Many companies, such as CNC Software, Gibbs, and Surfware are totally dependent on resellers. As
previously noted, some companies such as Cimatron, tend to start with resellers in a given geography and
then establish local subsidiaries as it becomes successful. Other suppliers, such as Delcam, implement
joint ventures in geographies of interest.

Vendors like UGS and Planit have been successful with direct sales people. The primary arguments
favoring direct sales are that it provides complete product dedication and greater control over the sales
force. Also, vendors are more comfortable in investing in training of direct salespeople. This usually
makes them more effective in complex, corporate selling situations, and in selling of complex products.

XIII. Software Seats

A. Software Seats Shipped and Installed Base

The CIMdata estimated number of NC-related software seat licenses shipped, and the year-end installed
base of NC seats is shown in the following figure for 1996 through 2005. Seat counts are based on the
number of software locks on individual computer processors utilizing CAM software in customer
environments. It is not the number of individual software modules running on a processor. For this tally,
the customer could be either an industrial or educational customer. The unit counts do not include dealer
or demo software or software running in a controller. Also, upgrades to a higher level software product on
the same processor do not count as an additional shipment. For processors installed on a network, the
counts are the number of concurrent licenses that have been purchased for the primary CAM product.

It can be seen that the estimated total number of NC seat licenses shipped in 2004 was 87,210. This was
composed of 67,110 industrial seats and 20,100 educational seats. This was an increase of 10.5% from
2003 in the number of seats shipped. This growth rate is greater than the revenue growth rate as there was
more discounting in the price per seat. Also, this increase is somewhat greater than would be expected,
but it is primarily due to the shipments by Pathtrace in the Project Lead the Way program. They
increased their placement of education seats from 800 in 2003 to 6,000 in 2004.

The number of industrial seat shipments and the number of education seat shipments both increased. The
worldwide base of installed NC software seats at the end of 2004 is estimated to be approximately
659,520. This is composed of 523,370 industrial seats and 136,150 educational seats.

CIMdata forecasts that in 2005, approximately 92,750 additional seats will be shipped. This will be a
6.4% increase in shipments and will bring the installed base to roughly 709,730 seats. The shipments plus
the previous year installed base are not directly cumulative, as some seats are retired each year. CIMdata
estimates this amount, but it is an imprecise estimate. The growth in number of seats shipped per year
generally tracks the growth in total annual software revenue, although the growth in seats shipped is
typically greater than the growth in revenues.

CIMdata views these values as conservative estimates, since the level of information provided by vendors
regarding seat counts has been less than that furnished for revenues. Moreover, vendors typically know
the total number of seats shipped over any period of time, but they do not have an accurate count of their
installed base. They know the total number of seats on a software maintenance contract at any point in
time, but if a user replaces a non-maintenance seat with a seat from a competitor, this is not normally
known to the original vendor. Hence, CIMdata adjusts the total installed base somewhat to allow for this
factor.

Copyright © 2005 by CIMdata, Inc.

NC Market Assessment V14-209

Year

NC Seats Shipped

Annual Growth Rate %

Installed Base

Number of Seats

1996 56,000

15

275,000

1997 65,000

16

315,000

1998 74,000

12

361,000

1999 83,000

15

474,000

2000 89,000

7

511,000

2001 82,500

-7.3

531,000

2002 80,200

-2.8

546,000

2003 78,940

-1.6

594,400

2004 87,210

10.5

659,520

2005 92,750

6.4

709,730

Figure 101. NC Software Licenses and Installed Base

B. Vendor Ranking by Industrial Seats Shipped and Installed Base

The market share of the top ten vendors on the basis of industrial seats shipped during 2004 is shown in
the figure below. CIMdata places much more credence on industrial seats than educational seats.
Industrial users are the primary focus of most vendors and the vast bulk of revenues are obtained from
these users. Moreover, sales to industrial users are highly competitive and are a measure of software
value. As such, for seat count comparisons among vendors, the primary CIMdata ranking is based on
industrial seats. In addition, a separate, less comprehensive ranking based on educational seats is provided
in the next section.

