Market Horizons™ Report PART FOUR Market Analysis & Future Outlook

Market Horizons™ Report PART FOUR Market Analysis & Future Outlook
Real-time Automation & Controls (RTAC) in the North American Water/Wastewater Utilities Marketplace ( ) PART FOUR Market Analysis & Future Outlook NOTICE This presentation has been prepared in Microsoft PowerPoint format for fast, easy interpretation and use by the client organization only. Blanket permission to use some or all of the materials/contents FOR INTERNAL CLIENT USE is granted. No portion of this presentation may be transferred or otherwise shared with any person or persons outside the client organization that is the procuring entity for the report without the express written permission of InfoNetrix LLC prior to any such transfer or use. Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

About This Report InfoNetrix LLC, an independent technical research and consulting firm specialized in utility automation and information technology (Utility Automation/IT) markets conducted the research for this report. InfoNetrix reports are available for subscription by any and all interested parties, foreign and domestic (except as prohibited by law), in accordance with the pricing and terms set forth in the prospectus, provided separately. This report addresses Real-time Automation & Controls (RTAC) in the North American Water/Wastewater Utilities Marketplace. Other reports in the Market Horizons™ Series provide similar analyses of Real-time Automation & Controls (RTAC) in the North American Electric Utilities Marketplace and Geospatial & Field Automation Solutions (GFAS) in the North American Utilities Marketplace. Please visit for more information about these and other InfoNetrix Advisory Services. PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

General Information & Notifications
PURPOSE The information contained in this document is for the sole use of InfoNetrix clients and is not to be distributed outside client organizations. No part of this publication may be reproduced, transcribed, or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any electronic storage and retrieval system, without permission in writing from the copyright owner. DISCLAIMER This publication has been prepared with care, however, no guarantee of accuracy, completeness, or warranty of any kind is expressed or implied, nor shall InfoNetrix be liable to any user of the publication or any portion(s) hereof for any direct or indirect damages, expenses, costs or losses of any kind resulting from its use. COUNTRY OF ORIGIN United States of America PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

Research Standards & Methodology
The preparation of this report follows generally accepted standards of market research practice and is based on principles of truthfulness and professionalism. A reasonable and prudent effort has been made to ensure that factors and circumstances having a material impact on any decision-making process derived from, or impacted by, this report are included in the analyses and recommendations. The representations of industry and market data and portrayals of the business environment are based on market research conducted by experienced professionals with broad knowledge and experience in the markets addressed. The information upon which the findings and analyses contained in this report are based was obtained through a combination of telephone interviews with key suppliers and consultants and other individuals with extensive market knowledge and experience, augmented by survey with a cross section of utility managers and ongoing interactive research with over 1,000 utilities annually. Each telephone interview/survey was guided by a specially designed questionnaire to obtain pertinent data, insights and market perspectives. These interviews were augmented by secondary research across a wide range of reliable public and proprietary information sources pertinent to the study. PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

Research Reliability & Acceptance
The information presented in this report was gathered, recorded and analyzed with care and precision. However, there will undoubtedly be differences between the findings presented and actual results for various reasons and, because future events and circumstances frequently do not occur as expected, those differences may be material. For these and other reasons (including, but not necessarily limited to human error, misinterpretations, misunderstandings and information sensitivities among respondents), the resulting data will most likely not be completely accurate in all respects. Moreover, the forecasts presented herein reflect judgments made as of the period during which this report was prepared. As such, some aspects can be expected to change as a result of numerous direct and indirect factors, which are beyond the scope of this report to accurately predict. For example, it assumes that current events will continue to have the same effect on the marketplace in the future and that the conventional wisdom of today will continue to be completely applicable to future market conditions, which is at best, unlikely. By accepting and using the information contained in this report, the user assumes all responsibility for its use for any and all purposes as user may deem appropriate and agrees to hold InfoNetrix, its principals and its staff harmless from any direct, indirect or consequential damages resulting from, or in any way related to, such use(s). However, InfoNetrix actively solicits and welcomes inquiries or other input regarding any errors, omissions or inconsistencies discovered during the course of using this report. Please direct any such correspondence to InfoNetrix Client Services. (Detailed company contact information is provided on the web at: PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

