eneral-purpose test equipment is a

Gdiverse assortment of relatively low-volume, sophisticated technology products that are expensive to develop and manufacture. Most

products are built in short runs with low finished goods inventories and long lead times from manufacturers.In the old market, manufacturers created new, state of the art products from their own engineering expertise and consulted with their customers' engineering counterparts to demonstrate their value. Better measurement specifications usually won the sale and the customer always paid list price. As defense spending plummeted, new markets such as telecommunications and IT took up most of the slack in industry sales—but with very different product needs and buying priorities. Testing needs have shifted from measurement technology for research and product design to versatile, user-friendly tools for the verification of product and system performance.Customers are now driven to minimize their assets and be nimble in response to rapidly developing new markets.They demand products that are easy to use and understand and cutting edge technology is still important to them, but they value the operation of the product as much as its specifications. Most customers want products they can pick up and use, not ones that require lengthy demonstrations and consultation.As they respond to these profound changes, manufacturers have become so highly focused and fragmented that even finding a source for a product has become a daunting task for customers. Product lines are being cut back, spun-out and restructured

so rapidly that information becomes obsolete faster than it can be published and disseminated.In order to keep the development cost low, companies try to keep the testing costs very low. This is a big challenge for companies in the test and measurement space, as they spend large amounts to keep in line with futuristic technology trends to match the customers’ needs. Also, some challenges other than the pricing pressure are:- High-end testing instruments are rented out in order to reduce capital expenditure- Low availability of alternative testing mechanisms- Less clarity in Government policies- Price-sensitive end users and low subscriber Average Revenue per User (ARPU)- Lack of a structured ecosystem

WHEN TO LEASE, WHEN TO BUY AND WHEN TO RENTWith equipment budgets growing ever tighter in the current tough financial climate, more and more firms are putting greater emphasis on the business case for procurement before investing.

TEST & MEASUREMENT

Rental Test & Measurement Equipments

SHIKHA NAGPAL

Rentals is providing the solution that can help reduce a company’s

financial risks, free up much needed capital and help eliminate the

“hidden” costs associated with the purchase of test and measurement

equipment.

Is it the THE RIGHT SOLUTION?

However your procurement cycle is organized, there is no escaping the fact that buying electronic test and measurement equipment requires cash, capital and commitment. Many of the instruments are specialist, with complex technology, so it’s not just the purchase price that has to be considered; there are also the lifecycle costs.A company can begin by assessing the frequency and period of use for their test and measurement equipment. Firms are then in a better position to weigh up the benefits of purchasing an instrument versus renting or leasing, before making an investment. LeasingLeasing offers a simple, cost-effective solution for companies seeking equipment for longer periods of time and in the test and measurement industry can be a viable alternative to purchasing an instrument outright. Typically, contracts are fixed between three and five years and, as this is shorter than the lifespan of the equipment, you pay significantly much less than the equivalent cost of ownership.The primary benefits are financial, as leasing can save capital, improve cash flow and greatly reduce the cost of ownership. The equivalent cost of ownership is, on average, 25% higher than leasing.In addition to financial rewards, the leasing option can also be beneficial in terms of keeping equipment up-to-date without the financial burden of maintenance, calibration, obsolescence and repair costs. With a lease, this burden is left to the leasing company so, when the lease expires, there is the flexibility to upgrade or return the equipment.Leasing options can also be tailored to suit individual business needs, with the choice of a simple lease at a competitive rate, or a lease with manufacturer services bundled in under one simple monthly charge. Alternatively, for a fully-outsourced solution, it is possible to add management services. BuyingThe decision to buy should predominantly be based on the length of time instruments are needed and the demand for usage. Generally, if a business needs the equipment for more than three years - and it is going to be used frequently - the decision is often made to purchase rather than lease.Buying is used in sectors such as the defence industry where a proportion of the budget, sometimes funded by state agencies has been designated for test and measurement equipment.