2004

Other

49.8%

Vero Intl

3.7%

Delcam 3.9%

Pathtrace 4.2%

Hitachi Zosen

4.6%

IBM/Dassault

5.1%

Planit

5.8%

PTC 5.8%

UGS

7.2%

CNC Software

6.8%

DP Technology

3.1%

Figure 102. Market Share of NC Vendors Based on Industrial Seats Shipped

The market share of the top ten vendors on the basis of industrial seats installed at year-end 2004 is
shown in the subsequent figure.

210-NC Market AssessmeV14

Copyright © 2005 by CIMdata, Inc.

2004

Other

44.4%

Surfware 4%

TekSoft

4.4%

Pathtrace 5%

IBM/Das s ault 5.3%

Planit 5.3%

Vero Intl

4%

Delcam 3.9%

UGS 6.3%

PTC

8.2%

CNC Software

9.2%

Figure 103. Market Share of NC Vendors Based on Industrial Seats Installed

The number of industrial seats shipped and installed clearly measures the pervasiveness of vendor
software in the markets of primary interest, and the length of time the vendor has been shipping software.
They indicate the actual number of users, since the ranking is independent of the software price. Vendors
in these rankings are dramatically different than the vendors listed in the rankings based on user
expenditures, or revenues received by the vendor in a given year. Seat ranking favors those vendors
providing lower-cost software through a distributor network, over a longer period of time.

As with revenue data, CIMdata often adjusts information provided by the vendor. Additionally, if
CIMdata views the vendor to be on a downward slide, CIMdata could show the installed base decreasing,
even though additional seats are being shipped. New software versions, product updates, or additional
modules added to the software lock do not impact the seat count. Like all other information in this report,
CIMdata makes its best estimate, continually reassesses the information, and updates the data in each
version of the Market Assessment report.

CNC Software has been the consistent market leader on the basis of industrial seat count. However, as
shown in the above figure for industrial seats shipped, they were surpassed for the first time by UGS in
2004. CNC Software did retain its leadership position in terms of the installed base of industrial seats at
the end of 2004. UGS was responsible for 7.2% of the industrial seats shipped in 2004, as compared to
the CNC Software value of 6.8%. CNC Software has an estimated 9.2% of the installed base at the end of
2004. CNC Software has been the leader in this ranking since CIMdata began measuring the market.
Mastercam is a well-known and pervasive product.

The distinction in rankings is evident by comparing seat count rankings to the revenue-related rankings.
In the vendor revenue listing, CNC Software is positioned as only the number 13 vendor in 2004, with
revenues of $19.0 million. This can be compared to the UGS revenues of $115 million in 2004. On the
basis of end-user payments in 2004, CNC Software is listed in the eighth position with end-user payments
of $41.8 million. Again, it can be noted that since all CNC Software revenues are derived from resellers
the value of end-user payments is 2.2 times that of the CNC revenues. Hence, they rank higher on end-
user payments than they do on vendor revenues. IBM/Dassault Systèmes is the largest vendor on the basis
of end-user payments in 2004 with $161.6 million. Although both the UGS and IBM/Dassault Systèmes
revenues are substantially greater than that of CNC, CNC is the leader in seats installed and is in the
number two position in seats shipped in 2004. This is because the price of the software is significantly
less than either that of UGS or IBM/Dassault Systèmes.

For industrial seats shipped in 2004, the remaining vendors in the top ten after UGS and CNC Software
are estimated to be PTC, Planit, IBM/Dassault Systèmes, Hitachi Zosen, Pathtrace, Delcam, Vero
International, and DP Technology.

Copyright © 2005 by CIMdata, Inc.

