Militaries in Europe are turning to commercial R&D and off-the-shelf technology (COTS) in an effort to reduce R&D costs in the European strategic military communications market. This trend is enabling firms that were, in the past, non defense to step into the European strategic military communications market and thereby fulfill the expanding opportunities for COTS technology and services. As the traditional European defense contractors grapple with this threat, they are also having to face intensifying competition from their U.S counterparts.

European militaries are awakening to the need for up-to-date information and communication technology. However, the advanced nature of U.S technology is a cause for concern for European contractors, as in parts of the continent, such as Eastern Europe, because of the efforts of U.S. defense and non-defense firms.

"The impact of Foreign Military Financing (FMF) on the European market and the advanced nature of many of the technologies have succeeded in creating a virtual monopoly through Foreign Military Funding," according to Konstantinos Tigkos, a senior defense analyst at Frost and Sullivan. FMF identifies U.S. programs wherein U.S. companies play a role in modernizing the technological infrastructure of European countries, usually through foreign aid. Foreign military sales go through the U.S. Department of Defense, which contract with U.S. companies such as Boeing and Harris, to deliver the equipment to the U.S. military. They, in turn, deliver the military equipment to the armed forces of countries such as Hungary, and Czechoslovakia. In some cases, this aid is outright, as is the case with the Soviet successor state, Kyrgystan; in other cases, the equipment is sold.

Despite these challenges, traditional market participants can still look forward to a host of growth opportunities. For instance, developments in sensor technology is enabling the transmission of increasing amounts of data to create an efficient network in the battle space, and is also spurring market expansion. These factors will fuel existing competition while pushing overall revenues from an estimated $1.9 billion in 2005 to $2.5 billion in 2014.

A brochure is available that identifies manufacturers, end-users, and other industry participants, along with an overview of the latest analysis and is entitled, "European Strategic Military Communications Markets (F233-22)." It is available from Frost and Sullivan.

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