In some cases, not using the allocated amount for equipment could have implications for future budgets.Typically, firms that decide to buy tend to be those that prefer to use their capital budgets to obtain equipment and own it outright because they are not measured on capital expenditure. In some cases, the reason for buying is historical as, only a few years ago, renting and leasing deals in the sector did not exist. Now companies have got the choice - and the opportunity - to enjoy greater financial flexibility.RentingMany of the instruments used in the field of electronic test and measurement equipment are specialist and contain complex technology. When procuring this equipment it is not just the purchase price that must be considered but also the lifecycle costs.Often, there is a substantial difference between the initial expense and the ongoing support costs. In fact, on average a high-quality piece of equipment works out at double the original purchase price because of the comprehensive maintenance, upgrades, capital funding and ongoing management and tracking costs.The fundamental requirement of a piece of test and measurement equipment is that it measures the required parameters to a defined degree of precision. In order to cope with the ever-changing needs of the user, a revision to the software and hardware may be needed. Renting removes both the cost and time of managing the equipment, enabling access to the required instrumentation without the added responsibility of managing the calibration, maintenance, repairs and upgrades.Another major advantage of renting is that a business can afford to perform short-term projects, without large cash outlays. It also allows companies the flexibility to change or upgrade equipment and reduces the cost of maintaining equipment in-

TEST & MEASUREMENT

Renting equipment is a very attractive option for both large and small businesses. A major advantage of renting test equipment is that a business can afford to perform short term projects without the large cash outlays required when purchasing equipment.

house. Renting provides access to the most modern and advanced instruments for a small percentage of the purchase cost so companies who cannot afford to buy equipment outright can still get the latest equipment. A set rental payment also buys the company’s expertise and specialist technical knowledge of the most up-to-date products.Whether businesses choose to rent, lease or buy their test and measurement equipment depends largely on the type of equipment needed, the expected utilization and the financial priorities of the organization. In today’s competitive market place it is essential that companies have access to the best equipment for the right price. Many of the financial packages available through the test and measurement companies are flexible and can be tailored to suit the customer’s needs. The options of renting, leasing or buying are varied but the end result is always the same - businesses can lower their costs and improve efficiency.

Madhukar Tripathi, Regional Manager, Anritsu India Pvt LtdToday market is very competitive, all network operators have pressure to reduce Capital Expenditure – Operational Expenditure (CAPEX - OPEX) and they are investing very less for T&M. To keep CAPEX OPEX low, MSO, NEM are adopting rental model. Other reasons like limited time

period usage of T&M also leads to rental model.If instrument is required for short duration and one time project then rental model will work well, but instrument is in demand and need regular usage, then buying is best option. Sometimes old out-dated, un-calibrated instruments are supplied which make measurement results inaccurate. Hence this should be noticed when opting for rental T&M.There are few reasons behind growing rental model.• All Mobile Service providers and their installers are adopting less investment to increase profit. They have limited CAPEX OPEX and this is leading way for rental model.• Sometime instrument is required for very limited time, this also makes rental model easy. • Project (if short term) cost goes down.• Stock, maintenance, calibration cost is less for project. Anritsu provides rental T&M instruments by partnership with some global rental companies.

Reinier Treur, Global Marketing Director,LivingstonThe long-held belief that direct purchase was the best way to get access to required test equipment has, over the last few years, been shown to less and less valid. As a result, test equipment manufacturers

TEST & MEASUREMENT

Madhukar Tripathi, Madhukar Tripathi, Anritsu Anritsu

Madhukar Tripathi, Anritsu

Reinier Treur, Reinier Treur, LivingstonLivingston

Reinier Treur, Livingston

and their channel partners must be able to offer alternatives that better meet the actual needs of the modern marketplace. The global economic crisis has, of course, played a big part in this - as it has meant that companies have to be a lot more cautious about the capital investments they make and how they approach test equipment procurement. It would however be wrong to say that this was the only factor that has had influence on the increasing popularity of the rental approach. There are a lot of other dynamics that need to be factored in. The pace at which next generation technologies are adopted, new performance benchmarks are set and industry standards are introduced means that company ’s test requirements are rarely static. Once purchased, companies run the risk that the equipment will only be utilised for a relatively small proportion of the time and a result will not actually be able to generate the revenue needed to justify buying it in the first place. This is compounded by the high degree of uncertainty in the industry - with the prospect of a contract for which the equipment was sourced ending up being cut short, or a sudden change in the technology that must be supported. Redundant test hardware can end up just taking up shelf space in a storage depot. The on-going operational expense of stocking items of equipment, though often overlooked, can have a major impact on the total cost of ownership. Activities like recalibration, maintenance and repair all need to be factored in, as do insurance, f inance repayments , downt ime cover, transportation between sites and eventually disposal. With companies finding it ever more difficult to accurately forecast what their long term test requirements are going to be, with the possibility that equipment will not be utilised as much as expected or become outdated before the initial outlay made on it has been recovered, compounded by the variety of post purchase costs they have to contend with, companies are starting to see the attraction of renting equipment rather than purchasing it. It means they don't have to concern themselves with finding the necessary funds for purchasing equipment. Instead it can be treated as an operational cost, which does not affect their balance sheet. Equipment can be returned as soon as it is no longer needed, or upgraded if the test parameters that must be dealt with alter. Livingston’s involvement in the Indian test

