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EXECUTIVE SUMMARY:

Smart Grid Technologies


Networking and Communications, Energy Management,
Grid Automation, and Advanced Metering Infrastructure
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Published 4Q 2009

Jevan Fox
Research Analyst
Bob Gohn
Senior Analyst
Clint Wheelock
Managing Director

Smart Grid Technologies

Section 1
EXECUTIVE SUMMARY
The worldwide electrical grid is perhaps the greatest technical innovation of the 20th
century, delivering the life blood for technical advances in computing and communications
that have occurred in recent decades. However, the days of taking the grid for granted are
coming to a close, as economic, technical, environmental, and political challenges call for
fundamental changes in how electricity is generated, distributed, and used.
The key market issues driving change in the electric grid can be placed into four
categories:
Improved reliability and security, as societys dependence on electricity has long passed
the critical mark;
Reducing waste incurred by operating inefficiencies, as costs and consumption increase;
Responding to the growing imbalances between worldwide supply and demand in power
generation and distribution capacity, generation fuels, and the associated price volatility;
Reducing the overall electrical systems impact on climate change, while meeting the
challenge of increased demand as other infrastructures, most notably transportation, lean
more heavily on electricity as the energy source of choice.
Ironically, the electrical grid itself has not yet taken full advantage of the integrated
intelligence of the computing and communications technologies that it enables. This is an
enormous technical and economic gap, but also represents tremendous opportunity to
transform the current infrastructure into a smart grid that can deliver more efficiency and
capacity using the existing system. The challenge is implementing such a large scale
transformation in an evolutionary manner by leveraging a wide range of new technologies,
which is analogous to switching engines on an airplane in mid-flight.
No doubt, barriers to this transformation exist, and go well beyond pure technical and
economic issues including the lack of a common vision and/or standards, outdated and
fragmented business and regulatory models, and the lack of awareness (and often trust) of
the consuming public. However, government and industry bodies are coming together with
newfound urgency spurred in some regions by copious amounts of economic stimulus
funds to develop and articulate architectural frameworks and standards.
As so often happens, the term smart grid has come to mean many different things to the
various constituencies involved. Pike Research has found it useful to consider the smart
grid in three key dimensions:
Functional characteristics: includes end-to-end integrated communications
infrastructure, providing real-time visibility to operators and users; integration of
distributed, renewable generation resources; consumer-level energy management
enablement; and support for electric vehicles (EVs).
Component technologies: includes smart meters; application of existing and new wide
area and home-based networking; new distributed sensors; a variety of demand
response (DR) systems; automation of utility transmission, distribution, and substation
systems; and vehicle-to-grid (V2G) technologies.

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Smart Grid Technologies


Application use cases: examples include consumer empowerment and incentives
through real-time information, time-based pricing, and utility-based demand controls; net
metering for consumer-based renewable (wind, solar) generation; utility operating
efficiency and fault management improvements; and support for home and mobile plug-in
EVs.
An important goal of the smart grid is to enable informed choices by consumers regarding
electricity use. Such choices mean the economic realities of peak vs. off-peak generation
costs (for example) can be more accurately understood by the consumer. Pike Research
has studied and surveyed consumers attitudes toward the technologies, services, and
providers associated with enabling these choices (and providing incentives for specific
behaviors). Our surveys have found that consumers willingness to participate in managing
their energy use is quite high, within certain constraints, which is good news for utilities and
policy makers.
The technologies included as part of the smart grid, which ultimately are included in Pike
Researchs forecast, are wide ranging. The heart of the smart grid is the communications
technology that is required to link everything from high-voltage transmission systems and
utility control centers to a consumers individual appliances. Existing industry-specific (and
often proprietary) communications silos need to be linked within a common, consistent,
and flexible communications architecture. A wide range of different wired and wireless,
private and public, general and purpose-built, and existing and new technologies will make
up this infrastructure. While integrated communications will make the grid smarter, it can
also make it more vulnerable to cyber attacks, unless the proper security technologies are
included. Robust standards activities are underway to assure this new communications
infrastructure will meet the functional and security needs.
With the advent of a robust grid communications infrastructure, additional intelligence can
be deployed throughout the grid. New transmission and distribution (T&D) technologies
aim to reduce the significant power lost due to distribution line and equipment
inefficiencies, and sub-optimal utilization of existing resources. High-voltage transmission
lines, enabled by new materials and voltage control technologies, promise to reduce line
losses, which become more critical as renewable generation plants are often far away from
consuming population centers. New distribution automation (DA) technologies that
dynamically control local voltage levels can offer significant power consumption reductions,
while providing improved power quality to consumers and faster outage detection,
correction, and prevention. Smart meters are the fundamental building block for providing
consumers the information they need to make productive choices.
The companies providing products and services for the smart grid are as wide and diverse
as the technologies and applications involved and include traditional industrial power
equipment suppliers, existing networking and telecommunications companies, existing and
new consumer electronics players, large and small software and IT systems houses, and
the utilities themselves. In many ways, the smart grid represents the melding of traditional
industrial grid companies, communications equipment and services firms, and IT hardware,
software, and services companies. The result will be no less transformative than the
integration of the voice, data, and video communications industries that rocked the
previous decade.
Pike Research forecasts that smart grid infrastructure, broken out into advanced metering,
DA, substation automation (SA), transmission upgrades, and EV systems, represents a
large market opportunity, with worldwide revenues growing from approximately $10 billion
in 2009, peaking at $35 billion in 2013. While much of the market attention has been on
metering infrastructure, transmission upgrades and DA systems actually represent the

