Market Outlook and the Implications of the Coronavirus Pandemic to Bittium
(Updated February 11, 2021)
(Updated February 11, 2021)
Bittium's customers operate in various industries, each of them having their own industry specific factors driving the demand. A common factor creating demand among the whole customer base is the growing need for higher quality and secure data transfer. Due to the technology competences accrued over time and the long history in developing mobile communication solutions, Bittium is in a good position to offer customized solutions to its customers. Over thirty years of experience and extensive competence in measuring of biosignals also act as a basis for medical technology solutions.
In 2020, the global coronavirus pandemic significantly affected the global economy and market situation. The general delay in the business development and significant increase of risks and uncertainties caused by the pandemic weakens the visibility into the market situation. Bittium´s business sales cycles are long by their nature, but the effects of the pandemic have begun to be seen also in Bittium´s business, such as slow down of existing projects and the transition of new projects. In addition, the restrictions due to the pandemic will slow down new customer acquisition.
Read more information about other risks and uncertainties here.
The factors affecting the demand for Bittium's products and services and the effects of the coronavirus pandemic on them are described below:
In the defense sector´s tactical communication market, the governments´ defense forces and other authorities need networks that troops, who are more and more constantly on the move, can use and transfer growing amounts of data securely. This creates demand for Bittium Tactical Wireless IP Network™ (TAC WIN) broadband network, Bittium Tough SDR™ handheld and vehicle radios and for other Bittium´s IP-based (Internet Protocol) tactical communication solutions that fulfill the needs of data transfer of moving troops and individual soldiers. Bittium continues efforts to bring its defense market targeted products and services also to the international defense markets and aims to get new international customers for its tactical communication system in 2021. Due to the long sales cycles driven by purchasing programs of national governments, it will take time to receive purchase orders.
The financial difficulties caused by the coronavirus pandemic affect the budgets of public finances such as states and public authorities and may require postponing of procurement. This may delay receiving new orders. Especially in the defense and authorities´ markets testing and piloting of products and systems are typical phases before receiving orders of larger entities. Current circumstances may postpone the materialization of some orders from their planned schedule. In addition, due to the travelling restrictions, the acceptance tests may need to be rescheduled, which may affect the final product acceptances and thereby the actual product deliveries. The coronavirus pandemic may also somewhat affect the availability of some components used in the products, which may affect the company´s capability to deliver products to its customers.
The use of LTE technology, smartphones, and applications continue to increase in special verticals such as public safety creating demand for Bittium Tough Mobile™ secure LTE smartphone and other customized special terminals based on Bittium´s own product platform. The awareness of mobile security risks is growing and the interest towards secure mobile devices is increasing. The implementation of LTE-based devices in use in the Public Safety markets has been slower than expected because of the delay in the device functionalities required by the authorities and because of the slow progress of the market. The sales of the secure terminal products are expected to develop moderately according to the nature of public safety markets.
The smartphone sales process often involves testing and piloting systems and equipment, possibly integrating third-party technologies, and possible local regulatory approvals, which are typically long-lasting. Exceptional circumstances caused by the coronavirus pandemic may have a significant impact on the progress of projects, which slows down the closings of larger transactions.
Using public network connections in portable devices is increasing also in demanding professional use, for instance in the public sector. This creates requirements for network connections to be easy to use and secure. The products in the Bittium SafeMove® product family enable the ease of use of the devices and security in demanding use. Demand for the Bittium SafeMove® product family has not been affected by the coronavirus pandemic.
In the mobile telecommunications, the demand for 5G technology development work has stabilized and the implementation of 5G is accelerating in pace. Investments in developing new features continue and the importance of software development in the 5G network development expands. This creates demand for Bittium´s R&D services. There is a wide range of frequencies allocated for the 5G technology thus creating the need to develop multiple products to cover the market and creating demand for R&D services for development of product variants. Also, the development of new devices utilizing 5G technology increases the demand for Bittium´s services.
As the digitalization evolves, the secure IoT (Internet of Things) has become a significant development area in almost every industry. The increasing need of companies to digitalize their operations, collect data wirelessly, and transfer it to the internet and cloud services generate need for Bittium´s services and customized solutions. To this end, the market needs secure devices for both demanding industrial and leisure applications, which collect information from the sensors used by the device and create a reliable wireless connection to the Internet and cloud services. New radio systems customized to IoT are being used all over the world, and the number of digitalized devices increases continuously. Along with the 5G technology being used, there will also be new features in the IoT that enable i.e. remote control of machines. Therefore, the integration of different systems and technologies play an important role in enabling complete digitalization services. There are several learning systems and devices under development that use different kinds of artificial intelligence (AI) technologies to ease and speed up the processing of large data amounts.
Changes in the digitalization of the automotive industry and new business models and the automation of automotive operations create need for technological development. Most significant technology trends such as intelligent mobility, self-driving cars, electric cars and connectivity are guiding need for innovative software development. The share of software in cars is increasing in speed and software is becoming a major enabler and a differentiator. The use of Android™ Automotive operating system in the In-Vehicle Infotainment (IVI) systems is strongly entering the market. Several carmakers have announced the launch of cars with Android Automotive. Bittium's more than a decade of experience with the Android operating system and the Google ecosystem combined with security know-how create good business opportunities for this market.
Travel restrictions caused by the coronavirus pandemic have slowed down the sale of product development services. Even though the adaptation to new conditions and operating methods has gone well, the restrictions have somewhat slowed down the progress of the projects and gaining new customers.
Possible illnesses of own personnel due to the coronavirus could have a significant impact on Bittium's business, especially with regard to product development services. The company began taking measures to ensure the health and safety of its personnel and to ensure business continuity as soon as the coronavirus pandemic reached Europe in March 2020. So far, the pandemic has not yet significantly affected the health of Bittium employees.
The medical technology market is undergoing significant development in patient care, especially outside hospitals. There is an increasing focus on the prevention of diseases and health problems through early diagnosis and the repatriation of patients at an earlier stage in order to reduce hospital and treatment days. These actions significantly increase efficiency in health care processes and lower costs.
A perquisite for early repatriation is the enabling of accurate and precise follow-up and measurement opportunities in home conditions which would be enabled through remote monitoring. Remote monitoring and remote diagnostics also enable specialist´s diagnoses regardless of time and place. Also evolving artificial intelligence-based algorithms are increasing to support physicians in making diagnoses. Remote monitoring and remote diagnostics make it possible and faster to obtain more accurate diagnoses, which, in turn, speeds up the start of the right kind of treatment. The market change will enable several new providers to join the overall care service chain, without compromising the quality of specialist services in areas such as cardiology and neurophysiology.
For remote monitoring and remote diagnostics Bittium provides its Bittium Faros™ product family for remote heart monitoring and Bittium BrainStatus™ for measuring the electrical activity of the brain, as well as different kind of software for diagnostics.
As the coronavirus pandemic spread the number of non-emergency patients going to treatments and tests to healthcare providers decreased. Several hospitals and medical care facilities have postponed their non-emergency tests and examinations and focused on the treatment of the pandemic patients as well as on actions preventing the virus from spreading. The situation varies from country to country and in some countries the pandemic situation is worse than in others. In a long-term the pandemic will accelerate the use of remote services in hospitals and medical care facilities, and thus creates positive development on the demand of the remote monitoring products and services.