CIMdata Reports PDM Market Grows 27 Percent to Reach $1.4 Billion in 1998.

ANN ARBOR, Mich.--(BUSINESS WIRE)--March 8, 1999--According to figures released today from consulting and market research firm CIMdata, Inc., the worldwide Product Data Management (PDM) market grew 27% to reach $1.4 billion in 1998. The firm predicts the market will top $1.75 billion in 1999 and increase at a compound annual growth rate of 16% through the year 2003, when they expect the market size to exceed $2.9 billion. CIMdata attributes the high growth in 1998 to a degree of maturity in the market backed up by a strong record of large-scale implementations and broadening adoption of the technology throughout enterprises.

These statistics are provided as part of the CIMdata Market Service that keeps subscribers apprised of the latest trends, events, and issues surrounding the rapidly changing PDM industry. PDM is increasingly viewed as a tool to support the entire product definition lifecycle and to facilitate integration between the primary three product-related lifecycles within an enterprise: product definition, product production, and business operations support. Coordination and sharing of information between lifecycles is critical to a successful enterprise. PDM technology provides a way for systems to work together and exchange information at multiple points of continuous integration from design through manufacturing and support. In extended enterprises, PDM technology is effective in managing the product definition supply chain by serving as an informational bridge connecting OEMs, subcontractors, vendors, consultants, partners and customers.

Vendor Rankings

"A wide range of vendors supply software and services to the PDM market," explains Patrice Romzick, CIMdata Market Analyst. "Some offer large-scale, fully functional PDM implementations, while other vendors supply low-end or mid-range systems. Yet others focus on specific application areas such as document management, visualization, or component supplier management." Romzick says that as a result, the overall PDM market is comprised of different sub-segments with their own set of specific suppliers, many of which do not directly compete but rather complement one another. She expects this segmentation to increase in the coming years.

According to CIMdata statistics, the market leader for the broadscale PDM software and services market is Metaphase Technology, a wholly-owned subsidiary of Structural Dynamics Research Corporation (Nasdaq:SDRC). The company's market share is 7% and 1998 revenues were $101 million, making Metaphase the first PDM vendor to reach the hundred-million-dollar milestone. Documentum (Nasdaq:DCTM), IBM Corp. (NYSE:IBM), and Engineering Animation Inc. (Nasdaq:EAII) each have a 6% market share, followed by Aspect Development (Nasdaq:ASDV) with a 5% share. Rounding out the top ten software and service vendors are Parametric Technology Corp. (PTC) (Nasdaq:PMTC), Unigraphics Solutions (NYSE:UGS), Intergraph Corp. (Nasdaq:INGR) and Siemens Business Services, a jointly owned subsidiary of Siemens AG and Siemens Nixdorf Information Systems (FWB:SIEG), each with a 3% market share. MatrixOne Inc. holds a 2% share. Service-only vendors are not included in this group.

Based on sales of PDM software only, the overall top ten vendors are Engineering Animation Inc. with an estimated 10% share, Documentum with a 9% share, both Metaphase/SDRC and Aspect Development with 7% shares, Parametric Technology Corp. (PTC) with 6%, IBM with 5%, Unigraphics Solutions and SAP AG (NYSE:SAP), each with 4% shares, MatrixOne Inc. with 3%, and Baan Engineering with 2%.

CIMdata also compiles market figures for high-end product-centric system vendors--the traditional core of the PDM market. These vendors offer systems that have a range of PDM functionality and have demonstrated scalability, whose products can be distributed across multiple server networks, and have a track record of selling their products for use throughout an enterprise.

Leaders in this market are Metaphase/SDRC with a 17% share and IBM Corp. with 14%. Parametric Technology Corp., Unigraphics Solutions, and Intergraph Corp. each have a 7% share. MatrixOne Inc. and SAP AG each have a 5% share. Baan Engineering (ASE:BAAN); (Nasdaq:BAANF), Inso Corp.'s PDM Division (Nasdaq:INSO) (formerly Sherpa Corp.) and CoCreate Software, Inc., a subsidiary of Hewlett-Packard Company (NYSE:HWP), each have a 4% share of this market.

Based on sales of high-end PDM software only, the overall top vendors are Metaphase/SDRC with a 16% share, Parametric Technology Corp. with 15%, and IBM with 11%. Unigraphics Solutions has a 10% share and SAP AG has an 8% share while MatrixOne and Baan Engineering each have 6%. Finishing the list are Intergraph Corp., Eigner + Partner AG and Inso Corp.'s PDM Division each with 4% shares.

Worldwide Growth

Geographically, the largest PDM market segment remains North America. In 1998, 46% of the worldwide PDM investments came from companies in North America, where most of the early implementations occurred and where a growing number of companies are investing heavily in extensive second-generation systems. Due to continued expansion fueled by a healthy US economy and a strong dollar, North America's share increased 1% from 45% in 1997.

European PDM investments remained at 39% of the world market in 1998, with European PDM investments steady but still hampered by lack of dominant suppliers, the need for greater market education, lengthy procurement delays, and significant differences in priorities, suppliers, applications, and implementation approaches in the various countries.

The Asian-Pacific market share was 14% of the total worldwide PDM market, down 2% from 1997 due to continuing economic troubles. "The Asia-Pacific region continues to show healthy growth, however, and has a strong market potential, particularly in areas such as Japan and Korea where major manufacturers are investing heavily in PDM and an increasing number of vendors are establishing sales facilities and support centers," says Romzick.