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Smart Grid Technologies


largest opportunities worldwide.
Chart 1.1

Smart Grid Revenue by Application, World Markets: 2008-2015


$40,000

$35,000

(Millions)

$30,000

$25,000

Advanced Metering
Infrastructure (AMI)

$20,000

Electric Vehicle
Management Systems

$15,000

Distribution Automation
Substation Automation

$10,000

Transmission Upgrades

$5,000

$0
2008

2009

2010

2011

2012

2013

2014

2015

(Source: Pike Research)

The implications of this market growth will be significant, but not without risks. The
transformation, and ultimately the success, of the smart grid is dependent on consumer
behaviors, government policies, financial stability of utilities and energy suppliers,
cooperation between loosely linked industries, and the underlying technologies. But, as
electricity is the life blood of our modern world, the forces pushing for ultimate success are
strong.

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Smart Grid Technologies

Section 9
TABLE OF CONTENTS
Section 1 ...................................................................................................................................................... 1
Executive Summary .................................................................................................................................... 1
Section 2 ...................................................................................................................................................... 4
Market Issues .............................................................................................................................................. 4
2.1
Introduction and Background ........................................................................................................ 4
2.2
Market Drivers ............................................................................................................................... 5
2.2.1 Electricity Reliability and Security............................................................................................ 5
2.2.2 Operating Cost Reductions ..................................................................................................... 6
2.2.3 Electricity Supply Demand Gaps .......................................................................................... 6
2.2.4 Responding to Climate Change .............................................................................................. 7
2.3
Barriers to Smart Grid Deployment ............................................................................................... 7
2.4
American Recovery and Reinvestment Act .................................................................................. 7
2.5
Smart Grid Definition ..................................................................................................................... 8
2.5.1 Functional Characteristics of the Smart Grid .......................................................................... 8
2.5.2 Inventory of Smart Grid Technologies ..................................................................................... 9
2.5.2.1
Advanced Metering Infrastructure/Smart Meters ............................................................ 9
2.5.2.2
Wide Area Network Communications Technologies ...................................................... 9
2.5.2.3
Home Area Network Technologies ................................................................................. 9
2.5.2.4
Sensor Networking Technologies ................................................................................. 10
2.5.2.5
Demand Response Systems ........................................................................................ 10
2.5.2.6
Distribution Automation Systems .................................................................................. 10
2.5.2.7
Substation Automation Systems ................................................................................... 10
2.5.2.8
Advanced Transmission Systems ................................................................................ 11
2.5.2.9
Energy Storage ............................................................................................................. 11
2.5.2.10 Vehicle-to-Grid Charging Infrastructure for Plug-in Hybrid Electric Vehicles ............... 11
2.5.3 Key Applications for Smart Grid Technologies...................................................................... 11
2.5.3.1
Customer Monitoring and Control of Energy Usage ..................................................... 11
2.5.3.2
Time-of-Use Pricing ...................................................................................................... 11
2.5.3.3
Price Signaling to Customers ....................................................................................... 12
2.5.3.4
Peak Shaving via Remote Control of Customer Power Consumption ......................... 12
2.5.3.5
Net Metering for Solar and Wind Power ....................................................................... 13
2.5.3.6
Utility Grid Outage and Fault Management .................................................................. 13
2.5.3.7
Utility Operating Efficiency Improvements .................................................................... 14
2.5.3.8
Use of Plug-in Hybrid Electric Vehicles ........................................................................ 14
2.5.3.9
Mobile Workforce Management for Utility Technicians ................................................ 14
Section 3 .................................................................................................................................................... 15
Consumer Attitudes .................................................................................................................................. 15
3.1
Introduction and Overview .......................................................................................................... 15
3.2
Survey Methodology ................................................................................................................... 15
3.3
Energy Information Displays ....................................................................................................... 15
3.3.1 Market Overview.................................................................................................................... 15
3.3.2 Consumer Interest in Energy Information Displays ............................................................... 16
3.3.3 EID Interest among Demographic and Behavioral Groups ................................................... 17
3.3.4 Energy Information User Profiles .......................................................................................... 19
3.3.5 Information Display Type Preferences .................................................................................. 21
3.3.6 EID Payment Preferences ..................................................................................................... 22
3.3.7 Energy Management Service Provider Preferences ............................................................. 23

