Feature Article:Engineering Applications software - Looking East for 2006 and beyond…

Two recent events illustrate worldwide trends in the Engineering Applications market. Firstly Indian conglomerate Tata's bid for Corus, and secondly the closure of a leading consultancy's CAD group.

When we look at Asia, most people cite China as one of the primary engines of world manufacturing growth. Tata's bid reminds us that India is also a significant part of this growth phenomenon. For applications vendors, economic growth, both in international and domestic markets, drives demand for their products in Asia. Capturing this demand whilst making money presents significant challenges for vendors in the Asian market.

The closure of a consultancy's CAD group appears to imply that CAD is so well understood that there is simply no value in advising companies on CAD alone. To a certain extent this may be true - "CAD is dead; long live PLM", is the new mantra we hear from many vendors. However in emerging markets like India and China, most pirated engineering software is basic 2D and 3D CAD. Whilst revenues from basic CAD are low, its use is far more widespread; anti-piracy measures may be more effective at increasing revenue than increasing sales resources in the short-term. There is still money in CAD!

Whilst developed economies are looking beyond design into process efficiencies, emerging economies are still investing in basic design and manufacturing technologies incorporating local standards and languages. This is where local developers, often largely invisible to outsiders, hold an advantage. One area where international vendors enjoy some success is in manufacturing applications. As more complex shapes and parts are required, CAM vendors are partnering local expertise to get a bridgehead into what may become their biggest market in the future.

So just how big is the opportunity?

In absolute terms, our worldwide engineering applications estimate for 2006 is $9.25bn and our forecast for 2007 is currently just over $10bn.

As a proportion of the world-wide market Asia grew from just 19% in 2001 to nearly 23% in 2006.

Worldwide revenue growth in 2005 was 15%; Asia grew at over 21%, compared to EMEA and North America's 13%.

For 2006, Asia is returning growth of 16%, above that of both the other regions and a worldwide figure of 13%.

Looking forward to 2007, we estimate low-double digit growth for Asia, compared to a worldwide estimate of less than 10%.

Nick Ballard

back to top

Also in this issue . . . .

Cambashi researches best practice and assists IT suppliers in best practice implementation. For more information on Cambashi services please email info@cambashi.com

To subscribe: send an email with the word "subscribe" in the subject line to: ezine@cambashi.com

© Copyright 2006 Cambashi Ltd

back to top