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Between 2003 and 2007, the majority of software vendors spent substantial amounts of money on research and development (R&D) and marketing aimed at increasing awareness among end users about the benefits of software enhancements. This has continued over the past three years, although the economic slowdown has had a negative impact on demand for new applications. End users have now become more aware of the cost-saving potential of software, and this is opening up new market opportunities for suppliers.
The world metrology software market generated $262.6 million, at an annual growth rate of 3.4% in 2010. The revenues are expected to reach $331.9 million in 2014, as pent-up demand and technological advancements drive the market in the short and medium terms of the forecast period.
Demand for software is on the rise due to the need for constant enhancement of solutions and an evident drive toward a one-stop shop strategy. Without an extended service portfolio and qualified engineers, suppliers have limited scope of establishing and will find it difficult to establish themselves in the metrology software market. Most leading market participants have well-trained and experienced in-house staff that are able to provide complete and customized service support to their customers.
End users are demanding metrology equipment with higher life expectancy. While the increasing life of machines challenges new product sales, it enables software market growth. Research also indicates that there is increasing awareness about the benefits of maintaining metrology equipment in good operating condition and having periodic maintenance contracts that include software upgrades. End users prefer OPEX to CAPEX, at it allows them to be more flexible in their spending. Hence, an increase in maintenance contracts was seen in 2010.
Although the economic crisis adversely influenced new software license opportunities for vendors, it did increase the software sold with retrofit products. The need to create new business strategies has forced manufacturers to focus on providing services and solutions that can restore customer confidence and renew demand. This is the key differentiating factor for manufacturers, because as the uniqueness of the service improves, the potential for growth increases. Vendors are increasingly offering software upgrades as part of their service portfolios.
There has also been increasing acceptance for point cloud capabilities in the metrology software market. “The major economic slowdown of 2009 has emphasized the need for large manufacturing OEMs to reduce their number of metrology software platforms. And the new reality is that a corporate metrology solution must handle the big density point cloud workflows of the customers,” comments Marc Soucy, president of InnovMetric Software Inc. (Québec, QC Canada).
The metrology software market is facing increased consolidation from globally recognized companies such as Hexagon Metrology and Nikon Corp. Increasing consolidation limits the potential for growth, as the market is left with a handful of manufacturers offering standardized products. These acquisitions by larger players to penetrate new application areas or geographic regions, affects the competitive landscape by reducing the number of active market participants and creating a barrier for potential entrants into the market.
For potential new entrants and smaller players in the market, a key challenge is the presence of large, renowned companies such as Hexagon Metrology in the market. The marketing capabilities of such companies, in addition to their sales and distribution channel strength, are significant challenges for smaller market participants. Emerging participants also find it difficult to support all the software solution platforms end users are looking for. As customers increasingly look for a one-stop shop to meet all their requirements, breadth and depth of product line remain critical factors for end users while making investment decisions.
Metrology software market is by far a maintenance market, however, with respect to new licenses, there is increasing demand for portable coordinate measuring machine software and point cloud metrology software.