UPS vendors pressing to cut battery, transformer prices

Electronic News, August 10, 1992 by Bernard Levine

Uninterruptible power supply (UPS) makers have been scrutinizing their purchases of batteries, transformers and other componentry to cut costs and size, although dramatic changes in such mature areas can be tough. Pressure on the UPS industry is a two-step situation: end-users of widely deployed office equipment increasingly have the same price/performance expectations of the back-up UPS systems they buy, and the UPS vendors, in turn, are accelerating their shopping sprees for the mature piece parts which can comprise the most cost-effective UPS systems.

"Batteries are difficult," said John Mock, senior UPS marketing consultant, Exide Electronics. "They defy miniaturization. In a single-module, on-line UPS, the lead acid stationary battery at 15 or 20 minutes of operating could be 30 percent of the cost of the system."

Asked what the UPS firm is looking for from its battery suppliers, Mr. Mock replied "We want them to provide a reliable battery that lives its advertised life. You get what you get from the battery companies. It hasn't changed much since Ben Franklin."

There "won't be a revolutionary breakthrough" in lead batteries, agreed Mark Myers, manager of application engineering, at Deltec Corp., although he indicated any possible improvements are vital for the cost-squeezed UPS industry. "Five years ago, a 10KVA UPS would be $20,000, but today it is priced less than half that. Price pressure leads to technology change. We have redesigned, making our UPS smaller, more efficient, with better controls."

As for battery pricing, it is higher than five years ago, but steady over the past two years, Mr. Myers said. "The market won't bear to pay more."

Meanwhile, he noted "Transformers are getting more efficient. We've learned how to use transformers more efficiently. We are also using IGBTs and pulse width modulation technology, which need less filtering. We need smaller and fewer fans, and smaller cabinets."

At Best Power Technology, Necedah, Wis., a spokesman said "Weight and physical size are always important issues in UPS. It is in our interest and the interest of our customers to make our products as small and lightweight as possible."

The financial need for such savings is crucial, noted Norman Ackerman, vice president of marketing and chief executive officer, Perma Power Electronics. "It seems every week another cost reduction program is being forced on us by marketing competition."

The battery market "is so stabilized by a few good manufacturers. Pricing is very stable. They have come down over the past year only slightly. Transformer people have come down more. We standardize on certain types of batteries and design around them. We can push more in transformers, and printed circuit boards, because there is more competition in those markets. There are only a few good battery suppliers."

For their part, battery makers say they have responded to the UPS market with improved products and fair prices.

Charles McManus, vice president of marketing, GNB Industrial Battery Co., Lombard, Ill., noted "Smaller and less expensive are magic words in the computer industry. As our customers have moved smaller in power, we have also. Right now, we are down to 10KVA; not too many years ago, it was 70KVA, and soon we will be at 500VA, in less than a year. The market is shifting clearly. Fifteen years ago, everything was over 100 KVA. Now with PCs and LANs, UPS is 500VA to 10KVA."

Battery pricing, he said, "is coming down, but not on the same slope as electronics. Lead is still lead. In the total product life cycle, the lead acid battery has come down a lot. It is a very mature product, but it is still coming down somewhat, and we are gaining in efficiency; more watt hour performance. UPS makers complain a lot, but we tell them we do everything we can. The closer and closer the finished product cost gets to the material cost, the ability to whittle the price down gets less and less."

At Panasonic Industrial Co., Barry Huret, assistant general manager, Battery Sales group, said "We have learned to make batteries more powerful, the same case size with 20 to 30 percent more capacity, over the past year."

He added "I don't think batteries are too expensive. There has been no significant increase in battery cost over the past few years, but significant increases in battery performance."

While the firm's batteries are currently made in Japan, "We are building a 150,000-square-foot plant in Columbus, Ga., that will be on stream in January. The Matsushita Storage Battery Corp. of America facility will help keep our costs competitive and stable, and give us more flexibility."

Dave Dunsworth, manager of marketing, telecommunications, Yuasa-Exide Inc., Reading, Pa., said UPS customers "want smaller batteries, but higher quality, in terms of reliability, dependability, and how long its life will be."