The global simulation software market size was worth USD 14 billion in 2021 and is estimated to reach an expected value of USD 40 billion by 2030 at a CAGR of 12.8% during the forecast period (2022-2030).
The benefits offered by simulation software solutions, such as significant product development cost, reduced training cost, and enhanced quality and productivity of equipment/objects, bolster the adoption of simulation in various industries. Manufacturing organizations use simulation to digitally create equipment prototypes to design and test their functioning, quality, and operability even before developing physical equipment. This enables manufacturing companies to reduce product recall scenarios, which is still one of the major concerns for the companies. The key drivers for the market expansion include a sudden surge in the use of simulation software in the healthcare industry, coupled with the increasing usage of simulation tools in the automotive, electronics, and aerospace industries. Therefore, the growing usage of simulation for various applications, including Engineering, Research, Modeling & Simulated Testing, Manufacturing Process Optimization, High Fidelity Experiential 3D Training, among several others.
The growing emphasis on the impact of the increasing number of vehicles on the environment has led to the emergence of electric mobility. The benefits offered by battery-operated vehicles, including a reduction in the usage of fossil fuels and reduced greenhouse emissions, have gained consideration at a global level. As such, automotive companies across the globe are investing in developing future electric vehicles along with developments in the requisite infrastructure to support the growing usage of such vehicles.
Simulation software is mainly used in designing and manufacturing the battery systems installed in electric vehicles. Simulation software tools help automakers in annulling the risks of the battery systems catching fire. Simulation software is also used to improve battery design and performance. Simulation tools can potentially help simulate the current and molecular oxidation flow and subsequently optimize every individual battery cell for maximum lifespan, adequate safety, optimal thermal management, and structural integrity. As such, simulation tools can ultimately help automakers control production costs, scale production, and reduce the time to market. Simulation software also plays a vital role in developing autonomous and self-driven vehicles. Companies such as Tesla, Waymo, and Cruise, among others, vigorously emphasize progressively testing their autonomous vehicles before they can be deployed on the roads. Autonomous vehicles feature several antennas and sensors, among other intricate electronics, which need to be designed and engineered carefully for optimal vehicle performance. Simulation software allows design engineers to gain deeper insights into assessing various options and selecting the best one to improvise vehicle manufacturability. Benefits, such as enhanced vehicle design with reduced capital expenditure, offered by the latest simulation tools are driving the demand for simulation software among automakers. They are expected to play a niche role in driving the growth of the simulation software market over the forecast period.
Incumbents of the aerospace & defense have to abide by several stringent regulations. While various governments continue to draft more stringent regulations, industry incumbents are increasingly confronting budgetary constraints, thereby prompting industry incumbents to switch to more effective and resilient ways to innovate and develop modern aerospace & defense systems. As such, aerospace manufacturing companies increasingly utilize simulation and modeling tools to streamline and optimize manufacturing processes.
Using simulation software in manufacturing allows manufacturers to eliminate the costs incurred on prototype development, cut production costs, reduce scrap rates, and increase production rates. Using simulation at the design phase of the product manufacturing process allows manufacturers to try and test various options before selecting an optimal design without incurring additional costs and reducing lead times. Chances of product recall and certification issues also reduce substantially owing to the usage of simulation.
Simulation tools also play a vital role in developing unmanned aerial vehicles (UAVs) for various commercial and defense applications. Having realized that implementing a UAV prototype can involve higher costs, longer lead times, and potential risks, manufacturers are increasingly relying on simulated models to test the performance and design of UAVs. Conclusively, simulation tools can offer several benefits across the entire product development and manufacturing process in the aerospace & defense industry.
Using simulation software can be a complex task for untrained personnel. Making efficient use of simulation software calls for an in-depth understanding and knowledge of the functioning and applications of the software for various purposes, including design analysis. Therefore, companies prefer hiring trained personnel to run and operate the simulation tools.
Large organizations may find it easy to invest in developing simulation software and deploying a dedicated team of skilled engineers to operate and analyze product designs using the simulation platform. However, small and medium enterprises (SMEs) are plagued by budgetary constraints and a looming lack of skilled workforce and adequate market knowledge, among other factors, which are restricting them from adopting the latest technology to cater to their manufacturing needs. As a result, the adoption rate of simulation tools is relatively lower in SMEs.
Nevertheless, several simulation software vendors have started offering training services, which bodes well for smaller businesses willing to adopt the simulation technology and enhance their product offerings. As a result of this initiative, simulation software vendors have already started reporting a growing demand for simulation software tools from SMEs. But large corporates would continue to dominate the market over the forecast period owing to their large-scale operations, which enable economies of scale.
Simulation software for healthcare applications can capture the dynamics of healthcare systems, quantify their performance, drive better understanding, and encourage greater cooperation between the designers, administration, and healthcare practitioners. Companies are developing various innovative simulation tools dedicated to the healthcare industry. These tools include CAE Healthcare's human patient simulators, Pocket Nurse's simulated medication administration carts, and the virtual reality training offered by Oxford Medical Simulation, among others.