Market Horizons™ Report Contents
Executive Market Briefing Marketplace Characteristics Market Drivers, Issues & Trends Market Analysis & Future Outlook Supplier Environment This section provides an overview and detailed analysis of the Market Analysis and Future Outlook for Real-time Automation and Controls (RTAC) in the North American Water/Wastewater Utilities Marketplace for the period . Market forecasts are provided with successively more detail, starting with overall market values and concluding with annual numbers of opportunities and expenditures for projects in each category. PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

Market Analysis & Future Outlook
Current Market Assessment Market Outlook Synopsis General Market Outlook System Solutions Outlook Field Data Devices Outlook PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

Current Market Assessment Market Perspective
“You don't take technologies to market, you take products to market. A technology reaches the marketplace if it supports a product that provides utility and value." - Alberto Leon-Garcia, IEEE Fellow & Professor, University of Toronto PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

Current Market Assessment Market Composition & Direction
Slowed pace of change in structure & composition Privatization models over-promised and under-delivered Last round of M&A activity still being digested/rationalized Recession depleted municipal tax funding for most projects Still trying to digest and respond to new security mandates EPA funds for vulnerability assessments have been depleted Utilities view security as an un-funded mandate Pending legislation is mostly for security education and preparedness training; no specific funding for RTAC improvements is apparent Earlier ( ) pace of M&A activity has slowed substantially Privatization in re-evaluation stage (benefits not being realized) Atlanta canceled privatization contract with United Water (Suez) New Orleans pulled the plug on its 3-year privatization initiative; unable to obtain 3 qualified bids for project on 2nd RFP after earlier RFP failed to produce any compliant bids and were all rejected PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

Current Market Assessment Market Values & Growth
Market rebound in 2003, but issues linger: Continued utility spending restraints… Sustainability of economic recovery remains uncertain Budgetary & funding uncertainties (especially for municipal utilities) Utility regulation, realignment and redefinition Ongoing utility mergers, acquisitions & divestitures Some privatization reversals; fewer new initiatives Largely un-funded yet pervasive security mandates evolving Supplier challenges… Intensified price competition (with slow recovery expected) Further pressure for continued product standardization Diminishing numbers of very large projects Many large projects on hold pending economic recovery PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

Current Market Assessment Project Opportunities: System Solutions
Substantially all of the largest utilities now have some type of SCADA and/or PAS system in place Many projects have been upgrades & expansions to legacy installations during recession A large portion of enhancement projects are sole-sourced Moderate growth in numbers of large ($1.5M+) projects, but still concentrated among a relatively small number of utilities Increasing numbers of smaller projects (especially among Municipal Utilities) gaining momentum Some “push up” from lower price range into $100K-$350K range will augment growth as mid-sized utilities strive for improved functionality and more sophisticated capabilities Also “push down” from higher price ranges into $750K-$1.5M range as product standardization continues PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

Current Market Assessment Project Opportunities: FDDs
Field Data Devices (FDDs) PLCs continue to displace RTUs as FDD of choice due to: Standardization Simplicity (Ladder Logic Legacy) Perceived lower costs than for RTU/DCS equipment mainly due to modular design and electrical supply house availability Upgrades & expansions to legacy installations during recession funded mainly from O&M budgets RTUs remain popular for wastewater lift station monitoring and water distribution pump stations PLCs preference increasing for plant & process applications Increasing numbers of low-end units as smaller utilities enter RTAC user market in increasing numbers PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

Market Outlook Synopsis System Solutions
Opportunity Outlook Good project opportunity growth (7-10% CAGR) in ≤$100K & ≤$350K ASP ranges; heavily driven by upgrades and new entry-level buyers Annual market expenditures slightly more modest (4-9%) but still good Projects in higher ASP ranges ($750K->$5M+) will be mainly for large MUNIs and other utilities serving populations of 100,000 or more Project opportunities escalate in as economy recovers Average Selling Price (ASP) Outlook Flat to slightly down across most ASP ranges; any increases will be nominal Market Value Outlook Good growth (3-8% CAGR; across most ASP ranges), driven extensively by increasing numbers of small system procurements and more $1.5-$5M projects for plant modernization & upgrades PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

