PLM: Consolidated market to reach $13.4 billion by 2007
Recent estimates by Daratech, a leading IT market research firm
Daratech, a leading IT market research firm, say spending on product lifecycle management (PLM) software and services topped $12.3 billion in 2006, up 8% from 2005. The increase is attributed to strong investment by large and small enterprises in technologies that foster innovation. Looking ahead, the firm projects the PLM market will reach $13.4 billion in 2007, up 8% over 2006. Daratech warns, however, that these projections may change as companies announce 2007 quarterly earnings and begin to absorb their acquisitions.
Last year (2006) was a year of tremendous change in the makeup of the PLM market, notes Daratech, citing the closing or beginning of the following transactions:
ANSYS (#2 in overall computer-aided engineering, or CAE and #3 in computational fluid dynamics, or CFD) bought Fluent (#1 in CFD), creating the #1 player in CAE for 2007 and extending the lead in CFD;
Dassault Systemes (#2 in PDM) bought #6 MatrixOne to strengthen its position at #2;
Autodesk bought Alias;
Altair Engineering bought Mecalog; and
PTC bought Mathsoft.
Other smaller acquisitions also occurred, said Daratech. All of these deals brought each of the acquiring companies significant challenges, said the research firm. “Integrating product lines and staff, sorting out back office issues, and the like is taxing and can distract management. This period of uncertainty can also lead to a temporary slowdown in revenue as clients wait to see what will happen to their favorite products and staff. But from an overall market perspective, these acquisitions also caused market growth to slow where no real slowdown is evident: U.S. accounting rules require acquiring companies to write-off part of the deferred revenue that had been on the books of the acquired companies,” said Daratech.
According to the firm, it was a good year even so, noting that the PLM market as a whole (defined by Daratech as the market for mechanical design solutions and the data management solutions that control and monitor this data) grew around 8% over 2005 and now totals $12.3 billion. “Buyers understand the need for and benefits of what was traditionally called CAD/CAM, adding significant analytical and advanced visualization component even at the designer level,” said Daratech. “Buyers at many levels within the economy are investing in these solutions, branching outwards from both the traditional automotive/aerospace strongholds to new verticals and from the global 1000 companies to the smaller and medium-sized business.”
Daratech forecasts a 12% compounded annual growth rate for 2007 to 2010 and says it believes the PLM market will grow due to a high adoption rate of new users and new functionalities for which consumers are willing to pay a premium.
—Edited by Renee Robbins , Control Engineering editorial director