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3.4
Demand Response ..................................................................................................................... 24
3.4.1 Market Overview.................................................................................................................... 24
3.4.2 Consumer Interest in Demand Response ............................................................................. 24
3.4.3 Demand Response Interest among Demographic and Behavioral Groups .......................... 25
3.4.4 Acceptable Electric Bill Savings ............................................................................................ 27
3.4.5 Reasons for Lack of Interest in Demand Response.............................................................. 28
3.5
Consumer Survey Conclusions ................................................................................................... 29
3.5.1 Energy Information Displays Conclusions............................................................................. 29
3.5.2 Demand Response Plans Conclusions ................................................................................. 29
Section 4 .................................................................................................................................................... 30
Technology Issues .................................................................................................................................... 30
4.1
Role of Communication Networks ............................................................................................... 30
4.2
Smart Grid Networking Technologies ......................................................................................... 31
4.2.1 Wide Area and Neighborhood Area Networking Technologies............................................. 33
4.2.1.1
Leased Lines (TDM/SONET) ........................................................................................ 36
4.2.1.2
Broadband over Power Lines ....................................................................................... 36
4.2.1.3
Narrowband over Power Lines ..................................................................................... 36
4.2.1.4
Cellular Networks.......................................................................................................... 37
4.2.1.5
WiMAX .......................................................................................................................... 38
4.2.1.6
Metro Wi-Fi ................................................................................................................... 38
4.2.1.7
RF Mesh ....................................................................................................................... 39
4.2.2 Home Area Networking Technologies ................................................................................... 40
4.2.3 RF Home Area Networks ...................................................................................................... 40
4.2.3.1
ZigBee........................................................................................................................... 41
4.2.3.1.1. ZigBee Smart Energy Profile ................................................................................... 42
4.2.3.1.2. ZigBee Evolution ...................................................................................................... 42
4.2.3.2
Other RF HAN Technologies ........................................................................................ 42
4.2.4 Power Line Carrier ................................................................................................................ 43
4.2.4.1
HomePlug ..................................................................................................................... 43
4.2.4.2
HomeGrid/ITU G.hn ...................................................................................................... 44
4.2.5 Standards: IP vs. Proprietary Technologies .......................................................................... 44
4.2.6 Security.................................................................................................................................. 44
4.2.6.1
Inventory of Major Cyber Security Risks ...................................................................... 45
4.2.7 Smart Grid Interoperability Standards ................................................................................... 46
4.3
Transmission and Distribution Efficiency Technologies .............................................................. 47
4.4
Advanced Electrical Transmission Technologies........................................................................ 47
4.5
Distribution Automation ............................................................................................................... 48
4.6
Substation Automation ................................................................................................................ 49
4.7
Smart Meters ............................................................................................................................... 49
4.8
Electric Vehicle Charging Systems ............................................................................................. 50
Section 5 .................................................................................................................................................... 51
Key Industry Players................................................................................................................................. 51
5.1
Smart Grid Ecosystem ................................................................................................................ 51
5.2
Electric Utilities ............................................................................................................................ 52
5.2.1 American Electric Power ....................................................................................................... 52
5.2.2 Austin Energy ........................................................................................................................ 53
5.2.3 CenterPoint Energy ............................................................................................................... 54
5.2.4 Duke Energy .......................................................................................................................... 54
5.2.5 National Grid USA ................................................................................................................. 54
5.2.6 Pacific Gas & Electric Company............................................................................................ 55
5.2.7 San Diego Gas & Electric ...................................................................................................... 55
5.2.8 Southern California Edison.................................................................................................... 55
5.2.9 Xcel Energy ........................................................................................................................... 56

