What is PLM market growth potential?

What is PLM market growth potential?

The understanding market potential can make all the difference for the company between sitting courtside in the middle of the most active and watching the game from home. If you working on market and strategy, you have to get a pulse of the market. Then make an assessment of impact, competitors and future growth potential.

I found an interesting slide (source Altium) demonstrate revenue growth and EBITDA for CAD/PLM vendors over the last 12 months period.

I will come back to the slide. However, according to CIMdata reports, PLM market seems to be hot and moving. CIMdata is one of the leading companies that can give you an idea about the current state of the market. Check CIMdata website. A few months ago, I sat down with Stan Przybylinski and had a chance to discuss current market trends in PLM. Check my notes here  – CIMdata 2018 PLM Market Numbers – Growth with Forecast for M&A

Here are some numbers:

Coming back to Altium analysis. The article was published by Christopher Donato, Vice President of Global Sales at Altium. The article speaks about the incredible success of Altium and its growth but also presents other vendors performance.

What caught my special attention is the slide that demonstrates current growth potential in CAD / PLM business. 

Image source – Altium

Although the article focuses on the EDA market, the performance of PLM vendors such as Dassault Systemes, PTC, and Siemens PLM is there as well. The chart made me think about where is potential growth for PLM business these days.

Listening to analysts and vendors, you can hear multiple perspectives. According to the CIMdata, the potential in applications of artificial intelligence (AI) in PLM:

Artificial intelligence (AI) has been the “next big thing” for decades. The benefits of Moore’s Law and advances in AI and machine learning have increasingly made that promise a reality. For 2019, CIMdata’s global Product Lifecycle Management (PLM) Market & Industry Forum series will focus on applications of these technologies in PLM and adjacent enterprise software markets that are augmenting human skills, bringing data and advanced analytics to the point of work to make humans, and the processes they deploy, more effective

On the other side, an example of Altium demonstrates the potential of being an underdog on the market occupied by the two largest vendors. My hunch – Altium growth was achieved in the market that was not addressed by larger vendors.

Near-zero growth in revenues from PTC and Siemens, made me think there is the biggest potential in some segments of the market not covered by these vendors (and even Dassault Systems). Small manufacturing businesses is the biggest challenge in the PLM market and vendors are struggling to bring something meaningful for quite a long time. Aras PLM, the company that was recently added to the list of PLM mindshare leaders is also not focusing on smaller businesses and leaving space of small companies completely to Aras partners.

What is my conclusion? PLM market is in a very interesting moment. Although dominated by large vendors it has a lot of potential in the lower underdog position market. To find underserved market segments can be an interesting opportunity. Just my thoughts…

Best, Oleg

Disclaimer: I’m co-founder and CEO of OpenBOM developing cloud-based bill of materials and inventory management tool for manufacturing companies, hardware startups, and supply chain. My opinion can be unintentionally biased.

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  • Ryan

    I’m not a fan of percentage based graphs. Dollar based would be a better choice. If I had a plm company and made $2 profit from $1 investment l’d score higher than everyone else!

  • Noah Cole

    I share your optimism about the growth potential of the PLM market but some of the figures and related analysis are a bit misleading or inaccurate. As CIMData’s 2019 Executive PLM Market Report highlighted, one the primary drivers of PLM growth is the projected growth in EDA. As you cited, this is the result of electronics content increasing in all products and services as part of the “smart, connected” movement. This is part of what drove Siemens to acquire Mentor – which was a watershed movement for the industry as it will enable many more organizations to address the challenges and opportunities of the “electronics in everything” revolution. Mentor continues to operate as a Siemens business, so perhaps the contributions from this important segment were not included in the analysis of this industry if it looked at Siemens as a whole or even at the division level? Per Siemens policy, EBITDA is not published for either Mentor or Siemens PLM – So I assume that these charts are speculative or, compare hardware margins to software companies. In addition, the data you’ve cited in this article is attributed to a company that is focused on just one segment of the overall EDA and PLM markets. PCB design is an important segment within EDA, and Mentor has long held the market leading position – as documented by Pedestal Research (formerly Gary Smith EDA) – at 39% in 2017 or, as documented by ESDA, 40.5% in 2018. It isn’t clear which pieces/niches of the PCB market data you have included here, but it can’t be the overall PCB design market data that is currently published by Pedestal Research. Our leading PCB design market position is due to our strengths beyond just layout and capture (where we also lead) core design, but in areas such as PCB analysis, IC-PCB co-design, design thermal verification, multi-board systems, MBSE and PCB manufacturing solutions.

    Noah Cole
    Director, Global Communications
    Siemens PLM Software

  • beyondplm

    Ha! Good point…

  • beyondplm

    @disqus_KOwPE1xPBv:disqus thanks for sharing numbers and insight.

  • Bas Kuper

    These numbers reflect the growth and EBITDA of Siemens AG, which is a 100Bn conglomerate with many, very diverse businesses. Siemens Digital Industries Software is one of the fastest growing and most profitable BU’s in our company. Comparing the overall Siemens number in this chart is very misleading. And as for the PCB market share, Noah’s comments are spot on.

  • beyondplm

    Absence of transparency will always bring speculation.