems, Low Density Line Command and Control Systems (CCS), and High Density Line CCS.

The railways provide a difficult operational environment for GNSS technologies. Tunnels, cuttings and urban canyons are all problematic factors, potentially causing blockage of GNSS signals thus degrading GNSS availability and integrity, which is why historically GNSS has not been used for safety-critical train systems. However, GNSS when combined with other systems, such as inertial measurement units (IMU), does have potential to provide high accuracy and integrity positioning for train control/rail management systems.

The primary growth in revenue in the Rail segment is expected to come from High Density Line CCS. The introduction of Positive Train Control (PTC) within North America will drastically change the size of revenues within the Rail Segment and the growth in the next decade is expected, primarily due to innovations in the CCS and other applications, such as train tracking/management, logistics support and passenger information provision. In summary, the GSA Market Report indicates that over the coming decade, 2012-2022, the installed base of GNSS devices will increase nearly fourfold, largely driven by market penetration in regions outside Europe and North America. It is believed that the gains and benefits in the European and North American economies derived from the application of GNSS technologies is many market sectors will be replicated throughout the Rest of the World as these regions embrace GNSS technologies.

Global technology trends indicate that new smartphone capabilities alongside integrated technologies are blurring the market segment breakdowns, as LBS devices increasingly support navigation and services in other application areas. The LBS segment is forecasted to be the largest market segment by revenue, overtaking the Road/Automotive segment, where the PND market continues to decline, being cannibalised by the use of smartphones in cars. LBS devices are also being increasingly used in the general aviation and maritime leisure markets.

Overall, the GNSS market is forecasted to grow strongly as new capabilities emerge, such as multi-constellation positioning and navigation using Galileo and BeiDou, and new applications begin to add benefits to the daily lives of all humans on the planet by the end of the next decade – by the end of the second decade of the 21st century GNSS will truly be the “fifth utility” element, alongside water, electricity, gas and telecommunications, on a global scale.

The European Union is involoving the industry and research community into creating the added value of the European GNSS by different tools. In December 2013 the Horizon 2020 programme for research and innovation was launched. It includes the Call for Applications in Satellite Navigation- Galileo, with the budget of €38m in the first year. The topics within the call are aimed at supporting the development of innovative applications that can have a substantial effect on strengthening the EU industry and its ability to compete. Looking at the GNSS market potential in the GSA’s Market report, it is a good attitute to create synergies between research and market, building the EU added value in the most promising sectors.

The complete report can be download at http://gsa.europa.eu/market/market-report