rental marketMarket research firm Frost & Sullivan has predicted that the general purpose test instrumentation business in India will generate an annual revenue of 9.3 billion Indian Rupees by 2018. As well as a strong electronics manufacturing and outsourcing sectors, the country has an increasingly vibrant domestic telecoms market. The number of mobile subscribers here has more than tripled over the last 5 years - with the roll-out of 3G technology happening at a rapid pace and 4G deployment already on the horizon. Livingston established it Indian operations in September 2010, having recognised the country’s incredible future potential as it emerges to become one of the world’s economic powers. Before this companies looking to rent equipment had to either engage with one of the small local rental firms (who tend to have very limited product ranges) or deal with one of the larger players from outside India (with the desired equipment having to be shipped in from abroad - taking more time, as well as adding to the complexity of the process). We could see that if the Indian market was to be addressed adequately then what was needed was a local presence, with both sales and engineering staff available to give application and technical advice (without there being any time zone issues), backed up by a global network, through which clients would have access to an extensive portfolio of equipment. Since then our Indian business has grown rapidly. We are engaged with many blue chip companies. Also we are now interacting more and more with Indian companies outside of India itself - in locations such as Dubai, as well as other locations across Asia and Africa.Livingston Rental SolutionsLivingston’s goal is to offer as wide selection of different equipment sourcing options as possible, so that our clients can find a solution that is totally optimised for their specific requirements rather than just having to make do with the closest fit. In addition to our standard short/medium term rental plans, we also provide long term leasing and buy-to-rent services, as well as selling top quality used equipment too. We benefit from the strong relationships that we have built up with manufacturers such as Agilent, Yokogawa, EXFO, Kaelus, Fluke, JDSU, Tektronix, Fujikura, Sumitomo and Rohde & Schwarz, to name just a few. We have a large and extremely effective organisation, with a highly skilled workforce. We purchase local

TEST & MEASUREMENT

equipment, we interact with our customers via our local support team and we calibrate and maintain our equipment locally. Our Indian based warehouse is reinforced by a network of warehouses in key locations around the world - so that the desired equipment can be accessed quickly. If an item is not available locally, then it can soon be shipped from another site. Because of the extensive inventory we stock, we are able to supply large quantities - sometime based on new purchases in India and sometimes based on the importing of items from our Europe operations. Our highly advanced on-line asset management tool enables customers to check the status, location and servicing details of every item of equipment they are currently renting from us. Rental costs can be allocated to different, engineers, sites and contracts, so that operational efficiencies are maximised. Customers can also be kept up to date as to when their rented equipment next needs recalibration or servicing. Rental is certain to prove a vital to the future prosperity of the test equipment business. It will allow an increasing cost conscious customer base to get hold of the sophisticated instrumentation needed, while avoiding both heavy financial outlay and post purchase costs, as well as simultaneously mitigating the various risks that are inherent to direct purchase.

