Embedded Software Market

Market Overview

The global embedded software market size was valued at USD 14.3 billion in 2022 and is projected to reach USD 25.6 billion by 2031, registering a CAGR of 7.6% during the forecast period (2023-2031).

The increasing usage of Internet of Things (IoT) devices, developments in automotive electronics, and increased demand for smart manufacturing solutions drive the integration of embedded software into a wide range of devices and systems across numerous industries. Embedded software is computer programs or code incorporated into physical devices or systems to govern performance, execute specified jobs, and allow desired features. Unlike standard software that runs on general-purpose computers, embedded software is tailored to the specific needs and limits of the hardware on which it works. It is critical to operate a wide range of electronic devices and equipment.

Embedded software market share is predicted to grow at a 7.6% CAGR due to the increasing usage of Internet of Things (IoT) devices, developments in automotive electronics, and increased demand for smart manufacturing solutions. These considerations drive the integration of embedded software into a wide range of devices and systems across numerous industries.

Market Dynamics

Market Drivers

Rise of the Internet of Things (IoT)

The Internet of Things (IoT) is a network of interconnected gadgets and items that communicate and share data via the Internet. These devices, which range from wearable gadgets to industrial sensors, rely on embedded software to function properly and communicate with one another. The Internet of Things has become a major driver for the embedded software business because of its wide-ranging applications across industries. Embedded software market trend in smart home setups where multiple devices are networked and controlled through a central hub or a smartphone app. In this scenario, smart thermostats, lighting systems, security cameras, and voice assistants are all part of the IoT ecosystem. Each device requires embedded software to interface with other devices, gather data, and execute certain activities. The worldwide IoT market is predicted to expand from USD 250 billion in 2019 to USD 1.5 trillion by 2030, according to IoT Analytics. This expansion can be attributable to the rising use of IoT devices across businesses.

Market Restraints

Security and Privacy Concerns

Security and privacy concerns grow as embedded software grows more prevalent across products and businesses. Malicious actors can use embedded system vulnerabilities to obtain unwanted access, disrupt operations, or compromise sensitive data. Maintaining trust in embedded software solutions requires ensuring robust security measures and addressing privacy concerns. The European Union Agency for Cybersecurity (ENISA) and other regulatory authorities have stressed the importance of cybersecurity in IoT and embedded systems. The "Good Practices for Security of IoT" publication from ENISA advises on securing embedded systems against cyber-attacks.

The European Union's General Data Protection Regulation (GDPR) and comparable data privacy legislation worldwide impose rigorous standards on how data acquired by embedded systems is managed, kept, and communicated. Media attention has been drawn to high-profile security breaches involving embedded systems, such as the Mirai botnet attack in 2016, which used vulnerabilities in IoT devices to conduct enormous DDoS attacks. Embedded software market insights thus demonstrate the vulnerability of revealing confidential data. Thereby hampering the Embedded Software market growth.

Market Opportunities

AI and Machine Learning Integration

Integrating artificial intelligence (AI) and machine learning (ML) capabilities into embedded software provides a tremendous opportunity to improve device functionality, decision-making, and user experiences. This possibility applies to various sectors and applications, including consumer electronics and industrial automation. Tesla's Autopilot technology is a notable example of AI integration in embedded software for self-driving cars. The system processes sensor data, makes driving judgments, and improves over time using AI-powered algorithms. AI-enhanced embedded devices in healthcare, such as wearable health trackers, may analyze biometric data and give users individualized health insights. This allows for the early diagnosis of health disorders and promotes healthier lifestyles. In consumer electronics devices such as smart speakers and smart TVs, AI-powered voice assistants use embedded software to parse natural language, understand user commands, and offer relevant responses. AI-powered embedded solutions can monitor soil conditions, weather patterns, and crop health in agriculture to optimize irrigation, fertilization, and harvesting procedures.

Regional Analysis

The global embedded software market analysis is conducted in North America, Europe, Asia-Pacific, the Middle East and Africa, and Latin America.

North American embedded software industry size is anticipated to exhibit a CAGR of 7.2% during the forecast period. Rising technological advancements in the vehicle industry and increased safety norms and regulations throughout the country will likely boost regional growth during the projection period. Furthermore, regional automakers' rising R&D investments in ADAS and autonomous driving technologies propel market expansion. These technologies require exceptionally efficient and secure software to analyze sensor and camera data and make safe vehicle management decisions. For example, in September 2021, Arm announced a partnership with numerous automotive distributors, including AWS, Continental, and CARIAD, to expand the use of its new embedded software architecture. The businesses worked to create the Scalable Open Architecture for Embedded Edge (SOAFEE), which enables automotive developers to incorporate a wide range of automotive technologies such as ADAS, in-vehicle entertainment systems, and electric powertrains.

