After four straight years of double-digit growth, the annual growth rate of the NC software market dipped to 7.7 percent in 1999. Worldwide user payments for NC software and related services reached $1.22 billion, up from $1.13 billion in 1998. Partially responsible for the slower worldwide growth was the downturn in U.S. machine tool purchases, which AMT—The Association For Manufacturing Technology—reported to be down by 28 percent from 1998, and the health of the U.S. moldmaking industry, which according to a University of Michigan survey fell by 3 percent. Clearly, purchases of NC software relates to purchases of new machine tools, and moldmakers are the largest buyers of NC software.
However, it is expected that the NC software market will resume its significant growth in 2000, growing by 12.3 percent to reach $1.37 billion. To achieve double-digit growth in five of six years indicates a mature but healthy market. This and other market information is contained in the recently released CIMdata report, titled NC Software and Related Services Market Assessment, Version 9.
In 1999, many NC software vendors saw their revenues plateau and, in some cases, actually decline from 1998 levels. However, in the face of more difficult market conditions, some vendors continued to achieve rapid growth rates. For example, OPEN MIND, Unigraphics Solutions and Delcam all experienced annual growth rates of 20 percent or more. In each case, a focus on target markets, significant new product releases that met user demands and effective marketing and sales programs drove their growth.
CIMdata reports that PTC, IBM/Dassault and Unigraphics Solutions have clearly emerged as the major providers of NC software. In 1999, PTC was the largest CAM vendor, based on revenues received by software vendors, and IBM/Dassault was the largest CAM vendor, as measured by end user payments. End user payments are distributed between software vendors and resellers. Unigraphics Solutions was the second largest vendor on the basis of revenue received and, as previously noted, is one of the most rapidly growing providers of NC software. In addition to the above, Mastercam from CNC Software was again the market leader in 1999 in terms of units shipped and number of units in the installed base.
The CAM market is in contrast to the CAD market, in that some now view CAD as becoming a commodity product. In fact, some major CAD/CAM vendors are showing declining revenues. CAD prices continue to fall, as mid-range systems such as SolidWorks carve out a niche from the traditional high-end products. On the other hand, CAM software prices are remaining stable. A CIMdata survey shows that 85 percent of NC software vendors plan to maintain their existing software prices in 2000, although new features will be added. This stability is probably in the best long-term interest of vendors and users alike.
The NC software market continues to be driven by a number of factors:
• the continuing worldwide competition that forces manufacturers to further automate their operations in order to produce quality products in the shortest time with minimum cost-—competition from Asian firms, such as mold and die shops in China, has intensified the pressure in the past year or two;
• designers placing a greater emphasis on aesthetics in order to establish product differentiation, which results in creation of complex freeform surfaces that are more difficult to create, program and machine;
• modern investors increasing pressure on manufacturers and major software vendors alike to enhance their financial performance—short-term investors are quick to make companies vulnerable to takeover if expectations are not met;
• rising customer expectations as the ubiquitousness of the Internet grows;
• continuously upgraded software to support the latest machine tool technologies, such as high-speed milling and multi-axis lathes;
• the worldwide shortage of skilled workers accelerating the movement to more automated software that captures the knowledge of machining processes employed, then re-applies it in similar situations, and
• implementing newer manufacturing methodologies, such as digital manufacturing, collaboration, concurrent engineering, lean production and supply chain management to move production operations into the mainstream—advanced CAM software is a component in the implementation of each of these recently introduced methodologies.
NC software will continue to play a vital role in helping manufacturers remain competitive in the new millennium.