This analysis is based on the study of 39 individual programs, all constituents of the airborne EO market. When the details of their production forecasts are studied, it becomes clear that of the three segments reviewed - ESM/EW, imaging, and targeting - targeting systems will be the most valuable over the duration of the analyzed period, 2016-2025. While airborne EO systems that specialize in the targeting role will not constitute the first-place segment in terms of production volume, their elevated technological level demands a higher unit price. Today's militaries are demanding more from their systems. Where in the past, an EO device such as a targeting pod might have only one role, today it might perform several duties. As a set, these multipurpose units are known as NT-ISTAR (non-traditional intelligence, surveillance, target acquisition, and reconnaissance) systems. With the introduction of the latest generation of fighter jets, including the F-35, a new trend has emerged: the rise of internal EO systems. These conformal or integral units are highly specialized to their individual aircraft, and may be used on an alternate platform only by creating a unique variant, repurposing the original technology. This diminishes market potential. However, conformal systems include almost all EO functions that a device might perform in a single unit; great technological complexity in combination with a captive client base makes for an expensive procurement and a high market value. The technologies of these specially tailored conformal systems are also making their way into the pod market. Venerable systems such as the AAQ-28 and AAQ-33 are receiving major refreshes to push their technological levels to the most recent contemporary standards. Much of the intellectual property of the unique conformal systems is being repurposed into a more widely applicable unit, the EO pod. Consequently, the targeting pods have reached near state-of-the-art capability, while existing in a cheaper, universal package. Qualities such as increased capability over predecessors and lower cost and better platform flexibility compared with integral systems can be highly incentivizing to procurement programs. In most economic systems, there is great value to be found from widespread demand across diverse customer bases. It creates a situation wherein, although the product concerned might not be the most expensive, its sheer volume of sales lends it an outsized gravitas. The same is true in the airborne EO market, where the safety provided by ESM and EW systems - although they are not the most costly or complicated EO devices - is requisite for nearly every platform. Systems such as the AAR-57 CMWS or the LAIRCM are being specified for vast portions of military fleets. The universal status of these systems makes for massive procurement programs stretching over many years. Existing platforms have to be retrofit, while any new production requires an EO purchase on an at least one-for-one basis. By filling a crucial need, ESM/EW systems will be built at nearly a 72.0 percent higher rate than the next most produced segment, targeting. Funding for airborne EO systems will remain strong through the next 10 years. EO systems are the "eyes of the military." They protect warfighters and spy on adversaries, and thus are a vital requirement. New ways to identify, track, and target enemies will continue to be developed. Legacy systems will be modernized with new capabilities, and units will become lighter and smaller. Any year-by-year shortfalls in production value during the forecast period should be viewed as an opportunity. As time progresses, due to the enduring demand for airborne EO services, new systems will arise and fill the withering place of aging systems. Over time, the true market value will correct, filling any of the spending voids left by older systems leaving the marketplace.
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