Simulation Software Market

Market Overview

The global simulation software market size was worth USD 19 billion in 2022 and is estimated to reach an expected value of USD 80 billion by 2031 at a CAGR of 15.3% during the forecast period (2023-2031). Due to the factors such as increasing prevalence for simulation software to optimize performance of electric-autonomous vehicles and growing adoption of simulation tools in the healthcare Industry significantly drives the simulation software market demand by 2031.

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 simulation software market growth 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.

Market Dynamics

Global Simulation Software Market Drivers

Increasing Prevalence for Simulation Software to Optimize Performance of Electric and Autonomous Vehicles

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 simulation software market growth over the forecast period.

Growing Implementation of Simulation Tools in Aerospace & Defense and Other Industries

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.

Global Simulation Software Market Restraint

Budgetary Constraints and Lack of Skilled Personnel Restricting Adoption of Simulation Tools

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.

Global Simulation Software Market Opportunities

Growing Adoption of Simulation Tools in the Healthcare Industry

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.

Regional Analysis

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 simulation software 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.

Segmental Analysis

The global simulation software market is segmented by components, deployment, application, deployment, end use and region.

The global simulation software market, offerings are primarily segmented into two categories: Software and Services. While the software segment encompasses the primary platforms and tools designed to facilitate various simulation activities, the services segment delves into the support, customization, and consultation provided to ensure these tools align seamlessly with specific user needs and industry demands. This dichotomy ensures that end-users not only have access to cutting-edge simulation tools but also receive the necessary support and expertise to maximize their utility.

The global simulation software market, types are primarily segmented into Flight Simulation Software, Process Simulation Software, Electronic Circuit Simulation Software, Engine Simulation Software, and Others. Flight Simulation Software is pivotal for aviation sectors, enabling pilots and crew to train under controlled virtual scenarios. Process Simulation Software aids industries in modeling and analyzing processes, ensuring optimal performance. For electronics and tech sectors, Electronic Circuit Simulation Software becomes indispensable, letting engineers test circuits without physical prototypes. Meanwhile, the automotive and mechanical sectors benefit from Engine Simulation Software, facilitating design tweaks for performance and efficiency. Additionally, the market encompasses various other niche simulation tools tailored for specialized applications across different industries.

The global simulation software market, price model are primarily segmented into Subscription Based, Perpetual License, and Freemium. The Subscription-Based model allows users to access the software for a set period, typically monthly or annually, providing flexibility and regular updates. The Perpetual License model, on the other hand, involves a one-time purchase, granting users indefinite access to the software without recurring fees. Additionally, some providers adopt a Freemium model, offering basic features for free while charging for advanced functionalities, enabling users to test the software before investing further. Each pricing structure aims to meet different user requirements, from budget constraints to desired software features.

The global simulation software market, deployment are primarily segmented into On-premise, and cloud. The traditional "On-Premise" model entails software installation on the user's local hardware, providing direct control over data and infrastructure. On the other hand, the "Cloud" deployment offers flexibility, as the software is hosted on remote servers, allowing users to access and operate the software via the internet. This shift to cloud-based solutions is driven by the need for scalability, cost-effectiveness, and ease of integration with other systems.

The global simulation software market, functionality are primarily segmented into Finite Element Analysis, Simulated Training & Testing, Computational Fluid Dynamics, Game Development and Entertainment, and Others. Among these, Finite Element Analysis is employed to predict how objects react to real-world forces. Simulated Training & Testing, on the other hand, is pivotal for immersive learning environments and accurate system testing. Computational Fluid Dynamics aids in analyzing fluid flow, heat transfer, and associated phenomena. Meanwhile, the Game Development and Entertainment sector utilizes specialized simulation software to enhance realism, physics, and user experience in gaming environments. Besides these primary functionalities, there are other versatile applications tailored to meet specific industry needs.

The global simulation software market, enterprises are primarily segmented into Small Scale Enterprises, and Medium And Large Scale Enterprises. Specifically, Small Scale Enterprises often utilize simulation software to enhance their workflow efficiency and forecast potential challenges, even with limited resources. On the other hand, Medium and Large Scale Enterprises deploy these software solutions on a broader scale, tapping into their extensive features to drive innovation, manage large datasets, and make informed decisions in real-time scenarios. The adaptability of simulation software ensures that businesses of all sizes can harness its potential, catering to their unique requirements and operational scope.

The global simulation software market, end use are primarily segmented into Automotive, Aerospace &Defense, Oil & Gas, Energy & Utilities, Electronics And Telecommunications, Transportation & Logistics, Healthcare, and Others. The automotive industry utilizes simulation software to refine vehicle design and test performance under various conditions. Similarly, the aerospace and defense sector employs these tools to ensure aircraft and equipment safety, efficiency, and reliability. The oil & gas industry deploys simulation to optimize drilling operations and pipeline integrity. Energy & utilities firms harness these platforms to forecast power consumption and distribution. Meanwhile, the electronics and telecommunications sector utilizes simulation for circuit design and network optimizations. Furthermore, the transportation & logistics domain taps into simulation for optimizing route planning and cargo handling, while the healthcare sector employs it for medical imaging, patient simulations, and equipment design. These varied applications underscore the versatility and critical importance of simulation software across industries.

Recent Developments

• October 2022 - Through its open digital business platform Siemens Xcelerator, which was introduced on June 29, 2022, Siemens is leading the digital transformation of economies along with its partners and clients. The platform aims to simplify digitalization quicker and more widely by combining a broad, carefully-curated portfolio with a robust partner ecosystem and developer marketplace. Two new agreements using the Siemens Xcelerator platform were introduced by Siemens.
• October 2022 - Siemens Smart Infrastructure and Volta Trucks, the leading full-electric commercial vehicle manufacturer and services provider, today announced a strategic partnership to deliver and scale eMobility charging infrastructure to simplify the transition to fleet electrification.