Rental Test & Measurement Equipments

General-purpose test equipment is a diverse assortment of relatively low- volume, sophisticated technology products that are expensive to develop   and   manufacture.   Most

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.products  are  built in short runs with low finished goods inventories and long lead times from manufacturers.

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

–   Lo w   a v a i l a b i l i t y    o f    a l t e r n a t i v e   t e s t i n g 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 RENT

With 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.

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.

Leasing

Leasing 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.

Buying

The 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.

Renting

Many 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, u p g r a d e s ,   c a p i t a l    f u n d i n g   a n d   o n g o i n g 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- 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 Ltd

Today   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, Livingston

The 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 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 i n t r o d u c e d   m e a n s   t h a t   c o m p a n y ’ s   t e s t 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 i n a n c e    r e p a y m e n t s ,    d o w n t i m e    c o v e r, 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 market

Market 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 Solutions

Livingston’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 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 l a t e st   A g i l e n t   i n st r um e n t s,   a n d   p r o vi d e s 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 Equipment

There 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

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