UPS service revenues forecast to grow to USD3.1 bn in 2014
The forecast includes revenues for service contracts, warranties, installation, battery replacements and preventative maintenance on UPS hardware when assessing the service market. Service revenues often follow the trends seen in the UPS hardware market, although are not inextricably linked.
Despite UPS hardware sales continuing to post year-on-year falls, service vendors have become increasingly focused on shoring up their income by increasing the penetration of service and support. It is projected that service and support revenues will grow by 4.3 percent in 2013, to reach $2.9 billion. This is in contrast to the performance of the service market through 2012 when revenues were estimated to have contracted by 0.7 percent.
The Asia-Pacific region is important to the future income derived from UPS service revenues and was estimated to have grown by 5.9 percent in 2012. In contrast, the markets in the Americas and EMEA both declined over the same period. While it is estimated that growth will return to all regions in 2013 and beyond, Asia will continue to be the area of the strongest growth, with the market projected to expand by 11.1 percent in 2014, compared to a global average of 7.7 percent.
Despite many major economies slowly emerging from the global economic slowdown, conditions are still challenging for UPS hardware sales. As a result, service vendors are focusing as much of their effort as possible on capturing a greater percentage of the existing installed base of hardware, which has prevented deeper losses in the Americas and EMEA. In addition, the burgeoning market in Asia is helping to mitigate the weakness in the rest of the world, and we expect to see this strength continue through 2014.
With the UPS hardware market set to return to growth over the coming years, service revenues are, as a result, set for continued growth through the next five years as greater hardware numbers provide a further avenue for increased service penetration.
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