Event Report: DaratechSUMMIT 20067 Mar, 2006 By: Amy Rowell
PLM market growing steadily; Daratech predicts disruptive technology might be around the bend
Each year, research firm Daratech brings together customers and suppliers in the mechanical CAD/CAE/PLM space at DaratechSUMMIT and presents its official state of the industry address. The good news at this year's event, held in late February, was that PLM (product lifecycle management),which was barely acknowledged as a market segment five years ago, appears healthy and is showing signs of steady growth.
According to Daratech figures, total estimated 2005 PLM sales were $10.49 billion, up 13% from 2004. And looking ahead, Daratech's estimated 2006 figures put PLM software sales and service at $11.95 billion, which represents a 14% increase over 2005.
Estimated 2005 revenue for PLM software sales and service.
Leading the way currently is Dassault Systèmes, although UGS appears well-positioned to gain even more traction in the coming year. With its recent competitive win at NISSAN, and customers like Jaguar eagerly anticipating the PLM provider's new Teamcenter-driven digital simulation management tools, UGS continues to demonstrate its strength in the PLM marketplace.
Estimated 2005 revenue for digital prototyping and simulation (CAE) sales and service. Note: Data in this chart is presented as if acquisitions were completed prior to the first day of the period shown. For example, the 2005 data includes Dassault Systèmes' ABAQUS acquisition and UGS' Tecnomatix acquisition, as if both had been completed before January 1, 2005. These charts are Daratech's traditional view. ANSYS' acquisition of Fluent has not been completed and is therefore not reflected in these charts.
The overall market for PLM software and services appears poised for continued growth; however, the rate of growth in some segments appears to be slowing. As Daratech analyst Monica Schnitger pointed out, CAE revenue growth, although stronger than in recent years, is showing signs that it may be leveling off. With total revenue for CAE (computer-aided engineering) software sales and service estimated at $2.25 billion for 2005, Daratech predicts growth in the coming year to reach just $2.45 billion, an increase of just 10%, compared to an 11% increase in the previous year. It's important to explain that, in spite of these figures, Daratech believes that front loading will make CAE the dominant PLM technology in the next five to ten years.) One of the most interesting developments in this sector? ANSYS' recent announcement regarding its intent to acquire CFD (computational fluid dynamics) provider Fluent.
Where growth in CAE investments was viewed as a significant contributor to PLM market growth just a few years ago, it is the demand for value-priced 3D CAD that seems to be accelerating today. In fact, according to Daratech figures, the market for 3D CAD for the masses (high volume, "low" price) appears to be exploding, with revenues having climbed nearly 23% from 2000 to 2005. In fact, claims Daratech, "Today's value-priced modelers are in themselves mini-PLM systems. While many would cringe at the notion, there is no denying that a solution that offers CAD, built-in PDM and integration with CAE, as well as offering hooks to multiple periphery solutions, is a scaled-down PLM solution." With this in mind, the question posed by Daratech was, "Should the providers of high-end (that is, higher-priced, lower volume) 3D CAD be worried?"
Apparently, Dassault Systèmes doesn't think so. In short, Dassault President and CEO Bernard Charles expressed absolutely no interest in adjusting the price of its software in order to compete more readily in the marketplace. In fact, Charles went so far as to say that "the road is littered with the corpses of those that priced their software too low!"
Estimated 2005 revenue for mechanical CAD/CAM and DMPM (digital manufacturing process management) sales and service.
At the end of the day, Daratech CEO Charles Foundyller offered the following observations regarding the PLM marketplace:
- Thought leadership in PLM will be dominated by two companies for the next three years: UGS and Dassault Systèmes.
- No three companies will have 70% of the PLM market in the next five years.
- VOM (Volume Operations Model) business in PLM will stay below 35% market share for the next five years.
- Consolidation of the smaller companies will accelerate.
- But, new companies will be launched.
- Standalone CAD and/or standalone PDM are not sustainable businesses.
- PLM will gain the same widespread acceptance in all sectors of manufacturing that CAD has today.
- Front loading will make CAE the dominant PLM technology in the next five to 10 years, and CAD will be subsumed by CAE, as happened in EDA (electronic design automation).
- We're due for a major disruptive technology to appear in the PLM space.
- The PLM industry landscape will be completely different ten years from now.