Worldwide Engineering Applications Market

The worldwide engineering applications market continues to grow strongly. Despite economic turbulence, 2007 growth in demand of 13% will only slow to 11% in 2008

We predict that users of engineering software worldwide will continue to increase spending on applications in 2008 through to 2010, albeit at a lower rate than that seen in 2007. Spending will rise from the nearly $15bn, spent in 2007, to $19bn by 2010. (Figure 1)

Growth in all areas

In 2007, demand for engineering software grew in all regions and in all engineering disciplines: mechanical; architectural and civil; and geospatial. Growth was fastest in the Asia Pacific region. In the last two years, demand has increased sharply. Growth in 2005 was 10% and in 2007 spending growth increased to 13% world-wide. We forecast that 2008 will see an increase of around 11%, before falling back to high single digit growth by 2010.

Despite the economic and geo-political uncertainties we have seen in 2007, competition causes companies to continue to invest in new design and engineering tools.

Acquisitions key to Company revenue growth

A significant part of software provider's revenue growth has come from acquisitions. Since 2005, nearly a quarter of the growth of the top four providers and over half the growth of the top ten providers has come from acquisitions. This helped push 2007 provider revenue growth to over 14% worldwide, the highest in the last 5 years. We see further concentration of the market taking place in 2008 and expect this to be a recurring theme through to 2010, though we expect growth to return to single digit in the same period.

Currency plays its part

All growth figures quoted are in US$. The depreciation of the US$, against a basket of currencies over the past year, boosts the reported growth in US$ in the rest of the world For example, iIn EMEA, where the working currency is the Euro (€), growth has been inflated by 9%. Similarly the Asian currencies appreciated nearly 6% against the US$, boosting apparent growth in the APAC region.

Nick Ballard

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