Global Defence Industry Finds New Business Opportunity in Emerging Countries, Says Frost & Sullivan

LONDON, Nov. 19, 2012 /PRNewswire/ -- Under tight budgetary environment global defence industries are experiencing another threat to their growth: unexpected competition arising from rapid innovations in the commercial of the shelf (COTS) technologies. This is more relevant to C4ISR, being a complex web of high-tech sub-systems. As traditional defence markets no longer offer reliable growth opportunities global defence integrators are being forced to develop business in adjacent markets including new geographies, industries and end-users.

According to Frost & Sullivan research, countries can be broadly categorised into three types depending on the level of C4ISR capability: Advanced, Transitioning and Limited Capability. Frost & Sullivan predicts that each Advanced Market, including the US and major European countries, among a few others will spend at least USD 500 million each year between 2012 and 2021 on C4ISR capabilities.

Despite this, their market shares to global C4ISR are expected to decline in the study period. Frost & Sullivan consultant, Sabbir Ahmed, explains that this phenomenon is "not so much attributed to a reduction in Western market expenditure as significant investment growth in most Transitioning Markets." Maturing countries such as Brazil, Russia, India, China, Saudi Arabia, among others are the Transitioning Markets with significantly higher growth rates in C4ISR spending over the period mentioned.

Defence majors pursue geographical expansion, which Mr. Ahmed sees as a "sound strategy given than defence budgets in the Transitioning Markets are on the rise due to economic growth." These countries have demand in integrated Land C4ISR systems such as armoured vehicles with on-board computing systems. There is also increasing demand for special mission airborne systems that provide situational awareness and superiority.