UGS Corp. announced that IT market research and advisory firm IDC has recognized UGS as the leading PLM provider for the Aerospace and Defense, Automotive and High Tech industries.
IDC includes this ranking information in a recent report entitled, "Americas Product Life-Cycle Management Software 2005 Vendor Shares: Top 10 Vendors by Vertical Market," (IDC Doc#203741 Sept. 2006). The report evaluates market share positioning for PLM providers using a vertical segmentation of 2005 revenue.
According to the study, UGS maintains the largest share of revenue in three of four discrete manufacturing industries -- Aerospace and Defense, Automotive and High Tech - and is the third-largest PLM vendor for the "other" discrete industry category, which includes industrial machinery manufacturing and shipbuilding. In addition, IDC notes that within the Automotive category, the fastest growing industry segment for PLM software, UGS alone accounts for more than one-third of the revenue generated by the top 10 PLM providers and nearly one-quarter of the overall revenue generated.
"The Aerospace and Defense, Automobile, and High Tech industries face significant pressures for innovative design to accommodate changing consumer preferences and increased fuel and material costs. These pressures have resulted in demands to reduce the number of prototypes, detect design problems early, and in many instances reduce costs and accelerate time to market, thereby creating strong demand for PLM in these industries," said Noel Stevens, IDC analyst and report author. "IDC expects these pressures to result in the strongest growth in PLM to come from the automotive and high tech industries over the next five years. Existing leaders in these industries possess the greatest growth potential for PLM software."
"Our clear leadership across multiple industries underscores the fact that UGS is not only a technology leader but also a vertical market expert with deep domain experience and knowledge that enables us to deliver high-impact, industry-relevant solutions," said Leif Pedersen, vice president of industry marketing at UGS. "We're extremely pleased to have IDC validate this competitive advantage.
"UGS has had a very good year in vertical industries. We have seen tremendous growth this year in the government military services sector of the Aerospace and Defense industry this year. In the Automotive industry, UGS won key contracts and was recognized for quality and customer support by major automotive OEMs. In the High Tech industry, where UGS signed more than 30 contracts in the first half of 2006, the company has been recognized as an industry leader by multiple industry analysts firms."
UGS(R) software, used extensively by the top 15 Aerospace and Defense OEM's, has accrued more experience in mission-critical operations in the Aerospace and Defense industry than any other comparable PLM product. In fact, with 2.3 million licenses issued, UGS is a leading provider of PLM and facilitator of enterprise transformation for the Aerospace and Defense industry and Government Military services.
UGS is the leading provider of PLM software to the Automotive industry. With over 500,000 seats of software in use at the top 25 OEMs globally and their suppliers, UGS software is involved in the design, validation and/or production of almost every passenger vehicle being produced today.
Also a leading provider to the High Tech and Electronics industry, UGS software is widely used at leading High Tech and Electronics companies globally, including the top semiconductor and mobile phone manufacturers, four of the top five consumer electronics OEMs, three of the top five semiconductor equipment manufacturers, and eight of the top 10 contract manufacturers. UGS solutions enable companies to develop innovative products that capture the imagination of consumers.
Commentary By Jeffrey Rowe, Editor
According to the IDC study, not bad for UGS to lead in revenue in three out of four discrete manufacturing industries -- aerospace and defense (A&D), automotive, and high tech and electronics (HT&E). Obviously these are all huge markets with ongoing needs for engineering software and associated services.
I’m pretty sure that UGS is encouraged to hear that the market through the end of the decade for A&D is poised for good growth. In the commercial aviation sector there is an anticipated need for about 5,000 new aircraft, due to emerging markets and routes, and this need translates to over $300B -- with the military and defense accounting for the majority of it. Considering aftermarket services and other parts, the total global A&D market is projected to be around $600B for this timeframe, with at least a 10 percent annual growth. Overall PLM business (including UGS) from the A&D market is estimated at just over $3B.
UGS enjoys an enviable presence in A&D. UGS also estimates that over 90 percent of all A&D enterprise collaborative PLM environments are managed using Teamcenter Enterprise. UGS PLM software is used by all of the top 15 A&D OEM companies worldwide, and includes (in order of size) Boeing, Airbus, Lockheed Martin, Northrup/Gruman, Raytheon, General Dynamics, BAE, United Technologies, GE Engines, and Rolls-Royce.
On the automotive front, UGS is predicting that assembly areas, such as powertrain, body chassis, and body panels will increasingly be manufactured by suppliers, as opposed to OEMs. Suppliers and service providers will continue to assume a greater responsibility for manufacturing automotive components and sub-assemblies. Areas such as electronics, electrical, telematics, and mechatronics, which are traditionally high percentage (85 percent) supplier-furnished components, are not projected to increase in supplier percentage, but represent the highest revenue growth.
With its experience in the automotive industry, UGS understands that the primary lifecycle requirements include:
- Systems requirements and engineering
- Design automation, MCAD, ECAD, CAE, and Software
- Bills of Material
- Process planning and simulation (digital manufacturing)
- Service warranty and management
UGS is involved with what it calls the Automotive Innovation Network (ASG), a partnership with many of its automotive customers, including GM, Ford, DaimlerChrysler, Renault, BMW, Audi, Toyota, Nissan, Hyundai, Porsche, and others, which represent a consortium to help define, validate, prioritize, and drive Automotive PLM strategies.
Early last year UGS won out over Dassault Systemes for a major contract after a two-year evaluation by Nissan. The Nissan deal was the conclusion of its largest contract win in 2005. Nissan is using UGS's NX CAD software to design vehicles, as well as UGS' Teamcenter software to manage product data.
In winning over Dassault, UGS replaces the former supplier at Nissan. In 1999, when Nissan and French car maker, Renault, entered into an alliance that led to joint management of the two companies, Renault standardized on Dassault's CATIA. That alliance, however, initiated a series of corporate improvement initiatives which, among other things, called for Nissan to increase the number of car models it produced while also cutting the time for developing a new model to 10 months on a globally collaborative basis.
With the win, Nissan became UGS' second major automotive OEM customer. General Motors, UGS' largest single customer, has also standardized on the company's PLM software. Ford, on the other hand, uses UGS' tools for power-train design while Dassault's CATIA is used for body design. In a conversation with an unnamed Ford insider familiar with the situation, he said that Dassault is still intent of convincing Ford of reversing its decision on UGS.
For the HT&E sector, UGS offers a comprehensive design/build environment from concept to product planning & development, to product launch validation, to product sustainment, to product obsolescence planning.
In terms of the HT&E market segments, UGS has focused on the following product segments that include consumer electronics and durables; test and measurement; computer peripherals; computer hardware; mechatronics and optical; network equipment; and telecommunications equipment.
UGS signed more than 30 contracts in HT&E in the first half of 2006. New customers included Ericsson, Hisense, Lam Research, LG Electronics, LS Cable, and Samsung Electronics.
The presence of UGS in the various industries discussed above, while quite impressive, seems to me to be somewhat limited. By that I mean, for the most part the companies mentioned above are what I would term “mega” companies. These are companies that buy and maintain hundreds and thousands of engineering software seats, and that’s a good thing for any software vendor. However, “mega” companies are somewhat finite, meaning that virtually all, if not all, have been sold to already. That leaves the virtually limitless potential market of the small and medium sized businesses (SMBs), many of which have already made a decision on a major investment in engineering software, but still a bunch out there that are still deciding.