This article was written by Daphne Tomlinson, Senior Research Associate at Memoori.
ABB is targeting a new growth opportunity in the commercial building solutions and services sector, according to its November 2019 Electrification Investor Day in Italy. The group presentation views commercial buildings as a high-growth segment with a $21 billion market size and a mid-term growth of >4% CAGR 2017 – 2025.
ABB’s Electrification business strategy is to expand its solutions beyond connected electrical distribution products into the Building Automation Control Systems (BACS) market for commercial buildings in the mid-segment size range of 2,000 to 10,000 m2. They estimate this BACS market has a 10-15% penetration today. Buildings in this category include commercial offices and hotels as well as multisite retail operations, government buildings, and specialized segments like data centers and hospitals.
In support of this strategy, ABB announced the acquisition of Cylon Controls, a second-tier building automation vendor in March 2020. The acquisition will enhance their portfolio of solutions for the commercial buildings segment, with a particular focus on delivering new innovations in energy-optimization and comfort.
Cylon Controls was founded by Sean Giblin in 1985 when he spun the company out from research at University College Dublin (UCD), Ireland. One of the largest independent manufacturers of building control systems in Europe and is a recognized vendor in the development of Smart Building Energy Management Systems for building optimization for over 30 years. With approximately 100 employees, its goal is to deliver operational efficiency, energy and comfort solutions for commercial and retail buildings, schools and healthcare facilities.
In recent years, Cylon has made a number of strategic acquisitions to increase their share of the US market.
- In July 2013, Cylon Energy Inc., a subsidiary of Cylon Controls Limited, announced their acquisition of the Building Automation Systems Integration Business of Teletrol Systems Inc., from Royal Philips Electronics.
- In June 2014 Cylon Energy Inc. announced the acquisition of American Auto-Matrix, an American based Building Automation Systems and Critical Environments Controls manufacturer located in Export, PA.
- In February 2018, Cylon Energy closed an Asset Purchase Agreement to acquire the balance of the Teletrol energy management business which increased their share in the multi-site retail market. Teletrol’s energy management solutions control and manage HVAC, lighting, and other energy-using equipment in over 10,000 retail and commercial facilities across North America.
Cylon Controls will be part of ABB Smart Buildings, a business line with around $3 billion in revenues. The Smart Buildings business provides low-voltage smart home and intelligent building control systems, including voice activated KNX systems to optimize efficiency, safety and comfort through the automated management of lighting, shutters and security.
In addition, the business supplies conventional wiring accessories, industrial plugs and sockets, DIN-rail products, and enclosures ideal for single family homes, multiple dwellings, commercial buildings, infrastructure and industrial applications, including electric vehicle charging infrastructure from AC wall boxes through to DC fast charging stations and on-demand electric bus charging systems.
ABB Smart Buildings Business line is part of the Electrification business unit, which accounted for $12.7 billion revenues in 2019. The division offers a comprehensive portfolio of low- and medium-voltage products and solutions for a reliable flow of electricity from substation to socket, delivering more than 1.5 million products around the world every day through a global network of channel partners and end-customers.
Customers in the Buildings vertical market account for around 30% of the divisional revenues. With GE Industrial Solutions acquired in 2017, ABB has strengthened their Number 2 position in electrification globally behind Schneider Electric. The acquisitions of both GE Industrial Solutions and Cylon, expand ABB’s access to the attractive North American market.
Cylon Controls building automation and control solutions will complement ABB i-bus KNX’s intelligent building lighting and blind control offering and will strengthen ABB’s building automation business with a global network of system integrators. However, there is strong competition from the major building automation incumbent vendors in the commercial buildings space.