These slides are from a webcast presented on 03/28/10. During this webcast Chris Rezendes, Executive Vice President at VDC Research, discusses the effects of the downturn and the current recovery trends seen in the position sensor market based on the data from our latest study. Specifically, we will cover: A general overview of the photo and proximity sensor and limit switch markets, the linear displacement sensor market and the rotary (non-modular) position sensor market – including market estimates & forecast, competitive landscape and channel estimates; The market perspective on the economic recovery; The potential impact new product introductions will have on the market; and Product/market challenges.

1. VDC Research Webcast:
Position Sensor Market
‘Positioned’ for Recovery
Market Demand Analysis, 9th Edition
Global Automation & Control Practice
Industrial
Chris J. Rezendes – Executive Vice President
David A. B. Laing – Senior Analyst

2. Recording Available
These slides are from a webcast presented on 03/28/10
A f ll audio recording is available for download at:
full di di i il bl f d l d t
http://www.vdcresearch.com/market_research/industrial_automation/freeresearch.aspx
1 –  2010 VDC Research Group, Inc.

3. VDC Research Group
Complimentary marketing data on the
Industrial Automation & Control Markets
is available on our website at:
www.vdcresearch.com
2 –  2010 VDC Research Group, Inc.
Industrial Automation & Control Practice

4. Today’s Speaker
• VDC Research Group
 Founded in 1971, continuous, profitable operation for nearly 40 years
 Focus on a number of embedded and niche network market segments
 1,000 clients annually …90% technology suppliers, tech investors
• Ch i Rezendes – E
Chris R d Executive Vice President
ti Vi P id t
 19 years experience in embedded, industrial, defense and other mission critical
and high available technology industries
 14 years experience in senior management and leadership positions at a
number of technology solutions and professional services organizations
 2 years DARPA contracting
 Chris has advised many of the largest and most respected technology
companies in a number of technology segments worldwide
 Chris is a graduate of Harvard University
3 –  2010 VDC Research Group, Inc.
Industrial Automation & Control Practice

5. Agenda
Introduction
2009 Position Sensor Report: Definition & Segmentation
General Economic Profile and Forecast, for the Position Sensor Market
Product & Technology and Market Trends
Competitive Overview
C titi O i
Closing Remarks
Q&A
4 –  2010 VDC Research Group, Inc.
Industrial Automation & Control Practice

6. Position Sensor Market Remains a Collection of Segments
Multiple technical,
M lti l t h i l vertical, regional and application segments – and subsegments
ti l i l d li ti t d b t
Vertical & Application Markets
Asia-Pacific
Regional
Markets
EA
A
EME
Americas
Proximity Sensors
Photo Sensors
Product Limit Switches
Type
Linear Displacement Sensors
Rotary (Non-Modular) Position Sensors
5 –  2010 VDC Research Group, Inc.
Industrial Automation & Control Practice

7. Position Commercial Value Chain Changing With Market
The i
Th rise of the A i markets, and th ECM/ODM community, may b elevating A i ECM/ ODM
f th Asia k t d the it be l ti Asian ODMs
• There are many layers
Materials & Components and possible paths between
d ibl th b t
position sensor suppliers and
the users of their products
Manufacturers of Position • The VDC report tracks suppliers
Sensors & Limit Switches
shipments to the FIRST
customer or level of distribution
• Hard line arrows represent the
Vendor Sales
Personnel
Manufacturers’ channels making up the majority
Representatives /
(Field and
Agents
of shipments
Inside)
• Dotted lines indicate secondary
product channels, but also
important communication
OEMs and feedback channels
Systems
Distributors ---------------------- Integrators
-Contract Mfg. g • Within the OEM Segment, there
g
is a growing contract
manufacturing element
End Users/ Enterprise Deployers
6 –  2010 VDC Research Group, Inc.
Industrial Automation & Control Practice

