Simulation Software Market Size, Share & Trends Analysis Report By Component (Software, Service), By Deployment (On-premise, Cloud), By End Use, By Region, And Segment Forecasts, 2019 - 2025

Industry Insights

The global simulation software market size was valued at USD 7.19 billion in 2018 and is expected to register a CAGR of 16.98% over the forecast period.simulation software is a tool used to virtually create a real-time environment to test the applicability and efficiency of different products and processes. Benefits such as reduction in production expenditure and reduced costs of training are expected to drive the market growth. Furthermore, simulation tools play a major role in determining the effects of military weapons. They also help automotive companies determine the ideal vehicle prototypes for reducing CO₂ emissions.

Simulation software is widely adopted by different companies as it helps reduce production costs. The software helps develop several prototypes and test them virtually. Moreover, the simulation software helps realize error-free output in a production process, thereby avoiding production of faulty products and the respective costs involved. It also helps save time spent on research and development activities. All the aforementioned benefits of simulation software are expected to fuel the market growth. 

Conventionally, manufacturers incurred huge costs while prototyping products, which involved complex mechanisms. In spite of the availability of prototypes, the chances of failure were high, which incurred additional R&D expenses to reduce such product failures. Expenses incurred on prototypes and curbing faults of the existing products led to increased pre & post-production costs. In such scenarios, the use of simulation software helps reduce the need for manually testing multiple prototypes to subsequently reduce the chances of product failures. This is encouraging companies to make investments in simulation tools.

Manufacturers across the globe are making investments to develop AI-related technologies to cope with the Volatile, Uncertain, Complex, and Ambiguous (VUCA) world. Virtual testing techniques are used to test these AI-enabled devices and involve the observation of the behavior of these devices in real-time situations. The use of virtual testing method increases the efficiency of a product development process and simultaneously reduces the product development cost. This growing focus on AI devices and products is expected to lead to the adoption of virtual testing tools.

Moreover, the industry is witnessing growth owing to the emergence of autonomous and electric vehicles. The automotive manufacturers are using simulation tools to test the efficiency & effectiveness of these vehicles using real-world situations. They are also using simulation software to meet different industry standards and regulations. In September 2018, BMW Group announced investments of approximately USD 115 million to establish a high-fidelity driving simulation center in Munich, Germany.

Component Insights

Based on components, the market for simulation software has been segmented into software and service. The software segment dominated the market in 2018 and is expected to remain dominant over the forecast period. The segment growth can be attributed to benefits such as data safety, reliability, and uninterrupted testing. Furthermore, under the software segment, finite element analysis is expected to largely contribute to the growth of the segment. FEA is widely used in industries such as automotive, aerospace, defense, and electronics to test product quality, performance, and design.

The service segment is expected to register the highest CAGR over the forecast period. The growth of the segment can be attributed to the growing awareness of virtually enabled processes used for product development among companies and governments. Services such as design & consulting, implementation, and maintenance are gaining popularity among various enterprises. ANSYS, Inc., one of the key players in the market, provides consultation and professional services for simulation workflow improvement, process compression, and so on.

Deployment Insights

Based on deployment, the market for simulation software has been segmented into on-premise and cloud. The cloud segment is expected to register the highest CAGR over the next six years. The growth of this segment can be attributed to benefits offered, including easy implementation and cost-effectiveness, as compared to the traditional on-premise software. Since the software is deployed over the cloud, it is easier to maintain and upgrade based on a client’s requirements. Moreover, cloud-based software can be used in applications such as R&D and training & education.  

The on-premise segment dominated the market in 2018 owing to the early adoption of the software. On-premise deployment is a traditional deployment method which involves the installation of the software on-site. This method is beneficial for companies who wish to maintain confidentiality of their data and secure the data from hackers. These benefits related to data confidentiality and security are the primary factors driving the growth of the segment. The segment is expected to account for the highest market share by 2025.

End Use Insights

Based on end use, the market for simulation software is segmented into automotive, aerospace & defense, electrical & electronics, industrial manufacturing, healthcare, and others. The others segment includes industries & sectors such as construction, retail, and telecommunications. The automotive segment dominated the market in 2018 owing to the early adoption of virtual tools for product development. Furthermore, the automotive industry is witnessing a shift toward the use of electric and autonomous vehicles. The use of simulation to enhance production processes in this industry is primarily driving the growth of this segment.

Additionally, the aerospace & defense segment is expected to grow at a considerable CAGR over the forecast period. The segment growth can be attributed to the use of simulators for designing aircraft and defense equipment. Furthermore, simulators are also used in the defense sector for training soldiers. The growing concerns of terrorism and national security amongst governments of developed and developing nations have resulted in increased investment for new and improved defense equipment. Simulation software is used in developing such equipment and training soldiers in virtualized real-time scenarios at minimal costs.

Regional Insights

North America dominated the simulation software market in 2018 and is expected to continue to dominate over the forecast period. The growth of the region can be attributed to the presence of major players operating in the U.S. and Canada. The companies in these countries have been observed to be investing in research & development activities in order to introduce technologically advanced products in the market. Moreover, the region is well-known as an early adopter of advanced technologies.

Asia Pacific regional market is anticipated to witness significant growth over the forecast period owing to the increased manufacturing activities in industries and sectors such as automotive and healthcare. The growths of the construction and healthcare verticals in countries such as Japan and India is subsequently driving the growth of the Asia Pacific regional market. Europe accounted for a relatively significant share in the market in 2018. Countries such as Germany and the U.K. are primarily contributing to the growth of the regional market. Rapid penetration of AI technology and increasing defense expenditure in the region are some of the factors that are positively contributing to the regional market growth.

Simulation Software Market Share Insights

A few of the major market players include Altair Engineering, Inc.; Autodesk Inc.; ANSYS, Inc.; and Dassault Systèmes. The market players are trying to gain higher market shares through the adoption of strategies such as partnerships, investments, and mergers & acquisitions. They are also launching new products & services and are also focusing on maintaining competitive prices. The use of simulation software is enabling automobile manufacturers to test multiple variants of a vehicle across various driving terrains and situations before determining & finalizing the ideal prototype of the vehicle. Therefore, these manufacturers are opting for full-fledged implementation of simulation software. For instance, in September 2018, BMW Group announced that the company planned to establish a simulation center in Munich. The facility would be equipped with a high-fidelity simulator capable of representing rotational, longitudinal, and transverse movements of a vehicle in real time.

Segments Covered in the Report

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2014 to 2025. For the purpose of this study, Grand View Research has segmented the global simulation software market report on the basis of component, deployment, end use, and region:

• Component Outlook (Revenue, USD Million, 2014 - 2025)

  • Software

  • Service

• Deployment Outlook (Revenue, USD Million, 2014 - 2025)

  • On-premise

  • Cloud

• End Use Outlook (Revenue, USD Million, 2014 - 2025)

  • Automotive

  • Aerospace & Defense

  • Electrical & Electronics

  • Industrial Manufacturing

  • Healthcare

  • Others

• Regional Outlook (Revenue, USD Million, 2014 - 2025)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

    • France

  • Asia Pacific

    • China

    • India

    • Japan

  • Latin America

    • Brazil

    • Mexico

  • Middle East & Africa