NC Market Assessment V14-211

The estimated rankings of the top 10 vendors based on the number of industrial seats in their installed
base is shown in the figure above for 2004. After CNC Software, the vendors with the largest estimated
installed base in 2004 are PTC, UGS, Planit, IBM/Dassault Systèmes, Pathtrace, TekSoft, Surfware, Vero
International, and Delcam. This ranking clearly favors those vendors that have been in the business for an
extended period of time. It can also be noted that although CNC Software is the clear leader on a seat
count basis, PTC, UGS, and IBM/Dassault Systèmes continue to rank among the CAM leaders on this
criteria as well as the revenue rankings.

In both categories of seats shipped and seats installed, the “other” category is unusually large. In 2004,
49.8% of the seats shipped were from companies outside of the top ten and 44.4% of the installed base is
from companies not in the top ten. This reflects a large number of products being shipped at lower prices.

As compared to revenue information, in which the 30 largest vendors are presented, these listings only
detail the top 25 vendors. This reflects a degree of uncertainty in the seat count data. Again, one can note
the significant differences between the seat count and revenue rankings.

Industrial Seats Shipped

Industrial Seats Installed

Rank Company

2002

2003

2004

Rank Company

2002

2003

2004

1

UGS

3,900

4,273

4,830

1

CNC Software

40,632

44,571

48,152

2

CNC Software

3,945

4,284

4,544

2

PTC

38,000

40,000

43,000

3

PTC

4,000

4,050

3,900

3

UGS

25,000

28,270

33,222

4

Planit

3,400

3,600

3,875

4

Planit

21,600

24,600

27,636

5

IBM Dassault

3,200

3,200

3,400

5

IBM/Dassault

24,500

26,000

27,500

6

Hitachi Zosen

3,000

3,000

3,100

6

Pathtrace

21,000

23,500

26,350

7

Pathtrace

2,600

2,500

2,850

7

TekSoft

21,800

22,400

23,000

8

Delcam

2,150

2,550

2,600

8

Surfware

17,380

19,760

21,000

9

Vero Intl

1,850

2,800

2,450

9

Vero Intl

15,740

18,540

20,990

10 DP Technology

2,160

2,000

2,100

10

Delcam

15,045

17,595

20,195

11 ICAM Technologies

1,700

1,700

1,700

11

Cimatron

17,000

18,000

19,000

12 Missler Software

1,000

1,480

1,600

12

DP Technology

15,257

16,988

18,988

13 Camtek

1,400

1,400

1,400

13

Hitachi Zosen

14,000

16,000

18,000

14 Gibbs

1,350

1,200

1,285

14

Gibbs

13,650

15,300

16,585

15 Cimatron

1,400

1,150

1,200

15

Intercim

15,400

15,800

16,200

16 Surfware

1,380

900

1,000

16

Camtek

11,300

12,300

13,355

17 Graphic Products

950

950

950

17

Missler Software

11,000

14,480

13,000

18 Sescoi

1,100

900

950

18

ICAM Technologies

9,000

10,000

11,000

19 OPEN MIND

760

850

910

19

Sescoi

7,000

8,000

9,000

20 Tebis

800

850

900

20

OPEN MIND

6,600

7,600

8,200

21 SolidCAM

720

720

860

21

Graphic Products

6,200

6,900

7,600

22 TekSoft

700

700

780

22

CG Tech

6,000

6,400

6,800

23 EGS

645

700

750

23

EGS

5,345

6,045

6,045

24 Nihon Unisys

700

700

700

24

Tebis

3,400

4,000

4,600

25 Scanvec

650

650

650

25

Nihon Unisys

3,100

3,700

4,300

Others

17,240

16,783

17,826

Others

59,901

59,151

59,652

Total

62,700

63,890

67,110

Total

444,850

485,900

523,370

Figure 104. 2004 Ranking of NC Vendors by Industrial Seats Shipped and Installed Base

The forecast ranking of the top 25 vendors for 2005 on the basis of industrial seats shipped and installed
base is shown in the following figures. It can be seen that UGS is again expected to be the leading vendor
on the basis of industrial seats shipped and CNC Software is projected to remain as the leader in terms of
industrial seats installed.