Gautam Awasthi, General Manager, Marketing,

Agilent Technologies India Pvt. Ltd.The rental option in the T&M Equipment industry caters to the customer requirements in fast paced industries where timing is critical or the requirements are temporary. Often companies need equipment immediately, and sometimes temporarily, to maintain ambitious production schedules or to manage their expenses. These companies sometimes can’t afford the time it takes to make a substantial purchase and then wait for delivery, or have project-based expenses (vs capital budget). The rental program helps customers get the equipment they need, when they need it, in the way in which they choose to acquire it.Agilent Technologies has a worldwide program that provides test and measurement equipment and services to customers through short term rental. The Premier Rental Partner (PRP) Program combines Agilent’s technical and commercial support with the logistical expertise of top-level rental companies located throughout the world. By renting the most advanced test equipment at competitive rates, Agilent’s customers are able to keep pace with rapid technological change, procure Agilent instruments for temporary needs, and reduce the cost of carrying capital assets.The PRP program is Agilent’s initiative to provide customers with flexible alternatives to traditional business purchases. Members of Agilent’s PRP program are carefully selected based on several criteria, including years of experience, market presence and demonstrated technical and logistical skills. Agilent also supports partners with dedicated support, co-operative marketing, referrals, fast deliveries, training, technical expertise, access to product roadmaps and current information on technological trends. Agilent supplies its partners with priority delivery of the latest Agilent instruments, and provides refurbishing and calibration services. The PRP program enables Agilent’s customers to quickly obtain, at a competitive price, the equipment they need. The PRP program is committed to providing the same high-level of customer service that our customers have come to expect!Agilent Premium Used EquipmentThere are many such cases where the customer seeks for lower-cost options, paired with high-quality products and services. Agilent Premium Used Equipment gives a vast selection of top-quality test instruments configured to work in a variety of applications.Pay less for the equipment you need

TEST & MEASUREMENT

Gautam Awasthi, Gautam Awasthi, Agilent Agilent

Gautam Awasthi, Agilent

Get CertiPrime premium qualityWe remanufacture to the same standards as new equipment. You get a full production calibration with test data supplied free, plus the latest compatible firmware and software, the same accessories and manuals as new products, and the same warranty and support. Enjoy the greatest flexibilityChoose from a fresh selection of current- and previous-generation products. We offer the largest inventory and let you configure to order (when possible), so you get the instrument you need.Take advantage of our unique 3-year warrantyAgilent Premium Used Equipment comes with a unique standard 3-year warranty. You have the opportunity to enjoy additional benefit by extending the warranty to 5 years or adding the 3- or 5-year Calibration Assurance plan.

Stephen Hire, General Manager for India,Aeroflex Asia

The decision over rent versus purchase very much depends on a number of factors; the most obvious example for where rental is attractive is when projects are very short term lasting just a few weeks. In other cases, the financial calculation is more evenly balanced. Rental equipment still has to make a financial return for its owner and so over longer time periods, outright purchase will often make sense. Of course, some rental companies also act as specialist T&M financing companies

and can structure a deal for an end user where they purchase the test equipment initially and then offer a hire purchase arrangement to the end user so that they spread their cash flows over time. A misconception about rental is that it helps avoid obsolescence issues. Modern test equipment such as that developed by Aeroflex is designed using modular hardware platforms that use software designed radio techniques. After investing in the initial platform, the customer can largely stay current via software upgrades or adding extra modules. As an example, Aeroflex’s industry leading TM500 LTE test mobile was first delivered to customers in 2007 but is still capable today of supporting the latest 3GPP requirements such as carrier aggregation and simulating very large numbers of mobiles. Our manufacturing and general purpose test equipment is also designed using the same principles so that even though cellular technology evolves rapidly, customer investment is protected.India is home to many IT companies that often have short-term outsourced projects and for these companies, matching their test equipment investment to the duration of the project is obviously attractive. Though in some cases, the company placing the contract may wish to purchase outright and then assign the equipment to their Indian partner for the project duration.Used T&M equipment can be attractive for many customers as a way of managing their investment but it depends on the type of equipment concerned. For low-end general purpose products, the hardware cost is significant and once it has been depreciated, people are often willing to sell at a much lower price compared to new equipment. For higher-end, more specialised equipment, much of the value lies in the application software which also needs to be kept up to date so there is less scope for significant savings. Of course, as with all T&M companies, Aeroflex does occasionally have ex-demonstration stock for sale and we always prefer to sell this where we can. Aeroflex does not usually provide rental options to customers directly but we do see rental as an attractive and complementary option for our customers. We work closely with a number of rental companies both internationally and within India. In cases where rental is the best option for our customers, we will introduce one of our rental partners who can help to structure a proposal that meets their needs.

TEST & MEASUREMENT

Stephen Hire, Stephen Hire, Aeroflex Asia Aeroflex Asia Stephen Hire, Aeroflex Asia