Test & Measurement Industry Update: Instrumentation Gets Smarter and Faster

According to Gutterman, Geotest has already evaluated its products to determine which components meet the directive, and which do not. "We will start using this year only those components that meet the requirements of the leadfree directive. It will increase prices almost across the board," he explained. "There is less of a selection. If you have three or four sources for a standard component, you may have only one or two sources - if you're lucky - for a lead-free part. You have less competition and pricing increases."

Dehne agrees that while the directive is a good initiative for the environment, having to completely change the way in which components are manufactured is a costly process, and that cost ultimately will filter down to the customer. "You have to synchronize when the semiconductor vendors will be ready and when companies like us putting the components on a board will be ready. There is a lot of timing and investment that goes into that. The costs go up, and someone has to absorb that."

So, as far as industry growth, what is the cost of entry into the test and measurement market? "For anyone to enter this market, they have to have some kind of unique contribution - some competitive advantage - and that's true of any market," said Agilent's Sampl. "Because the electronics industry is relatively mature, the test and measurement market is also relatively mature. But like any mature market, underneath the surface there is a lot of dynamic change."

The greatest opportunity for new entrants appears to be on the low-end, or commodity end. Said Cowper, "Ours is a segment with a very high barrier to entry because it's technology in which you've developed a core competency over years of development. It's extremely expensive for an organization without that core competency to leap into that market and compete against the leaders."

According to Ostrow, "The stranglehold that the top-tier manufacturers had on the marketplace for the last several years is loosening a bit. The successful companies will either own a category or be the number-two player. The ones that have struggled in terms of volume sales, or even share price, are the ones that are trying to be too much to too many," he explained. "The number-one and number-two companies no longer have that big grip. To me, there hasn't been a better time to be in the test and measurement industry."