CAD/CAM/CAE : electronic design automation, 1992 - Archive Server

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Forecast Assumptions
Following are the main forces, worldwide and
by region, driving the CAD/CAM/CAE/GIS
forecast.
Worldwide Forecast Drivers
The worldwide CAD/CAM/CAE/GIS market will
maintain consistent, steady growth during the
next five years. Figure 1 shows the forecast
change in mix among hardware, software, and
services.
The following are the main forces driving the
CAD/CAM/CAE/GIS worldwide forecast:
• Globalization of world markets is driving
economic restructuring for the major
regions—the United States, the European
Community (EC) and Japan—to a degree
unprecedented since the 1930s. Growth will
be limited in the short term as CAD/CAM/
CAE/GIS buyers assess market conditions.
There is a sense of cautious optimism that
the world economy will gradually improve,
rather than get worse, beginning in
mid-1993.
• CAD/CAM/CAE/GIS systems will continue to
give buyers a competitive edge. As time-tomarket
requirements shrink, demand for
design automation tools will continue to
increase.
• The recent currency fluctuations, specifically
the sharp decline of the U.S. dollar in relation
to many European currencies and the
Japanese yen, will offset sluggish economic
growth for multinational corporations, particularly
those with a high percentage of costs
denominated in doUars. While many companies
are hedging their profits to limit the
effects of the currency fluctuations, some
are utilizing the changes in exchange rates
to reprice their products. In the current
period of a rapidly declining dollar, U.S.based
multinationals may lower overseas
prices to stimulate demand. This would be
particularly true of the PC companies, which
CAD/CAM/CAE—Electronic Design Automation Applications
©1992 Dataquest Incorporated October—Reproduction Prohibited
are striving to rapidly increase unit volume
gains. For companies that have much of
their cost structure denominated in dollars,
the impact of currency will be highly leveraged.
In the case of more mature companies
that for the most part have established
major manufacturing facilities overseas and
therefore much of their cost structures are
in foreign currency, the leverage from the
change in the dollar is much less. Recent
currency-rate changes may drive CAD/CAM/
CAE/GIS growth internationally in the short
term; long-term effects could be highly
variable.
• Market demand will be limited by vendors'
inability to fully meet demand for highly
integrated software systems. We believe that
the industry business model is evolving to a
structure where large software vendors will
function increasingly as application software
integrators. Much of the innovation in new
niche products can be expected to come
from the small software vendors, who will
be dependent on their OEM relationships
with major software vendors. These alliances
will ultimately reduce the total cost of software
development, thus strengthening industry
profitability. However, design problems
being addressed ^vill become increasingly
complex, and meaningful success in integrating
software will lag market demand.
• Increased flexibility in softw^are portability
will improve market stability during the next
few years. Because the majority of software
vendors have ported their products to multiple
platforms, platform choice has become
less of an issue. Software vendors are now
poised to leverage their portability as new,
faster hardware platforms become available.
Those software vendors that do so will
have a selling advantage.
• The "late majority" buyers for CAD/CAM/
CAE/GIS will be coming to market during
the next five years, driving additional
growth. However, conservative buyers will
favor market leaders. These conservative
buyers are the "late majority" buyers who
do not buy until the weight of the majority
seems to legitimize the product. For vendors,
therefore, the value of having high
market share as well as financial clout will
increase.