Aggressive investments are being made to develop simulation-based models for the healthcare industry for various medical and clinical applications. For instance, in March 2020, Dassault Systemes announced that it is working with the Central-South Architectural Design Institute (CSADI) of China to support the simulation and evaluation of the dispersal of coronavirus from the confined environment of China's Leishenshan Hospital. Similarly, in February 2021, Sanofi, a life sciences company based in France, announced to invest approximately USD 3 million in Novadiscovery. This healthcare technology provider provides clinical trial simulations with virtual patients. The development can be considered indicative of the growing awareness about the potential of simulation technology in transforming drug development and de-risking clinical development.
Industry experts are describing the outbreak of the COVID-19 pandemic as a catalyst in the development of clinical simulations that have accelerated the industry by at least three years. Conclusively, the aggressive investments in developing robust healthcare infrastructure and reducing the time-to-market of drugs and vaccines are anticipated to open immense opportunities for the growth of the simulation software market over the forecast period.
The global simulation software market is segmented by components, deployment, application, deployment, end use and region.
Based on Components, the global simulation software market is segmented into software and services. The software segment accounted for the largest market share and is estimated to grow at a CAGR of 12% during the forecast period. The significant share is attributable to the rising adoption of simulation software across several industry verticals, including automotive, aerospace & defense, electronics & semiconductor devices, transportation & logistics, and healthcare. The simulation software helps various organizations to provide 3D design to virtual prototyping experience by delivering engineers a broad and adaptable set of tools for 3D Simulation, visualization, and documentation analysis. Additionally, it helps build the virtual prototype of an end product that allows engineers to verify the structure and function of the product before its' final production.
Based on Deployment, the global simulation software market is segmented into on-premise and cloud. The on-premise segment accounted for the largest market share and is estimated to grow at a CAGR of 11.8% during the forecast period. The high market share is primarily attributed to a substantial rise in implementing on-premises Simulation across prominent industry players to protect and access data securely within their premises. The simulation software contains vital information, such as the product design and operating models, which are crucial and confidential for any company before introducing the product in the market. Therefore, the preferences for on-premise simulation tools have witnessed remarkable growth across verticals such as aerospace & defense, automotive, electronics & semiconductors, and healthcare.
Based on Application, the global simulation software market is segmented into engineering, research, modeling & simulated testing, high fidelity experiential 3D training, gaming, immersive experiences, manufacturing process optimization, AI training & autonomous systems, planning and logistics management & transportation, and cyber simulation. The engineering, research modeling & simulated testing segment accounted for the largest market share and is estimated to grow at a CAGR of 13.8% during the forecast period. The high segment share is attributable to the robust adoption of simulation software by the prominent end-use companies Airbus, Boeing, Volkswagen Group, and others for product engineering, modeling, research, and testing purposes. Besides, the segment growth is driven by the client's requirements for quick, quality improvement in a cost-effective manner, allowing companies to foray into the market with new products fast and lower warranty costs.
By End-Use, the global simulation software market is segmented into automotive, aerospace & defense, industrial, electronics and semiconductor, transportation & logistics, healthcare, and others. The automotive segment accounted for the largest market share and is estimated to grow at a CAGR of 13.9% during the forecast period. The high market share is attributable to the developments and innovations of electrification and automation in vehicles. Simulation software supports the design & development of autonomous vehicles and vessels, resulting in a more robust and commercially viable vehicle design. Besides, it significantly reduces the company's product development/production costs by nullifying the need for physical product testing and modeling. Moreover, with the emergence of 5G, the demand for numerous 5G equipment, chipsets, and devices is skyrocketing across the globe. Developing the next-generation 5G infrastructure equipment and devices is an intricate proposition. Therefore, simulation software implementation helps engineers design new 5G radio technologies, chipsets, and devices precisely at affordable costs.
By Region, the global simulation software market is segmented into North America, Europe, Asia Pacific, Latin America, and Middle East & Africa
North America accounted for the largest market share and is estimated to grow at a CAGR of 12.6% during the forecast period. The region's high share is primarily attributed to the higher adoption of simulation software technology across various applications, such as modeling and testing autonomous and electric vehicles and simulating intelligent mobility, infrastructure, and traffic management across several smart cities. Additionally, the flourishing investments in developing next-generation 5G technologies by prominent vendors such as Intel, Qualcomm, AT&T, Ericsson, Nokia, and others are further expected to bolster regional growth. The investments in developing vaccines and clinical research in the U.S. have increased. For instance, in 2020, the U.S. government infused nearly USD 11 billion in the late stage of COVID-19 vaccine development. Additionally, other private and public investments in drug discoveries and equipment have led the U.S. market to gain a market size.
Europe is the second largest region. It is anticipated to reach an expected value of USD 10 billion by 2030 at a CAGR of 12%. Germany and the U.K. primarily contributed to the regional market's growth. High penetration of AI technology and increasing defense expenditure in the region are key factors driving the market growth.
The Asia Pacific is the third largest region. The significant growth is attributable to the increasing awareness and adoption of simulation tools across several manufacturing facilities to design, model, research, and test next-generation automobiles and discrete manufacturing process optimization. Additionally, the rapidly growing electronic and chip designing industry across critical countries such as China, Japan, India, and South Korea, among others, is further expected to augment the APAC region's growth over the forecast period.
Major companies in the global simulation software market are
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