Worldwide market growth is driven primarily by sizable investments in PDM by large manufacturing firms. In 1998, the automotive and electronics industries led all other industry sectors, each accounting for 19% of PDM investments. According to CIMdata, PDM is used by electronics companies in managing extremely short product lifecycles and meeting rapid time-to-market demands for products such as computers and telecommunications equipment. The aerospace industry accounts for 15% of the PDM market and continues to invest heavily in PDM.

Process and utilities industries contribute 15% of the PDM market at petroleum, chemical, food, pharmaceutical, and other plants as well as utility companies in electrical, gas, and water distribution. These companies use the technology mainly for asset management associated with the design, construction, and maintenance of huge projects and facilities.

Manufacturers of heavy machinery such as machine tools, construction equipment, and agricultural machinery accounted for 14% of PDM revenue, while another 11% was contributed by other discrete manufacturing companies using PDM in the design and manufacturing of consumer products, recreation equipment, home appliances, office equipment, business machines, and metal parts.

Romzick notes that in all these sectors, more than half the expenditures for PDM is devoted to software-related services, with a focus on integration of related systems and technologies. "A number of large worldwide system integration firms entered the PDM market in 1998, and are expected to grow these businesses significantly in the next several years," said Romzick. She also points out that total market figures for PDM represent only a small piece of what companies actually spend in implementing the technology and do not reflect required investments in critical areas such as hardware, computing infrastructure, consulting, business process re-engineering, planning, and coordination.

Trends and Issues

According to Ed Miller, president of CIMdata, the PDM market continues to show steady growth because the technology has evolved from an engineering department tool to support enterprise-wide business processes and the management of all product definition information and documents.

"In extended enterprises, PDM technology is effective in managing the product definition supply chain by serving as an informational bridge connecting OEMs, subcontractors, vendors, consultants, partners, and customers," said Miller.

Miller notes that the use of PDM is critical in managing design activities in the supply chain, since product development responsibility is increasingly relegated by OEMs to suppliers that formerly made parts according to specifications handed down to them.

These types of small and medium-size companies are finding PDM more affordable because of availability of economical and focused solutions aimed at handling clearly defined tasks for specific types of companies. For the most part, these application programs are more easily understood by workers, correlate closely with the user's own processes, and run more efficiently in performing required tasks. As a result, start-up time is shorter, training is easier, and payoffs come faster.

"With PDM becoming more pervasive throughout a broader range of companies, the use of the technology is expanding beyond design activities to include information management throughout the product lifecycle," says Miller. "In this way, PDM works closely with ERP in managing product definition, product production, and business operations support from the early conceptual stages of product development, through manufacturing, and finally to product support."

Miller notes that such a view also highlights the critical importance of a continuous exchange of information and the significant value of PDM and ERP throughout the entire lifecycle. For example, PDM is key to maintaining an accurate product definition for support of complex products such as aircraft, even after delivery. Conversely, ERP provides valuable manufacturing production and procurement information for designers in the early conceptual stages of product design.

One of the major enabling technologies spreading PDM throughout the enterprise, according to Miller, is visualization software to display graphical product representations which non-CAD users then can animate, manipulate, and merge into their own projects. This new class of software can be operated on relatively lightweight machines such as PCs and laptops, and they use relatively easy-to-use browser-type interfaces.

"By making product data more understandable to a broader range of people," explains Miller, "visualization tools help users make sense of information and provide a relatively simple, less expensive way of expanding the value of PDM to people who otherwise would probably not have convenient on-line access to product data. By enabling more users to become active more quickly, visualization tools can provide a jump start in achieving early PDM benefits for an organization."

According to Miller, the PDM market recently has been bubbling with activity as vendors offer an increasingly wide variety of visualization products from which to choose in leveraging product data throughout the enterprise.

Expanded Market Service

Additional information on the PDM market is available through CIMdata's Market Service covering latest trends, events, and issues surrounding the rapidly changing PDM industry. Subscribers receive periodic reports analyzing PDM market events and trends, a monthly industry newsletter on the market, daily late-breaking industry news, a comprehensive Market Opportunities Report with revenue and sales statistics, and access to teleconferences discussing issues and events relevant to the market.

April PDM Conference

Information on the PDM market, technology, and applications will be presented at the annual PDM Conference April 20-22, 1999, hosted by CIMdata in Atlanta, Georgia. Over 1000 delegates are expected, and more than 40 suppliers will exhibit PDM-related systems and services.

CIMdata president Ed Miller will deliver a "State of the Industry" address on the PDM market. Dr. Richard Riff, Director of the C3P Project Office at Ford Motor Co., will deliver the keynote presentation "PDM as a Strategic Technology" discussing the company's CAD/CAM/CAE/PIM initiative.

One day of technology tutorials will be followed by two days of presentations by users sharing application experiences. Cost is US$995 for the two-day conference, plus US$400 for tutorials.

Following this event, CIMdata will host its annual PDM Europe conference October 12-14, 1999 in Nice, France.

About CIMdata

CIMdata provides strategic technical consulting and in-depth market research for industrial organizations and suppliers of technologies and services seeking competitive advantage in the global economy. Services focus on areas related to PDM, CAD/CAM, and technology and information exchange standards, with particular emphasis on the use of these technologies in product development environments and engineering-to-manufacturing integration. CIMdata produces PDM, MCAD, and NC guides and industry reports aimed at both the industrial and supplier communities. The company serves clients worldwide from locations in North America, Europe, and the Pacific Rim.

PDM reports and guides published by CIMdata include a PDM Market News Alert, covering recent industry developments, Market Opportunities Report, Pricing Analysis, Buyer's Guide, Benefits Analysis Guide, Case Studies, and an Implementation Survey Report as well as STEP: Towards Open Systems. Other reports are offered on MCAD and NC systems and applications.

More information on CIMdata can be found on its web site http://www.CIMdata.com