Additionally, the federal government of the United States is boosting its investment in developing armed drones to increase its military and defense capabilities, which is growing regional market share. The United States Congress appropriated USD 7.5 billion to the Department of Defense (DoD) in May 2021. This money will be used to study and develop uncrewed aerial vehicles, combat drones, and unmanned surveillance systems. 

Asia-Pacific is anticipated to exhibit a CAGR of 7.9% over the forecast period. The Asia-Pacific region held a significant share of the global embedded software market in 2022. Facilities for semiconductor production are being expanded. In February 2022, for example, in Japan, Toshiba Electronic Devices and Storage Corporation built a 300-millimeter wafer fabrication plant for power semiconductors at Kaga Toshiba Electronics Corporation. Such activities will increase consumer electronics manufacturing, especially smartphones, and improve the industry's outlook. Furthermore, the growing network of consumer electronics manufacturers in major Asian nations such as Taiwan, China, and Japan will likely boost the growth of the Asia-Pacific embedded software market.

Furthermore, the Asia-Pacific area has a significant automotive market. Countries such as China, Japan, South Korea, and India substantially contribute to automobile production and consumption. According to the International Organization of Motor Vehicle Manufacturers (OICA), China is the world's largest automotive market, producing more than 25 million vehicles by 2020. The use of connected car technology is increasing in Asia-Pacific. These technologies require embedded software for features such as navigation, entertainment, telematics, and over-the-air upgrades. Implementing Industry 4.0 techniques and smart manufacturing efforts increases the demand for embedded software solutions.

Europe’s embedded software market is predicted to expand rapidly. This growth could be attributed to the increased use of automation and digital transformation in industrial applications. The transition to 'Industry 4.0' and the continuous advancement of software applications to optimize modern industrial processes increase demand for embedded software solutions. According to Horizon 2020, the government established research efforts as part of the strategy "Digitizing and changing European industry and services." Furthermore, it has committed over USD 500 million in R&D in 5G, AI, blockchain, embedded software support, smart system integration, and microelectronics.

Segmental Analysis

The global embedded software market is segmented based on tools, programming language, end-user, and region.

The tools are further segmented into RTOS, Assemblers, Debugger, and Compilers.

Debugger holds the major market share. Debuggers are tools used to detect and correct faults in software code. They allow developers to step through code in real time, set breakpoints, inspect variables, and evaluate program execution. Debuggers are critical in embedded systems for identifying software faults caused by hardware interactions, memory restrictions, or timing concerns. Compilers are tools that turn high-level programming languages (C and C++) into machine code that a certain processor can execute. They optimize code for efficiency and assure hardware compatibility. Compilers are essential for creating performant and portable embedded software across multiple hardware platforms.

Based on programming languages, the market is bifurcated into C, C++, JAVA, ASSEMBLY, MATLAB, and NET.

C is the major income-generating programming language. C is a computer language frequently used in the embedded software sector. Its success can be attributed to its efficiency, portability, and low-level capabilities. C supports direct memory manipulation and precise hardware control, making it ideal for resource-constrained settings. It is utilized in real-time systems, microcontrollers, and firmware production. C++ is also very popular in embedded software, particularly for complicated applications. C++ adds object-oriented capabilities to C, making it suited for large-scale projects. It improves code organization and reusability by providing abstraction, encapsulation, and inheritance.

Based on end-users, the market is sub-segmented into Computing Devices, Consumer Electronics, Telecommunication, Industrial Automation, Automotive, Manufacturing, Telecommunications, and Others.

Consumer Electronics led the market growth. Smartphones, smart TVs, smart home products, and wearables are examples of consumer electronics. These devices' embedded software provides communication, user interfaces, and a variety of functionalities. The fast Internet of Things (IoT) expansion and the increasing demand for smart and connected devices present substantial potential for embedded software innovation. Improved user experiences, integration with virtual assistants, and advanced functionalities drive this sub-segment. Laptops, desktop computers, and servers are included in this sub-segment. In computing devices, embedded software maintains the proper operation of physical components, manages resources, and provides user interfaces. As computing systems become more powerful and adaptable, embedded software is increasingly important in improving user experiences, optimizing performance, and allowing features such as virtualization and security advancements.

Recent Developments

• August 2023- Advantech Introduced SQRAM DDR5 5600 Memory with an Unprecedented Speed and Capacity of 48GB.
• August 2023- Cybersecurity with AI BlackBerry pioneers a significant update to its next-generation AI engine.
• August 2023- IBM announced Watsonx Generative AI Capabilities to Speed Up Mainframe Application Modernization.