Spectrum and Signal Analyzers Market: Growth Perspectives to 2020

by Jessy Cavazos, Industry Director – Frost & Sullivan

With ever-increasing competition, reducing time-to-market is critical for virtually all companies across industries. This trend is especially acute in the spectrum and signal analyzer market, considering that wireless communications is a large end-user segment. As a result of competitive pressure and end-user demand, customers are striving to reduce development time in their research and development (R&D) departments.

At the same time, new technologies are increasing the complexity of design engineers’ tasks and calling for significant improvements in the performance of electronic test and measurement instruments, especially signal analyzers. New technologies, such as 5G and WLAN standard 802.11ad, for instance, are driving significant changes in requirements including higher frequencies, wider modulation bandwidth, and higher phase noise performance. Making accurate measurements at higher frequencies and with wider modulation bandwidths is highly challenging, yet the requirement for measurement accuracy is also increasing due to more complex and smaller devices.

In addition to the technical challenges, access to these instruments is challenging for customers due to the products’ high price tags. High-performance signal analyzers are relatively expensive and typically cost over $100,000. Moreover, the trends towards high frequencies and wider bandwidths are expected to continue to increase prices for such instruments. With limited capital expenditures (CAPEX), accessing the test equipment they need will be a growing challenge for electronic engineers, one that will translate into a challenge for suppliers as well. To succeed in this market, suppliers must introduce products that will be able to address the needs of customers for several years, requiring the instruments to have wide technology coverage and the ability to evolve over time.

With increasingly complex technologies to deal with, limited expertise, and pressure on resources, there will also be a growing need for easier-to-use spectrum and signal analyzers. Manufacturers of spectrum and signal analyzers, therefore, must focus on addressing this market aspect to ensure their commercial success.

Market Forecast: R&D to Register Higher Revenue Growth for Participants

Ranking second in the electronic test equipment market for R&D applications, the spectrum and analyzers segment has significantly increased its contribution to the total market revenues over time. With a revenue share of 13.9% in 2015, these instruments are expected to continue to gain share over other instruments used in R&D applications, such as oscilloscopes and logic analyzers, over the next 5 years. Growth prospects for these instruments are less significant due to the absence of truly disruptive technologies on the horizon.

In terms of type, research shows increasing contribution from signal analyzers as opposed to spectrum analyzers over time, due to technology trends driving the needs for customers to look at the vectors. The market revenues are already majorly coming from signal analyzers.

From a frequency perspective, the great majority of the revenues originate from frequencies under 6 GHz, however this is expected to change drastically over the next few years with both the 6 to 26.5 GHz and > 26.5 GHz segments gaining share. Similarly, research indicates increasing demand for higher modulation bandwidths, with both the 80 to 160 MHz and > 160 MHz segments gaining share while that of the < 80 MHz segment is expected to diminish. These trends related to key specifications of these instruments imply a shift in the market by price range and will drive an increase in share for the $50,000 to $100,000 and > $100,000 segments.

While the trends towards millimeter-wave frequencies and higher modulation bandwidths also impact the spectrum and signal analyzers market in manufacturing applications, the impact of these trends is delayed on the market revenues for these instruments compared to R&D. One of the major challenges looming on the horizon is to enable the cost-effective testing of bandwidth-rich millimeter-wave frequencies in mass production. Over time, a higher percentage of the revenues will come from products with frequencies higher than 6 GHz. However, drastic shifts from these perspectives are expected to impact the market after 2020.

Competitive Perspective: Historical Leaders and Challengers

Theoretically, the companies who are best positioned to capture the opportunities stemming from the signal and spectrum analyzers market are historical leaders such as Keysight Technologies, Rohde & Schwarz, and Anritsu, mainly due to the higher technical requirements stemming from the new technologies coming into the market. Keysight and Rohde & Schwarz, especially, benefit from high market shares based on broad product portfolios and strong brand recognition.

While Anritsu commands a smaller market share, it leverages strong product innovation capabilities and focuses on the cellular end market. The expansion of smart devices and connectivity across industries is the key opportunity to capture for these companies. It could be a more significant growth opportunity for Anritsu, who tends to play in its core target market of wireless communications, while Keysight and Rohde & Schwarz customer bases are broader, spanning not only communications but also aerospace and defense, automotive and industrial, among others.

National Instruments is also a key company to watch due to the increasing penetration of modular instrumentation in manufacturing applications and its dominating position in the PXI test and measurement market. Among the different segments of the PXI test and measurement market, the PXI signal analyzer segment is expected to witness the highest growth over the next few years. In addition to manufacturing applications, increasing complexity in technology also drives penetration of automation in R&D applications. This expands the addressable market for modular instrumentation in R&D beyond the design validation phase, where modular instrumentation has already made its mark. 

At the same time, a major area of concern for these suppliers is the cautionary approach taken by customers with CAPEX, especially in light of the upcoming drastic changes in requirements regarding key specifications for signal analyzers to address higher frequencies and wider modulation bandwidths, which will drive prices up. This provides a key growth opportunity for new companies with high technical know-how to penetrate the market. Customers are also interested in new models to address their testing requirements, which is likely to change the mix for acquisition means for test and measurement equipment in the future.

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