Prices are declining because new technology has lowered the cost of providing satellite communication services for suppliers.
(PRWEB) August 07, 2014
Satellite and earth communication systems services have a buyer power score of 4.3 out of 5. The score reflects the positive purchasing environment and low risk of price volatility associated with satellite communication services. According to IBISWorld analyst Andrew Krabeepetcharat, the price of these services is expected to decline during the three years to 2014 due to the technological change in satellite communication systems and consistently declining costs for inputs such as semiconductors and other electronic components. Major suppliers, such as AT&T Corp., Verizon Communications Inc. and Sprint Nextel Corporation, have invested heavily in research and development (R&D) to improve the performance of satellite communication technology and make it more cost effective. Large vendors are striving to offer the best-quality services at competitive prices, benefiting buyers. Furthermore, the average supplier's profit margin is fairly high, benefiting buyers by allowing them to negotiate prices via multiyear contracts.
Prices are expected to continue to decline as satellite communication technology improves during the next three years, continues Krabeepetcharat. More suppliers are entering the market and will help drive prices down through price competition. At the same time, input prices for semiconductors and electronic components will continue to fall, prompting suppliers to reduce prices to compete with other vendors. However, as private investment in computers and software and the percentage of services conducted online grow in the next three years, rising demand for satellite communication services will mitigate price declines.
However, there are several factors limiting buyer power. For example, market share concentration is moderate due to the highly specialized technology related to these services, which requires a significant level of capital investments and makes it more difficult for new suppliers to enter the market. Thus, buyer power is harmed because supplier options are limited. Moderate switching costs also limit buyer power. Certain buyers require setup and installation for large-scale satellite communication systems and will face some expenses when switching suppliers. For more information, visit IBISWorld’s Satellite & Earth Communication Systems Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of satellite and earth communication systems services. These services provide telecommunications connections via satellite for consumers and business that do not have access to wired or cellular networks. This report does not include direct-to-home satellite television services.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.