8. Position Market Growth Will Require Agility to Manage...
P iti sensing products will experience a strong, b t uneven, th
Position i d t ill i t but through 2013
h
Overall Position Sensor Market
10,000
($ M)
9,000  VDC model overall
may show ‘smoother’
8,000
growth generally,
7,000 but …
6,000  Position sensor
market segment
5,000 performance will vary
4,000 widely along a
number of
3,000 dimensions
2,000  Mil/Aero market is
expected to continue
1,000
to be more stable than
0 most despite changes
in DoD and
international MoD
priorities
Total Mkt
7 –  2010 VDC Research Group, Inc.
Industrial Automation & Control Practice

9. …and Exposure to a Number of Technologies
Vi t ll every t h i l segment i growing … and APAC share of each also
Virtually technical t is i d h f h l
$1,600
$1,400
$1,200
$1,000
APAC
$800
EMEA
Americas
$600
$400
$200
$0
Photo Proximity Limit Switch Linear Rotary Position
Displacement
8 –  2010 VDC Research Group, Inc.
Industrial Automation & Control Practice

10. Overall, Users Expect 2010 to be a Strong Buy Year
However, we expect shipment l
H t hi t levels t l b 1 3 quarters from this chart
l to lag by 1-3 t f thi h t
When will your company’s purchase levels of these products return to previous levels?
My Company’s purchase level will not return to the previous level. 3.1%
My Company’s purchase level of these items did not decrease. 31.9%
My Company did not previously purchase these items. 6.0%
In 2015 or Later 2.3%
In 2014 0.0%
In 2013 1.6%
2nd Half 2012 2.3%
1st Half 2012 3.1%
Late 2011 5.2%
Mid 2011 6.0%
Early 2011 8.3%
Late 2010 12.2%
Mid 2010 13.5%
Early 2010 4.4%
0% 5% 10% 15% 20% 25% 30% 35%
9 –  2010 VDC Research Group, Inc.
Industrial Automation & Control Practice

11. The Tension Between Cost and Performance?
Expected to go away over time as new products offer increased capability and l
E t dt ti d t ff i d bilit d lower cost
t
New or
“high end”
Legacy Products
Position Sensing
Products
Customer’s
Future Cost
Sensor
Needs
Capability / Reliability
10 –  2010 VDC Research Group, Inc.
Industrial Automation & Control Practice

12. One Potential Example: Vision / 3D / Imaging
Sensor users are open to new technologies, such as machine vision, with adoption 3X over rejection
S t t h l i h hi i i ith d ti j ti
Are you using or have you considered using • VDC estimates that the potential market for new
different technologies (e.g., machine vision, 3D,
and / or Confocal Chromatic) instead of the linear
t h l i remains virtually untapped with 36%
technologies i i t ll t d ith
displacement sensing products specifically actively considering and 44% others that could
mentioned in this section? be upside targets for expansion
• VDC estimates that the one significant barrier to
new technology entrance to the linear
Yes we are using them. 15.0% displacement is either the cost of the actual
product compared to the incumbent or the
adoption / learning curve costs involved in
implementation
No, but we are considering their
36.4%
use. • Response to this question which was posed only
to users of linear displacement sensors was
optional and the results reflect the 107 (57 End
Users and 50 OEM, Int. and Others) that made a
No, we are not using them and are
43.9% selection
not yet considering their use.
After evaluation, we chose not to
4.7%
use them.
0% 10% 20% 30% 40% 50%
11 –  2010 VDC Research Group, Inc.
Industrial Automation & Control Practice

13. The Persistence of Multiple Technologies?
For
F most every application there are several product t
t li ti th l d t types/categories to consider
/ t i t id
• Other Product
Considerations Include:
Operating Target • Very High Accuracy
Environment Shape,
Shape Surface • Long Range
g g
• High Resolution
and • Small Size
Color • Durability / Reliability
• Low Power Requirements
q
Cost • High Speed / RPM Capability
• Wireless Connectivity
Target
• QC Functions:
Material • Surface, shape, color
• Process correction
data/feedback
• Debug Functions
12 –  2010 VDC Research Group, Inc.
Industrial Automation & Control Practice

