Investment in engineering software up 7%

Edited by the Engineeringtalk editorial team Mar 2, 2006

Engineering IT industry analysis and market research consultancy publishes results of annual survey of the worldwide engineering software market.

Cambashi has published the results of its annual survey of the worldwide engineering software market.

It shows investments in new engineering applications software by engineering and manufacturing firms worldwide increasing some 7% in 2006 compared with 2005.

The report, which covers the North America, Europe, Middle East and Africa (EMEA) and Asia-Pacific regions, describes the survey's findings on past and future investments in the two main categories of engineering software that it tracks, that is mechanical computer-aided design (MCAD) and product lifecycle management (PLM) software and architecture, engineering and construction (AEC) software.

According to Cambashi's findings, investment in engineering applications software across all sectors has been on an upwards trend since 2002.

This trend looks as if it will continue throughout 2006.

In 2002, total worldwide investments in engineering software, as measured by vendor revenues, was $5 billion.

With an approximate 14% increase in investments in each of the following two years, this investment figure grew to an estimated $6.8 billion in 2005.

Cambashi's forecast for 2006 shows a further increase, albeit at a lower overall rate of 7%, to $7.4 billion.

The report also shows that while increases in investments were fairly uniform across the three regions in 2004, clear differences had begun to emerge by 2005.

These differences look set to continue in 2006, with an 11% increase forecast for the Asia-Pacific region, compared with a 7% increase in EMEA and 6% in North America.

At the same time, while the Asia-Pacific region accounts for just 21% of the worldwide engineering applications software market, this proportion has increased by 2% over the past five years and looks set to continue increasing in the near to mid-term future.

In addition to exchange rate fluctuations that might negatively impact growth figures when expressed in US dollars, Cambashi also identifies other factors which could constrain future investments and therefore lower its forecasts.

One of these is the negative impact of rising oil and gas prices.

These could reduce GDP growth in China and Japan (Japan accounts for 60% of the Asia-Pacific market) by nearly 1.5% in 2006 and nearly 0.5% in the rest of the world.

On the other hand, the report points out, while the rise in the outsourcing of some manufacturing activities to the Far East could negatively impact investments in manufacturing and automation software in North America and EMEA, it has had a beneficial effect on those vendors with a presence in the Asia-Pacific region.

At the same time, with concerns over the protection of intellectual property rights and the costs associated with effectively communicating design intent and knowledge to off-shore providers, there are signs that design and early manufacturing planning activities are being retained in the home countries and that investments here will therefore continue.

A copy of the Cambashi World-Wide Engineering Applications Market Summary is available free of charge and can be found on the firm's web site.