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Evolution of Smart Technology to Emerge as a Key Trend for the Global Commercial AC Market Until 2020, Reports Technavio
[August 10, 2016]

Evolution of Smart Technology to Emerge as a Key Trend for the Global Commercial AC Market Until 2020, Reports Technavio


Technavio's latest report on the global commercial AC market provides an analysis on the most important trends expected to impact the market outlook from 2016-2020. Technavio defines an emerging trend as a factor that has the potential to significantly impact the market and contribute to its growth or decline.

The efficient unitary and chiller systems manufactured in Latin America, the Middle East, and parts of APAC will boost the global commercial AC market. The chillers segment is the second-largest revenue contributor to the overall market. APAC is the largest market for chillers, accounting for 300,000 units as of 2013, which represented 74% of the global chiller market and almost 50% in terms of revenue.

"In the Americas, centrifugal, screw, and oil-free centrifugal chillers are likely to benefit significantly from the economic recovery within the next 2-3 years. High capital investment is required to manufacture chillers, thus, resulting in high price of this product segment. The vendors in this market are focusing on performance, efficiency, and smooth operation, including noise control," says Anju Ajaykumar, a lead analyst at Technavio for research on engineering tools.

The top three emerging trends driving the global commercial AC market according to Technavio heavy industry research analysts are:

  • Integration with IoT
  • Emergence of smart technology
  • Growing preference for interoperability

Integration with IoT

The emergence of Internet of things (IoT) platforms has enabled monitoring of various HVAC appliances. IoT is used for effective energy management and to support use-cases such as preventive maintenance and remote diagnostics. IoT framework comprises two components, namely cloud-enabled IoT platform and IoT gateway. IoT platforms enable services such as energy management and smart building management. IoT gateway components provide connectivity to ACs.

"The platform is capable, either directly or via gateway, of connecting to devices from various domains and, therefore, supports a broad range of applications. The IoT gateway is used to provide connectivity to HVAC appliances, including ACs, in commercial areas and convert them into smart devices," says Anu.



The framework supports features that include remote access and monitoring, real-time subscription management, and video monitoring and camera control.

Emergence of smart technology


Despite the high initial expenditure involved and the need for manual and routine adjustments, the implementation of smart HVAC systems is increasingly becoming a necessary expense for larger buildings, as these systems enhance operational cost savings. With the advent of smart buildings, smart grid, and smart cities, the scope of data has increased more than ever, enabling better measurement using Big Data and analytics. Smart grids are capable of communicating with individual buildings, while smart cities can use technology to observe the trends across all buildings in the city.

There is a perceptible shift in the market toward smart grids, smart metering, and building automation. Smart grids enable intelligent distribution that aids in minimizing power losses, while smart meters provide measurement and reporting of electricity consumption in real time. As HVAC systems are among the biggest consumers of energy, these smart technologies can accrue good savings by detecting faults in time and enhancing overall performance.

OEMs in the HVAC market are increasingly employing technologies such as Big Data, advanced analytics, and cloud computing for product differentiation to gain market share. Using these technologies, it is possible to perform trend analysis, pattern recognition, and cause and effect analysis. Big Data and advanced analytics help in predicting the future energy needs, and in complying with regulatory and statutory guidelines by furnishing complete proof of energy efficiency and performance.

Growing preference for interoperability

Interoperability ensures effective integration and ease-of-use of different components in a particular system or appliance manufactured by various manufacturers. Building owners are increasingly requesting interoperability for commercial AC components as it eliminates the need engage with a single service provider for a long time. Therefore, manufacturers are slowly switching to local operating network (Lonworks) or BACnet (a communication protocol for building automation and network control) to make their systems open and ready for interoperability. However, open protocols in terms of interoperability are applied only at the field level and not fully implemented at the management level.

According to Technavio's estimate, in 2015, 20% of AC controllers worldwide still used proprietary protocols, but the figure is projected to decline slightly to 15% by the end of 2016. This indicates that although manufacturers and integrators may seek interoperability and openness in their systems, the installed systems may fall short of customers' expectations in terms of seamless integration they offer. Therefore, the ability to easily integrate such systems will be a crucial deciding factor in the coming years for building owners in selecting the AC control manufacturer.

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About Technavio

Technavio is a leading global technology research and advisory company. The company develops over 2000 pieces of research every year, covering more than 500 technologies across 80 countries. Technavio has about 300 analysts globally who specialize in customized consulting and business research assignments across the latest leading edge technologies.

Technavio analysts employ primary as well as secondary research techniques to ascertain the size and vendor landscape in a range of markets. Analysts obtain information using a combination of bottom-up and top-down approaches, besides using in-house market modeling tools and proprietary databases. They corroborate this data with the data obtained from various market participants and stakeholders across the value chain, including vendors, service providers, distributors, re-sellers, and end-users.

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