MARKET RESEARCH.

WMS Suppliers Penetrate New Markets, Look To Consolidate

Until recently, growth in warehouse management markets (WMS) stemmed from large companies in retail and manufacturing industries. But end- user saturation has forced WMS companies to explore new applications for third party logistics (3PL), e-commerce and mid-tier companies. Consequently, niche market penetration has spurred WMS software demand. Although opportunities are abundant, a new study from Frost & Sullivan advises participants to "consider mergers, acquisitions and alliances in order to consolidate market share in this fragmented market."

According to the new report entitled US Warehouse Management System Markets, total revenue for the WMS software vendor market is projected to increase from $620 million in 1998 to $1.8 billion by 2005. 1998 revenues for the WMS SI/Consulting market totaled $305 million and are projected to reach $1.2 billion by 2005. Growth in both markets will increase inversely as software vendors offer more specialized and efficient applications and as consultants assist companies in reengineering processes.

"Installing WMS software to improve warehouse efficiency implies utilizing a different set of rules for performing warehouse functions," says Vinita Jakhanwal, the lead analyst for the F&S report.

While companies increasingly recognize the efficiency benefits of WMS systems, they are still reluctant to reorganize warehouse operations and protocol. Jakhanwal concurs: "Gains from systems' improvement will be minimized if the client does not re-engineer its business processes simultaneously." Software vendors and consultants must demonstrate value, offer pertinent client deliverables, and develop applications that can be integrated across vertical industries, the study recommends.

"With many large companies streamlining operations, enterprise resource planning (ERP) and supply chain management (SCM) companies are searching for associated technology to improve their platforms," says Jakhanwal. Technological developments such as Windows CE and voice recognition continually transform WMS dynamics. Market leaders will acquire software with ERP integration capabilities and incorporate advanced technologies.

E-commerce proliferation will increasingly pose exciting new opportunities for companies offering the most efficient warehouse management solutions, concludes the report.

US Spending On Telecommunications Tops $517 Billion In 1999

The overall US telecommunications market (equipment and services) grew by more than 11.4 percent in 1999, generating revenues of $517.6 billion. Spending on telecom equipment continued its double-digit growth by recording an 11.5 percent increase over 1998 to reach $135.4 billion, according to figures from the Telecommunications Industry Association's 2000 MultiMedia Telecommunications Market Review and Forecast. Growth for transport services posted an 8.5 percent increase to $252 billion and support services posted a 17.3 percent increase to $138 billion.

The fastest-growing equipment categories in 1999 include: computer- telephone integration (CTI) hardware and software (up 66.2 percent over 1998); groupware (up 31.8 percent); videoconferencing equipment (up 14.3 percent); and network equipment and facilities (up 12.7 percent).

The largest dollar-value equipment category in 1999 was voice/data enterprise equipment, which totaled $75.8 billion, a healthy 11.5 percent increase over 1998.

As with virtually all other aspects of the telecom industry in 1999 and in recent years, the fastest-growing categories have been those that provide equipment primarily or largely for high-speed data transmission. Double-digit increases were recorded for Ethernet switches, network management equipment, routers and operating systems. ATM, integrated services digital network and frame relay also posted double-digit gains.

With respect to equipment primarily used for voice transmissions, voice processing (voice mail, interactive voice response, automatic call distributors and predictive dialing) showed the largest advance in 1999 with an 8.9 percent increase.

Asia/Pacific e-Banking Trails Region's Internet Securities Trading Boom

Securities traded online by private investors in Asia/Pacific markets will account for at least 20 percent of all retail equity market transaction volume in the region by 2003, according to the Dataquest unit of Gartner Group Inc. In fact, 70 percent of Asia/Pacific- headquartered retail brokerages will offer real-time Asian stock market trading facilities via secure Web sites by 2002. Through 2002, however, less than 50 percent of Asia/Pacific-headquartered banks will be able to leverage their Internet banking systems to succeed in consumer electronic commerce services.

Financial services organizations in the region's leading markets will be required to handle unprecedented retail transaction volumes over the Internet in the next five years. Dataquest has found that Japan, Taiwan and Korea will be home to the bulk of Web-based securities traders and online retail banking customers for at least the next three years. For the emerging markets in this region, including India and Malaysia, online securities trading and personal e-banking obstacles will continue to include regulatory hurdles and the lack of an Internet-based securities/transaction infrastructure.

"Customers who find that traditional securities trading services do not justify higher pre-order fees will begin to exploit direct Web-based trading in

droves by the middle of 2000," says Lane Leskela, principal analyst for Dataquest's e-Business Asia/Pacific programs. "By 2001, successful online retail banking services in Asia will require local banks to excel at Internet-centric marketing, customer relationship management and real-time web-based banking."

Because of the sheer demand for securities trading over the Web, most Asian brokers will shift their retail business to the Internet over the next five years, providing a variety of incentives for new and existing customers to make this shift, according to Leskela. As in North America, many traditional brokerage customers in Asia/Pacific may abandon traditional broker intermediaries when they realize the power and competitive pricing of direct global market access through securities trading over the Internet.

National regulatory interference in the development of online securities trading and retail Internet banking in Asia/Pacific will constitute the most serious market growth obstacle as global e-banking practices grow more competitive over the next three years. Regulators in local markets will ultimately be unable to control online securities trading from remote sites.

Internet securities trading and online banking "will utterly transform the consumer financial services marketplace" in Asia/Pacific over the next five years, the report concludes.