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5.3
Grid Infrastructure Vendors ......................................................................................................... 56
5.3.1 ABB Group ............................................................................................................................ 56
5.3.2 American Superconductor ..................................................................................................... 56
5.3.3 Cooper Power Systems......................................................................................................... 57
5.3.4 GE Energy ............................................................................................................................. 57
5.3.5 Schweitzer Engineering Laboratories ................................................................................... 57
5.3.6 Siemens Energy .................................................................................................................... 57
5.4
Smart Meter Vendors .................................................................................................................. 58
5.4.1 Echelon Corporation .............................................................................................................. 58
5.4.2 Elster Group .......................................................................................................................... 59
5.4.3 Holley Metering Ltd ............................................................................................................... 59
5.4.4 Iskraemeco ............................................................................................................................ 59
5.4.5 Itron ....................................................................................................................................... 60
5.4.6 Landis+Gyr ............................................................................................................................ 61
5.4.7 PRI Ltd................................................................................................................................... 62
5.4.8 Sensus................................................................................................................................... 62
5.4.9 SmartSynch ........................................................................................................................... 63
5.5
Networking and Software & Systems Vendors ........................................................................... 63
5.5.1 AT&T ..................................................................................................................................... 63
5.5.2 Aclara (ESCO Technologies) ................................................................................................ 64
5.5.3 Ambient Corporation ............................................................................................................. 65
5.5.4 Arch Rock Corporation .......................................................................................................... 65
5.5.5 BPL Global Ltd ...................................................................................................................... 66
5.5.6 Cisco Systems ....................................................................................................................... 66
5.5.7 Current Group........................................................................................................................ 67
5.5.8 Eka Systems.......................................................................................................................... 68
5.5.9 eMeter ................................................................................................................................... 69
5.5.10
Grid Net ............................................................................................................................. 69
5.5.11
Infotility Inc ........................................................................................................................ 69
5.5.12
Nuri Telecom ..................................................................................................................... 70
5.5.13
Oracle ................................................................................................................................ 70
5.5.14
OSIsoft LLC....................................................................................................................... 70
5.5.15
Plextek Ltd ........................................................................................................................ 71
5.5.16
RuggedCom ...................................................................................................................... 71
5.5.17
Silver Spring Networks ...................................................................................................... 72
5.5.18
Tantalus Systems Corp ..................................................................................................... 73
5.5.19
Trilliant Incorporated ......................................................................................................... 73
5.5.20
Tropos Networks Inc ......................................................................................................... 74
5.5.21
Ventyx ............................................................................................................................... 74
5.6
Energy Information Displays and Devices .................................................................................. 74
5.6.1 Agilewaves Inc....................................................................................................................... 74
5.6.2 Control4 ................................................................................................................................. 75
5.6.3 Energate Inc .......................................................................................................................... 75
5.6.4 Google ................................................................................................................................... 76
5.6.5 Microsoft ................................................................................................................................ 76
5.6.6 Onzo Ltd ................................................................................................................................ 76
5.6.7 OpenPeak Inc ........................................................................................................................ 77
5.6.8 Tendril Networks Inc .............................................................................................................. 77
5.7
Semiconductors and Components .............................................................................................. 77
5.7.1 Certicom ................................................................................................................................ 77
5.7.2 Digi International Inc .............................................................................................................. 78
5.7.3 Ember Corporation ................................................................................................................ 78
5.7.4 Texas Instruments ................................................................................................................. 78

