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June 21, 2004
PLM Market Projected to Top $8.65 Billion This Year
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Jeff Rowe - Managing Editor

by Jeff Rowe - Contributing Editor
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PLM Market Projected to Top $8.65 Billion This Year

Global manufacturers are increasing their investment in product lifecycle management (PLM) technology, reflecting recovery in a sector hit hard by recession. By Daratech's forecasts, spending on PLM software and services will top $8.65 billion in 2004, representing growth of 5% over 2003. Daratech is a provider of information technology market research and technology assessment, advisory and strategic consulting services, and executive-level conferences for manufacturing, engineering, construction and plant operations. Thought of as another passing acronym just a few short years ago, the manufacturing industry is showing a growing recognition and acceptance of PLM as a vital component of
the product development processes. The positive fiscal 2003 results enjoyed by many solutions providers, the recent acquisition of UGS for $2.05 billion, and the overall high level of technological investigating taking place at manufactures around the world makes for a promising future. Indeed, the improvement in the economy will have a positive effect on organizational purchasing decisions, many of which were put on hold over the past two years. Daratech forecasts the PLM market will grow at an annual rate of approximately 8% through 2008.

In Daratech's taxonomy, PLM includes CAD, CAM/CAE, PDM and DMPM (Digital Manufacturing Process Management). Projected to lead the PLM market in end user spending in 2004 are Dassault Systemes ($2.06 billion), UGS ($1.15 billion), PTC ($911 million) and Autodesk ($515 million). This year's forecast growth leaders are Autodesk (17%), Tecnomatix (15%), ANSYS (12%), Dassault (12%) and MatrixOne (12%).

Note: Market growth expressed in US Dollars differs from market growth rates expressed in other currencies when exchange rates change. These differences can be dramatic when there are large shifts in exchange rates. Daratech converts all reported information to US Dollars. As the US Dollar dropped in value against other currencies in 2003, this methodology increased in US Dollars the revenues from European and Japanese companies. In prior years, when the US Dollar was appreciating, the opposite was true.

This is good news, especially in light of the recent dour mood exhibited by several of the PLM vendors. Based on published sales figures and conversations with some of the vendors, we were under the general impression that while revenues and profits may have increased (due, in many cases to staff reductions and other cost-cutting measures), real growth was relatively flat or increasing at a slower rate than in previous years. On some levels, to at least a certain extent, many segments of the PLM market are saturated, meaning that although some customers may not be enamored with their current PLM set up, they are not in any hurry to upgrade or switch horses. Over time, of course, these
customers will move up and/or over to something else, and this is partially what Daratech's figures indicate - which is certainly good news. Conversely, the Daratech figures also indicate that the massive worldwide manufacturing sector is again in spending mood as its myriad participants look for ways to better compete through acquiring new and improved technologies to make their businesses more efficient and productive. It looks like opportunity beckons for those vendors who approach customers with these things in mind.

PTC Announces New Strategic Product PLM and Process Improvement Solutions Deployment For Toyota's Powertrain

PTC announced the deployment of Pro/ENGINEER Wildfire 2.0 at Toyota's Powertrain Division. The solution rolls out PTC's Pro/ENGINEER Wildfire 2.0 as the powertrain development standard, incorporating dozens of improvements for powertrain development, which Toyota and PTC conceived and developed over the last 18 months. The deployment is a part of the multi-year, joint process redesign and development initiative PTC and Toyota signed in May 2003.

Since standardizing on Pro/ENGINEER for powertrain in 2002, Toyota has achieved improvements in design cycle time, introduced new lean product development techniques, and furthered its established leadership in the areas of continuous improvement, quality leadership and technical innovation. This phase builds on that success by introducing innovative new PLM technology into their process in the areas of 3D engineering, analysis, manufacturing planning, drawing creation and interoperability.

"PTC has been a skilled and experienced partner to us throughout this major undertaking to improve our processes throughout the Powertrain Division," said Mr. Mikio Satoh, Toyota's general manager of Corporate IT. "PTC's comprehensive Product Development System clearly aligns with Toyota's approach to product design and development and we anticipate significant benefits to our process through this deployment."

"Toyota is renowned for its absolute focus on engineering and manufacturing excellence and PTC is proud to partner with them in this strategic use of PLM technology," said Dick Harrison, president and CEO of PTC. "The ability of our solutions to support and enable this undertaking is a tremendous validation of our vision, our approach and our offerings. We are confident that PTC will continue to help Toyota lead the industry in continuous process improvement."

Toyota's standardization on Pro/ENGINEER Wildfire 2.0 reinforces PTC's special focus on the powertrain segment of the transportation industry. Industry leaders such as VW, BMW, Hyundai, Fiat, Volvo Truck, Daihatsu, Hino Motors, Tata Motors, ZF, Mannesman AG, Visteon, Robert Bosch, Eaton, Dana, AVL and Cummins have selected PTC based on the business benefits provided by Pro/ENGINEER.

Pro/ENGINEER is the industry leader providing the power and performance required for delivering high performance products in the powertrain field while providing users with a simple, intuitive, and connected experience.

"The deployment of this phase is only the beginning of what Toyota and PTC envision for state-of-the-art design and process improvement," said PTC Senior Vice President of Product Management, Brian Shepherd. "More joint work is already underway and promises to continue to improve the powertrain product development process even further."

This latest foray into Toyota shows that PTC is increasingly able to crack the automotive/transportation market, especially in the powertrain area. This latest success at Toyota makes me wonder how much longer it will be before PTC gets into a major North American automaker in a big way, namely Ford Motor Co. Although Ford would never publicly disclose that it was shopping for a new PLM system, I can't help but think that Ford has to be planning and plotting its exit strategy away from its current majority design/engineering software - I-DEAS (currently owned by UGS and called I-DEAS NX Series). This could prove to be real window of opportunity for PTC, especially in the powertrain area.
Today, the powertrain; tomorrow, interior/exterior styling - who knows? PTC seems to have gotten better at selling its software on an enterprise basis (with Windchill and Pro/INTRALINK), and not just an engineering basis (with Pro/ENGINEER) with what it calls its product development system (PDS). Yes, PDS is but another acronym in the MCAD space, but one that has real meaning in mechanical design, engineering, and manufacturing.

Jeffrey Rowe is the editor and publisher of MCADCafé and MCAD Weekly Review. He can be reached at
Email Contact or 408.850.9230.

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    -- Jeff Rowe, MCADCafe.com Contributing Editor.