Market Outlook Synopsis Field Data Devices (FDDs)
Opportunity Outlook Best growth opportunity (largest numbers of projects) among mid-sized FDDs (≥$3.5K ≤$7.5K); most involving at east some process automation FDDs in higher ASP ranges (≥$7.5K-$3M+) will be mainly for in-plant process automation and/or main line pump/filtration apps Average Selling Price (ASP) Outlook Flat to slightly down across all ASP ranges, especially at low end Market Value Outlook Good growth (3-8% CAGR; ) across middle ($3.5K-$7.5K) ASP ranges, representing mainstream RTAC-FDD market Anticipated “push down” from upper ASP ranges augmenting growth in lower ranges (e.g., ≤$1K & $1K-2K ASP) PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

General Market Outlook Systems Composition & Contributions
Systems segment components: SCADA PAS Hybrid Systems Includes all host hardware, software, engineering and integration Excludes all Field Data Devices PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

General Market Outlook WWMS-RTAC Market Values
Good overall Systems market growth at 5.1% CAGR (based on market value) Systems Market Value: 5.3% CAGR is driven extensively by influx of smaller utilities becoming RTAC buyers and larger utilities making incremental upgrades and enhancements to legacy installations. FDD Market Value: 4.4% CAGR is driven by the same factors as for Systems (above) plus increasing requirements for better/faster data acquisition stemming from Clean Water Act and Safe Drinking Water Act provisions. PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

General Market Profile WWMS-RTAC Market Values (All Segments)
Annual Expenditures ($ Millions) PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

General Market Outlook WWMS-RTAC Opportunities (All Segments)
Systems opportunities will see moderate but steady growth at 5.3% CAGR ( ) Best growth will be in the 2 lower ASP ranges (<$100K & $100K-$350K). 9.9% CAGR in $1.5M-$5M range is mainly due to the relatively small number of systems in range Highest range ($5M+) will remain relatively flat PAS & Hybrid systems in this range are primarily plant process automation systems No SCADA system opportunities projected in this range PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

General Market Profile Systems Project Opportunities & FDD Units
Number of Opportunities* (*NOTE: Logarithmic Scale) PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

General Market Profile Systems Composition & Contributions
Annual Expenditures ($Millions) PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

Detailed Market Profile SCADA Systems Values
Annual Expenditures ($Millions) Average Selling Price Ranges PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

Detailed Market Profile SCADA Systems Opportunities
Number of Opportunities Average Selling Price Ranges PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

Detailed Market Profile PAS Systems Values

Detailed Market Profile PAS Systems Opportunities

Detailed Market Profile Hybrid Systems Values

Detailed Market Profile Hybrid Systems Opportunities

General Market Outlook FDD Composition & Contributions
Field Data Device (FDD) segment includes all FDD hardware, software, engineering and integration, whether or not purchased as part of a system. Includes FDDs for Distribution & Control (e.g., water pump stations, wastewater lift stations, storage facilities, etc.) and Plant data acquisition and controls (e.g., pumping and filtration apparatus; chemical injection systems; digesters; etc.). Excludes communications media (e.g., radios, leased lines or other media costs) unless integral the FDD, such as embedded modems, radio links, etc.) and special panels or enclosures. PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

General Market Profile Field Data Device (FDD) Market Values
Annual Expenditures ($ Millions) PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

General Market Profile FDD Market Value Contributions
Annual Expenditures ($Millions) PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

General Market Profile FDD Opportunities
Number of Units PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

Detailed Market Profile D&C FDD Market Values
Annual Expenditures ($Thousands) Average Selling Price Ranges PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

Detailed Market Profile D&C FDD Opportunities
Number of Opportunities (Units) Average Selling Price Ranges PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

Detailed Market Profile Plant FDD Market Values
Annual Expenditures ($Thousands) Average Selling Price Ranges PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

Detailed Market Profile Plant FDD Opportunities
Number of Opportunities (Units) Average Selling Price Ranges PART 4: Market Analysis & Future Outlook Reproduction or distribution of copyrighted materials without written permission is strictly forbidden.

Market Horizons™ Report PART FOUR Market Analysis & Future Outlook

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Market Horizons™ Report PART FOUR Market Analysis & Future Outlook

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