212-NC Market AssessmeV14

Copyright © 2005 by CIMdata, Inc.

Industial Seats Shipped

Industrial Seats Installed

Rank Company

2003

2004

2005

Rank Company

2003

2004

2005

1

UGS

4,273

4,830

5,200

1

CNC Software

44,571

48,152

52,802

2

CNC Software

4,284

4,544

4,650

2

PTC

40,000

43,000

44,000

3

Planit

3,600

3,875

4,280

3

UGS

28,270

33,222

37,500

4

PTC

4,050

3,900

4,050

4

Delcam

17,595

20,195

29,895

5

Delcam

2,550

2,600

3,600

5

Pathtrace

23,500

26,350

29,650

6

IBM/Dassault

3,200

3,400

3,500

6

Planit

24,600

27,636

29,601

7

Pathtrace

2,500

2,850

3,300

7

IBM/Dassault

26,000

27,500

29,000

8

Hitachi Zosen

3,000

3,100

2,700

8

Vero Intl

18,540

20,990

23,640

9

Vero Intl

2,800

2,450

2,650

9

TekSoft

22,400

23,000

23,500

10

DP Technology

2,000

2,100

2,200

10

Surfware

19,760

21,000

22,000

11

Missler Software

1,700

1,600

1,800

11

DP Technology

17,000

19,000

20,500

12

ICAM Technologies

1,480

1,700

1,700

12

Cimatron

18,000

19,000

20,000

13

Camtek

1,400

1,400

1,400

13

Hitachi Zosen

16,000

18,500

18,500

14

Gibbs

1,200

1,285

1,400

14

Gibbs

15,300

16,585

17,000

15

Cimaton

1,150

1,200

1,300

15

Intercim

15,800

16,200

15,000

16

OPEN MIND

850

910

1,030

16

Missler Software

14,480

13,000

14,400

17

Surfware

900

1,000

1,100

17

Camtek

12,300

13,355

14,000

18

SolidCAM

720

860

1,050

18

ICAM Technologies

10,000

11,000

11,000

19

Sescoi

900

950

1,000

19

Sescoi

8,000

8,700

9,400

20

Graphic Products

950

950

950

20

OPEN MIND

7,600

8,200

9,100

21

TekSoft

700

780

920

21

Graphic Products

6,900

7,600

8,100

22

Tebis

850

900

900

22

CG Tech

6,400

6,800

7,200

23

Nihon Unisys

700

700

700

23

Tebis

4,000

4,600

5,000

24

IMS

550

600

650

24

Nihon Unisys

3,700

4,300

4,800

25

ScanVec

650

650

650

25

IMS

3,400

3,900

4,500

Others

18,143

17,976

17,910

Others

61,784

61,585

53,312

Total

65,100

67,110

70,590

Total

485,900

523,370

553,400

Figure 105. Forecasted 2005 Ranking of NC Vendors by Industrial Seats Shipped and Installed Base

C. Vendor Ranking by Educational Seats Shipped and Installed

Base

The 2003 and 2004 ranking of the largest NC software vendors, based on the estimated number of
educational seats shipped and in the installed base is shown in the figures below. As indicated, CIMdata
places less emphasis on educational ranking than on industrial rankings. Moreover, not all vendors supply
software to the education market. As such, only the top 15 vendors are listed. In the past, CNC Software
has been the dominant vendor in the education market on the basis of both seats shipped and installed
base. However, in 2004, Pathtrace replaced CNC Software as the leader in the education market. In 2004,
Pathtrace took over the Project Lead the Way program which places large numbers of NC seats into
education market. As a result, the number of seats shipped by Pathtrace increased from 800 in 2003 to
6,000 in 2004. CNC Software, UGS, and Delcam also ship a significant number of seats into education.

Copyright © 2005 by CIMdata, Inc.

NC Market Assessment V14-213