Just like every aspect of the electronics industry, rampant M&A activity has resulted in consolidation in the organizations offering test and measurement equipment. This is a sign of commoditization – the remaining players are operating in thinner margins. One of my good friends always says that in order to really be high-tech, a company must invest approximately 15% of its sales revenues to earn 50% margin. The catch-22 is always, which comes first? By these numbers, the four or five major test and measurement equipment companies that engineers typically deal with tend to fall into the category of actually being high-tech.
Trends driving innovation in this market is the needs of IoT systems, from measuring energy harvesting power levels to the opposite spectrum of measuring fast wide-band-gap switching waveforms. The focus is power electronics with high slew rates at high voltages, and with high isolation at relatively high voltages and power levels.
Silicon Valley’s disruption of the automotive market is also driving innovation in test and measurement in the areas of electrification of transportation. Additionally, 5G-market deployment will drive the test equipment market to provide innovative solutions. For instance, oscilloscope suppliers have innovated in the area of probes just where it was needed for power applications.
Overall, electronics suppliers are also offering more capabilities for less money than ever before. Yet the conundrum that has been true for decades still applies; that is, the component market, including semiconductors and passive devices (.01% and higher precision resistors, for example), need higher and higher performance test equipment to test their products. However, test and measurement companies are limited by the parts they can obtain to design and build their equipment, presenting another catch-22: You give me higher performance and I will deliver higher performance to you. And such is the virtuous cycle of product development in test and measurement.
Innovation is also being driven by test equipment becoming more portable while offering battery-powered operation that doesn’t have to compromise on performance. This opens up possibilities for engineers who can bring good test equipment to customer locations and remote sites, such as base stations, in vehicle testing, etc. This portable equipment is driving improvements in battery and charging technology. Also, users of test and measurement equipment are demanding highly efficient power supplies with fan-less operation when possible. Not only is fan noise an irritation, it creates dust ingress and can be a source of system failures.
In summary, when I worked for a defense contractor, we always bought the best test equipment possible. Our motto was “We don’t buy toys.” The stakes were simply too high to not use professional test equipment. I’m always astounded when I work with customers who often are forced to use very old, obsolete equipment or are not provided with the proper test gear to do the job. The creed of mechanics that you are only as good as your tools applies to engineers and test equipment. My advice to managers: invest in your engineers with the best, calibrated test equipment – it pays off in the long run.