CIMdata estimates that in 2002, the worldwide CAM software and related services market declined for the third straight year. The market, as measured by end user payments, is estimated to have fallen from $1.13 billion to $1.06 billion, a drop off of 6 percent. This follows declines of 1.6 percent in 2000 and 5.8 percent in 2001. Purchases reached their peak in 1999 at $1.22 billion and have been falling ever since.
However, CIMdata projects that 2003 will better and that end user payments for NC software and related services will increase by 4.2 percent. This information is found in the recently issued annual NC Software and Related Services Market Assessment Report, a 200-plus page document that can be obtained from CIMdata. The annual end user payments for 1998 through a projected 2003 are shown in the chart below.
The worldwide CAM software market is highly dependent upon the state of the overall economy, the viability of the manufacturing sector and the extent of technology spending. All three contributed to a negative environment for NC software purchases in 2002. A sudden and sharp slowdown occurred in the U.S. economy in the second half of 2001 and continued in 2002. The Japanese manufacturing market remained in the doldrums in 2002, and the European market did not grow as much as expected. However, some parts of the world, such as China, have shown significant growth.
Worldwide automakers and other major companies cut back on new product programs during this period. This resulted in a reduction in the mold and die business, which drives more than half of NC software purchases. In addition, the worldwide machine tool business struggled, and machine tool purchases in the United States fell from the levels of 2001. This continued a pattern of declining machine tool sales, which has a direct impact on the volume of software purchased to control these tools. Moreover, after making several significant annual investments in technology, including software, most companies scaled back on technology-related spending in 2002. All of these factors contributed to the continued decline in the CAM software market.
However, CIMdata and most worldwide NC software suppliers are cautiously optimistic and anticipate a small increase in end user purchases of CAM software during the balance of 2003 and into 2004. This, of course, will be dependent upon global economic conditions, manufacturing activity, business confidence and turnaround in the specific factors noted above. If this occurs, the inherent forces that have driven the growth in NC software purchases in the past could again come into play. A list of some of those driving forces follows.
- Investor pressures—For a manufacturer or vendor, this translates into relentless pressure to grow revenues and increase margins and profits.
- Customer expectations—Users want customized products that fit their specific needs with higher functionality, lower cost and rapid delivery.
- Worldwide competition—The worldwide competition provides a strong incentive for manufacturers to increase the level of automation within their operations and to take advantage of the best available computer and software tools.
- Shorter product cycles—To meet the requirement for a reduced product development cycle, more frequent and additional NC programming is required to produce the product itself, along with the molds, tools and dies that are often required.
- Fewer parts per assembly—Fewer parts per assembly often make for more complex parts and more difficult NC programming.
- Aesthetics—Establishing product differentiation often involves the creation of more complex free form shapes, which in turn generally requires a more advanced NC programming capability.
- Newer methodologies—Acceptance of newer manufacturing methodologies, such as digital manufacturing, collaboration, concurrent engineering, lean production, supply chain management and design for manufacturing, are forcing major introduction of advance manufacturing technologies.
- Manufacturing complexity—The continued change in technology and increased complexity in manufacturing tools and processes drives more NC programming.