Date: 08/07/2010

IMS Research: Emerson tie up with Chloride results in UPS service giant

Emerson has raised its offer to $1.5 billion to outbid rival ABB in a view to tie up with British UPS maker Chloride. According to IMS research this tie-up has the potential to not only reshape the European market for critical backup systems, but also create a possible new market leader in the service and support segment.

According to data from IMS Research the joint Emerson/Chloride would be the second largest supplier of UPS products, behind France's Schneider Electric. The world market was worth $6.5 billion in 2009. The combined companies aims to form a strong presence in the UPS services segment.

Senior research analyst Jason dePreaux notes, "Both Emerson and Chloride are major players in providing service for three-phase UPS systems. The union will put them on par with Schneider in this lucrative business."

UPS services, alone a multi-billion dollar industry, have become increasingly important in recent years as the growing power requirements in data centers has led to deployment of higher capacity UPS. dePreaux explains, "Power delivery in data centers is redundant to ensure uptime. Since the UPS is a critical link in this chain, they receive regular on-site attention and scheduled maintenance, which provides a steady stream of revenues to the service providers. Whereas global revenues from UPS products fell by over 20% in 2009, UPS service revenues actually increased."

IMS Research's ongoing analysis has revealed a growth of revenues from UPS products and services grew by over 20% in the first quarter of 2010 as compared to the previous year.