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5.8
Systems Integrators and Services .............................................................................................. 79
5.8.1 Accenture .............................................................................................................................. 79
5.8.2 EnerNex Corporation ............................................................................................................. 79
5.8.3 EnerNOC Inc ......................................................................................................................... 79
5.8.4 IBM ........................................................................................................................................ 80
5.8.5 IBM Venture Capital Group ................................................................................................... 80
5.8.6 PowerSecure International .................................................................................................... 81
5.8.7 SAP ....................................................................................................................................... 81
5.8.8 Sentec ................................................................................................................................... 82
5.9
Industry Associations and Advocacy Groups.............................................................................. 82
5.9.1 Edison Electric Institute ......................................................................................................... 82
5.9.2 Electric Power Research Institute ......................................................................................... 82
5.9.3 Galvin Electricity Initiative ...................................................................................................... 83
5.9.4 The Demand Response and Smart Grid Coalition ................................................................ 83
5.9.5 ZigBee Alliance...................................................................................................................... 84
Section 6 .................................................................................................................................................... 85
Market Forecasts....................................................................................................................................... 85
6.1
Worldwide Smart Grid Market ..................................................................................................... 85
6.2
North American Smart Grid Market ............................................................................................. 90
6.2.1 United States ......................................................................................................................... 90
6.2.2 Canada .................................................................................................................................. 91
6.3
European Smart Grid Market ...................................................................................................... 92
6.4
Latin America, Asia-Pacific, and Middle East/Africa Smart Grid Markets ................................... 93
Section 7 .................................................................................................................................................... 96
Company Directory ................................................................................................................................... 96
Section 8 .................................................................................................................................................. 100
Acronym and Abbreviation List ............................................................................................................. 100
Section 9 .................................................................................................................................................. 105
Table of Contents .................................................................................................................................... 105
Section 10 ................................................................................................................................................ 109
Table of Charts and Figures................................................................................................................... 109
Section 11 ................................................................................................................................................ 110
Scope of Study ........................................................................................................................................ 110
Sources and Methodology ..................................................................................................................... 110
Notes ........................................................................................................................................................ 111

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Section 10
TABLE OF CHARTS AND FIGURES
Chart 1.1
Chart 3.1
Chart 3.2
Chart 3.3
Chart 3.4
Chart 3.5
Chart 3.6
Chart 3.7
Chart 3.8
Chart 3.9
Chart 3.10
Chart 6.1
Chart 6.2
Chart 6.3
Chart 6.4
Chart 6.5
Chart 6.6
Chart 6.7
Chart 6.8
Chart 6.9
Chart 6.10
Chart 6.11

Smart Grid Revenue by Application, World Markets: 2008-2015 .......................................... 3


Interest in Energy Information Displays: All Respondents ................................................... 16
Interest in Energy Information Displays by Respondent Profiles and Demographics ........... 18
Energy Information User Profiles among EID Intenders ....................................................... 20
Information Display Type Preferences among EID Intenders ............................................... 21
Payment Preferences among EID Intenders......................................................................... 22
Energy Management Service Provider Preferences among EID Intenders .......................... 23
Interest in DR Service Plans: All Respondents .................................................................... 24
Interest in Demand Response Plans by Respondent Profiles and Demographics ............... 26
Lowest Acceptable Electric Bill Savings among Demand Response Intenders ................... 27
Reasons for Lack of Interest in Demand Response.............................................................. 28
Smart Grid Revenue by Region, World Markets: 2008-2015............................................... 85
Smart Grid Revenue by Application, World Markets: 2008-2015 ........................................ 87
Smart Grid Application Revenue Comparisons, World Markets: 2008-2015 ....................... 87
Cumulative Smart Grid Revenue by Region, World Markets: 2008-2015 ........................... 88
Cumulative Smart Grid Revenue by Application (by 2015) ................................................... 89
Smart Grid Revenue by Application, United States: 2008-2015 .......................................... 90
Smart Grid Revenue by Application, Canada: 2008-2015 ................................................... 91
Smart Grid Revenue by Application, Europe: 2008-2015 .................................................... 92
Smart Grid Revenue by Application Category, Latin America: 2008-2015 .......................... 93
Smart Grid Revenue by Application Category, Asia-Pacific: 2008-2015 ............................. 94
Smart Grid Revenue by Application Category, Middle East/Africa: 2008-2015 ................... 95

