Rugged tech vendors must justify products' value
Companies need to convince agencies that rugged is necessary, not a luxury
Compared to its high-volume, nonrugged sibling, rugged computing is a niche market. But it had been a consistent growth market during the past decade until the recession.
Demand for handheld rugged computers, which had been the strongest part of the market, nosedived in 2009, by as much as 30 percent in some segments. Although the large form-factor market was shielded to some extent by procurements budgets that were already in place, the recession’s effect began to show in that area, too, with a noticeable dip in demand in 2010.
Industry observers are focusing on how the market recovers and develops going forward, given the budget constraints that organizations face, particularly those in government. The small form-factor market bounced back well in 2010, according to market watcher VDC Research, with 20 percent revenue gains in the overall rugged market. However, the outlook is unsettled.
“In a recent discussion with a utility in Florida, which has been a long-term user of rugged notebooks, it said it was faced with deciding whether or not it really needs fully rugged boxes for its applications or whether it can instead use business rugged machines with flash drives,” said David Krebs, director of VDC’s mobile and wireless practice. “Or if it even needs a notebook at all and could get away with using a tablet.”
Nearly every major procurement of rugged computers is going through the same scrutiny now. A lot of organizations are looking at things such as rugged handheld computers and instead deploying smart phones and trying to live with the failure rates, Krebs said. However, many of them are realizing that those failure rates cause workflow interruptions, which in turn affect productivity and worker morale.
“So it’s a fine line,” Krebs said.
Based on published solicitations only, rugged procurements in government might be on the rise because more solicitations have the word "rugged" in the specifications, said Tim Collins, director of defense and intelligence sales at Panasonic Corp.’s federal unit. However, when they finally decide on a product, many organizations decide to just go with a cheaper unit, which might not be suitable to users' needs.
“You have to be careful when you deal with customers about what rugged really means,” Collins said. “Customs and Border Protection has been ordering quite a few computers to take out in their trucks, for example, but it needs truly fully rugged because its systems are out in places such as the Mexico/Arizona border, and they’re really banging on those things.”
Most users understand the level of rugged devices they need to support their mission, he said. The challenge usually comes when the process gets to the contracting phase, which is usually the responsibility of people in a different part of the organization and for whom price is often the major factor in a purchasing decision.
“And that’s our challenge, to make sure those folks truly understand the mission that these computers are being purchased for,” Collins said.
One catalyst for more rugged systems is organizations' need to move more computing and communications devices to people in the field. That’s certainly true of the military, by far the biggest user of rugged systems in government.
That's a major reason why companies such as Crystal Group Inc., which provides rugged servers for military applications, have observed an increase in demand for rugged technology in recent years. The market for such systems has evolved from standard commercial technology to more rugged commercial tech, said Todd Prouty, Crystal’s business development manager. As those systems in the field become more prevalent, the need for more reliability becomes more critical.
“The Navy, for example, has had some events that have happened in the past where the regular [commercial] products have not been lasting as long as it needs them to, and that has prodded it to move to more rugged systems at the server level,” Prouty said. “We use [commercial] components in the servers themselves, but the chassis that carries them and that we provide is more rugged.”
For government, an advantage of the shifting market is a likely drop in the price of rugged systems. More companies have moved into the government rugged market, so there is more competition for the same opportunities. And rugged technology will likely remain a growth market after the effects of the recession wane.
“The growth rates are lower for government than for nongovernment,” VDC’s Krebs said. “But I’d still put them in the midsingle digit range.”