14. Position Sensor Industry: Competitive Overview
Top 3 Proximity Sensor Top 3 Linear Displacement Top 3 Rotary (Non-Modular)
Manufacturers Sensor Manufacturers Position Sensor Manufacturers
(W/W $M) (W/W $M) (W/W $M)
Turck Inc Dr. Johannes Dr. Johannes Heidenhain
Heidenhain GMBH GMBH
iFM Efector Schneider Electric SA Schneider Electric SA
KEYENCE
OMRON Electronics, Inc SICK AG
CORPORATION
0 500 0 500 0 500
13 –  2010 VDC Research Group, Inc.
Industrial Automation & Control Practice

15. Position Sensor Industry: Competitive Overview
Top 3 Photoelectric Sensor Manufacturers Top 3 Limit Switch Manufacturers
(W/W $M) (W/W $M)
( )
KEYENCE OMRON Electronics, Inc
OMRON Schneider Electric SA
SICK AG Siemens Industrial Division
0 500 0 500
14 –  2010 VDC Research Group, Inc.
Industrial Automation & Control Practice

16. Closing Remarks
The l b l
Th global position sensor market is still a multi-billion opportunity, and it will grow again
iti k t i till lti billi t it d ill i
• Virtually all of the vertical markets have declined significantly from the peaks seen in
mid-2008 with the sole exception of the military / aerospace market, which is generally
governed by long term contracts
• China and Brazil are seen as having some of the best growing markets in the near term, but
expansion generally requires placing manufacturing facilities inside them. There are
multiple reasons for this including economic (labor costs), government-imposed trade
restrictions, as well as concerns that today’s business partner could become a future
competitor
• The military / aero markets – the best performing markets in 2008 and 2009 – are likely to
tighten as competing interests for tax revenue will likely be reflected in the kind of stimulus
legislation that we are seeing in many regions of the world
• In VDC’s estimate, the most realistic picture for economic recovery was seen when users
were asked about % increase or decrease of future (next 3 years) sensor purchases
 5% thought that purchases would be within +/- 1% of current levels and 25% predicted a modest
2 – 5% increase
 Therefore it is best for suppliers to plan for and expect 4% year to year growth from 2011 onward
after a modest recovery of 7 – 8% in 2010
15 –  2010 VDC Research Group, Inc.
Industrial Automation & Control Practice

17. How will VDC coverage help clients stay on top of the market?
Position Sensor Market, 2009 Global Market Demand Analysis
, y
• VOLUME 1: Proximity and Photoelectric Sensors and Limit Switches
• VOLUME 2: Linear Displacement Sensors
• VOLUME 3 R t (Non-Modular) P iti S
3: Rotary (N M d l ) Position Sensors
ACTUAL MARKET SIZE/SUPPLIER
STUDY PUBLICATION DATE FORECAST MARKET SIZE
SHARE
Service Year 2010 2008/2009 2010-2013
16 –  2010 VDC Research Group, Inc.
Industrial Automation & Control Practice

18. Q&A Session
Thank You for Attending this VDC Webcast
g
For more information about VDC Research coverage of the global markets
for industrial networking solutions – including the 2009 Position Sensor Market,
Global Market Demand Analysis, or the recently p
y y published Touch Screen Sensors
and Displays Global Market Demand and Customer Requirements Analysis study,
please contact:
Christopher Rezendes – Executive Vice President
p
cjr@vdcresearch.com | 508.653.9000 x120
David Laing – Senior Analyst/ Program Manager
dlaing@vdcresearch.com | 508.653.9000 x146
Tim Shea – Senior Account Executive
tims@vdcresearch.com | 508.653.9000 x132
17 –  2010 VDC Research Group, Inc.
Industrial Automation & Control Practice