Figure 2.1
Figure 2.2
Figure 2.3
Figure 4.1
Figure 4.2
Figure 4.3
Figure 4.4
Figure 4.5
Figure 4.6
Figure 4.7
Figure 4.8
Figure 4.9
Figure 5.1
Figure 6.1

Real-Time Pricing by State, United States: 2003 ................................................................. 12


Net Metering by State, United States: 2009 ......................................................................... 13
Smart Grid Components........................................................................................................ 14
EPRI Intelligrid Model ............................................................................................................ 30
Characteristics of Communication Technologies in Legacy Grids and Smart Grids ............ 31
Smart Grid Networks ............................................................................................................. 33
WAN/NAN Technology Comparison Chart ........................................................................... 34
Applications, Pros and Cons of Various WAN Technologies ................................................ 35
Metro Wi-Fi Architecture for a Smart Grid Deployment......................................................... 39
Home Area Networking Diagram........................................................................................... 40
ZigBee Smart Energy Profile ................................................................................................. 41
Opportunity for Volt-VAR Control Technologies.................................................................... 49
Smart Grid Ecosystem .......................................................................................................... 52
Smart Grid Application Growth Rates ................................................................................... 86

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Section 11
SCOPE OF STUDY
Pike Research has prepared this report to provide participants in the emerging smart grid market
(equipment and hardware vendors, utilities, software companies, installation and service providers, and
other system component manufacturers) with a study of the global market potential for smart grid
technologies including AMI, transmission upgrades, SA, DA, EV management systems, energy
management systems, and other categories.
The reports purpose is not to provide an exhaustive technical assessment of all of the technologies and
industries that may be related to smart grid deployments, but rather a strategic examination of the smart
grid market focusing on business models, key technology issues, regulatory factors, customer demand
dynamics, and the competitive landscape. Pike Research strives to identify and examine new market
segments to aid readers in the development of their business models. All major global regions are
included. The forecast period extends through 2015.

SOURCES AND METHODOLOGY


Pike Researchs industry analysts utilize a variety of research sources in preparing Research Reports.
The key component of Pike Researchs analysis is primary research gained from phone and in-person
interviews with industry leaders including executives, engineers, and marketing professionals. Analysts
are diligent in ensuring that they speak with representatives from every part of the value chain, including
but not limited to technology companies, utilities and other service providers, industry associations,
government agencies, and the investment community.
Additional analysis includes secondary research conducted by Pike Researchs analysts and the firms
staff of research assistants. Where applicable, all secondary research sources are appropriately cited
within this report.
These primary and secondary research sources, combined with the analysts industry expertise, are
synthesized into the qualitative and quantitative analysis presented in Pike Researchs reports. Great
care is taken in making sure that all analysis is well-supported by facts, but where the facts are unknown
and assumptions must be made, analysts document their assumptions and are prepared to explain their
methodology, both within the body of a report and in direct conversations with clients.
Pike Research is an independent market research firm whose goal is to present an objective, unbiased
view of market opportunities within its coverage areas. The firm is not beholden to any special interests
and is thus able to offer clear, actionable advice to help clients succeed in the industry, unfettered by
technology hype, political agendas, or emotional factors that are inherent in cleantech markets.

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NOTES
CAGR refers to compound average annual growth rate, using the formula:
CAGR = (End Year Value Start Year Value)(1/steps) 1.
CAGRs presented in the tables are for the entire timeframe in the title. Where data for fewer years are
given, the CAGR is for the range presented. Where relevant, CAGRs for shorter timeframes may be
given as well.
Figures are based on the best estimates available at the time of calculation. Annual revenues,
shipments, and sales are based on end-of-year figures unless otherwise noted. All values are expressed
in year 2009 U.S. dollars unless otherwise noted. Percentages may not add up to 100 due to rounding

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Published 4Q 2009
2009 Pike Research LLC
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in this publication). If you do not have a license from Pike covering this publication, please refrain from
accessing or using this publication. Please contact Pike to obtain a license to this publication.

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