Venture Development Corp. (VDC) recently completed a market analysis study titled The 2002/2003 Embedded Software Strategic Market Intelligence Program: Volume II: Embedded Operating Systems, Software Development Tools, Design Automation Tools, Test Automation Tools, and Database Management Solutions for Embedded Systems. The following VDC whitepaper by VDC analysts Chris Lanfear and Steve Balacco summarizes some of the top level research findings.

An extensive analysis of the world market for embedded operating systems, software development tools, system design automation tools, test automation tools, and database management systems leads us to the following conclusions . . .

On the world market for embedded operating systems:

• Shipments of embedded operating systems, bundled products, and related services reached over $600 million during 2002.
  
• Sales in the embedded OS industry during 2002 was mainly driven by increased focus on bundling integrated development solutions and OS vendors adapting business models in response to a changing set of market requirements.
  
• Challenges and limitations to OS vendor sales during 2002 was mainly driven by a weak macro economy and downturn in information technology spending that impacted new project starts.
  
• Run-time royalties continue to be a large part of the revenue mix for embedded OS vendors amid the postponement and cancellation of new project starts and reduced investment in product.
  
• In terms of geographical regions, shipments to the Americas region remained number one, followed by shipments to EMEA (i.e. Europe, Middle East, Africa), and Asia-Pacific.
  
• For some time, telecommunication and data communication applications have driven the source of revenues for embedded OS vendors; however, the downturn in the industry has continued to affect investments in new project starts and shipments of products in 2002.
  
• In 2002, embedded operating system shipments to development teams using the ARM microprocessor architecture continued to grow.
  
• By 2007, we estimate the market for embedded operating systems, bundled tools, and related services will reach over $1 billion. Shipments to Asia-Pacific markets are expected to lead growth in terms of geographical regions, while automotive, consumer electronics, and military/aerospace are expected to lead growth in terms of vertical markets.

On the world market for unbundled embedded software development tools:

• VDC estimates that the market for software development tools and related services reached over $330 million in 2002, a decline from 2001. This decline is primarily due to the overall global economic slow down. However, the ongoing trend of bundling operating systems with development tools is also an important factor.
  
• GDE (i.e. GUI-driven development environment) toolsets make up the largest portion of shipments of software development tool shipments.
  
• Military/Aerospace/Avionics was a bright spot for tools vendors in 2002. The post September 11th emphasis on security and defense has strengthened prospects in the military/aerospace market.
  
• Last year was one of the worst on record for the telecom industry. Over-supply of all types of telecom equipment resulted in huge losses for many top telecom ESMs. Those losses led to layoffs, reduction in research and development spending, and general frugality across the industry.
  
• The Americas is the largest consuming market for unbundled software development tools accounting for over half of all shipments. Growth is expected to be just above average for the Americas.
  
• C remains the language of choice for embedded developers using third party tools.
  
• Power PC is the leading architecture supported by third party tools. The 68k architecture and x86 family continue to place 2nd and 3rd in terms of dollar volume.
  
• Linux ranks third behind proprietary and VxWorks on a list of the most supported operating systems with over 7% of the market.
  
• VDC is forecasting the market for embedded software development tools to reach $525.2 million in 2007 – a compound annual growth rate of 9.5%.

On the world market for embedded design automation tools:

• VDC estimates that the embedded design automation tools market segment dropped to $363.4 million in 2002, a decline from 2001. Specific growth drivers for the software modeling tools and design automation tools markets will be dealt with in upcoming sections of this module.
  
• In 2002, dynamic system design tools comprised 43% of total shipments, while software-modeling tools accounted for 16%. The remaining share (41%) was of services and consulting related to the aforementioned tools.
  
• Europe was the largest consuming market for design automation tools, however VDC estimates that North America will pass Europe as the largest market during the forecast period.
  
• Automotive is the largest consuming market for design automation tools due to the wide use of dynamic systems design tools for modeling and simulation. VDC expects automotive and military/aerospace to increase their shares of the market.
  
• This market is forecast to reach $682.8 million in 2007, at a compound annual growth rate (CAGR) of 13.5%.

On the world market for embedded test automation tools:

• VDC estimates that the market for test automation tools for embedded applications reached $69 million in 2002, a slight decrease from 2001.
  
• The Americas region remains the largest consuming and fastest growing market for test automation tools. This comes as no surprise given the large amount of embedded development that takes place in the Americas.
  
• The leading consuming market for embedded test automation is the military/aerospace. DO-178B, MOD 00-55 and other safety standards have made test automation a central part of the safety critical development process rather than an afterthought. VDC expects the military/aerospace market to continue to drive growth through the forecast period as more complex software controlled weapons systems are developed.
  
• Other markets are also embracing test automation. The growing software content in networked and stand-alone consumer electronics require that the devices ship bugfree or a costly recall will result.
  
• Telecom infrastructure and medical are expected to all be high growth industries for test automation tools and services.
  
• VDC is forecasting this market to grow to over $200 million by 2007, a compound annual growth rate of 24%.

On the world market for database management solutions for embedded systems:

• Shipments of database management systems and related services reached over $40.0 million during 2002.
  
• In 2002, vendors establishing strategic alliances and partnerships with embedded OS vendors, resellers and distributors mainly drove sales for database management systems.
  
• Challenges and limitations to database management sales during 2002 was mainly driven by a weak macro economy, a downturn in information technology spending that impacted new project starts, and limited in-house domain experience and expertise working with embedded developers in the embedded systems market.
  
• Database management system revenues are derived from product licensing, run-time royalty, and services and support. In 2002, run-time royalties accounted for the largest share of revenues from the shipment of database management systems for embedded systems.
  
• In terms of geographical regions, shipments to the Americas region were number one, followed by shipments to EMEA, and Asia-Pacific.
  
• In 2002, VDC estimates the telecom/datacom market to be the leading market for database management systems and related services for embedded systems.
  
• In 2002, the Linux operating system ranked number one in support of database management systems for shipments of products and related services.
  
• By 2007, we estimate the market for database management systems and related services for embedded systems will exceed $100 million. Shipments to Asia-Pacific markets are expected to lead growth in terms of geographical regions, while automotive, consumer electronics, and military/aerospace are expected to lead growth in terms of vertical markets.

Further information on the report is available here.

Copyright © 2003, Venture Development Corp. (VDC). All rights reserved. Reproduced by LinuxDevices.com with permission.

 
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