Simulation Software Market Analysis: Competitive Landscape and Regional Developments

The global simulation software market was valued at USD 20.96 billion in 2023 and is projected to grow at a compound annual growth rate (CAGR) of 13.8% from 2024 to 2030. Simulation software is a tool that creates virtual environments to test the functionality and efficiency of products and processes in real-time. Key factors driving the market include the reduction in production costs and training expenses. Additionally, simulation tools are crucial in evaluating the effects of military weapons and helping automotive companies develop vehicle prototypes aimed at reducing CO2 emissions.

The adoption of simulation software across various industries is increasing, as it helps minimize production costs by enabling the virtual testing of multiple prototypes. This results in error-free outputs, avoiding the costs associated with defective products and reducing the time spent on research and development (R&D). Traditionally, manufacturers faced high costs while developing prototypes, with complex mechanisms and a significant risk of failure. This led to increased R&D expenses, which the use of simulation software can reduce by minimizing the need for manual prototype testing and lowering the chances of product failure.

Gather more insights about the market drivers, restrains and growth of the Global Simulation Software Market

Manufacturers are increasingly investing in simulation tools to address issues of high prototype expenses and product flaws. Companies worldwide are also developing AI-related technologies to navigate the challenges of the Volatile, Uncertain, Complex, and Ambiguous (VUCA) world. Simulation software allows the virtual testing of AI-enabled devices, observing their behavior in real-time scenarios, which enhances the efficiency of product development while reducing costs. This focus on AI technologies is expected to boost the adoption of virtual testing tools.

The market is further driven by the emergence of autonomous and electric vehicles (EVs). Automotive manufacturers are using simulation tools to assess the efficiency of these vehicles in real-world scenarios and ensure compliance with industry standards. For instance, in September 2018, BMW Group announced investments of around USD 115 million to establish a high-fidelity driving simulation center in Munich, Germany.

Component Insights

In 2023, the software segment led the market, accounting for over 69.5% of the revenue. This segment is expected to maintain its dominance throughout the forecast period. Its growth can be attributed to the benefits provided by simulation software, such as data safety, reliability, and uninterrupted testing. Within this segment, finite element analysis (FEA) plays a significant role and is widely used in industries like automotive, aerospace, defense, and electronics to test product quality, performance, and design.

The service segment is expected to experience the fastest growth during the forecast period. The growth of this segment is driven by the increasing awareness among companies and governments about the benefits of virtually-enabled processes in product development. Services such as design and consulting, implementation, and maintenance are becoming more popular among enterprises. ANSYS, Inc., a key player in the market, offers consulting and professional services to enhance simulation workflows and process efficiencies.

Deployment Insights

Based on deployment modes, the global market is segmented into on-premises and cloud. The on-premises segment dominated the market in 2023, accounting for over 71.4% of global revenue. This segment’s growth is primarily due to the early adoption of simulation software. On-premise deployment involves the installation of software on-site, which is advantageous for companies that prioritize data confidentiality and security. This traditional method of deployment is expected to remain the largest share of the market through 2030.

Meanwhile, the cloud segment is projected to grow at the fastest rate over the next seven years. Cloud-based deployment offers benefits such as easier implementation, cost-effectiveness, and flexibility. It allows for faster upgrades and better adaptability to clients’ needs. Cloud-based simulation software is particularly useful in applications like R&D and education & training, making it an increasingly popular choice.

Application Insights

In 2023, the engineering, research, modeling, and simulated testing segment held the largest market share of 37.3%. This segment’s dominance is driven by the extensive use of simulation software by leading companies such as Airbus, Boeing, and Volkswagen Group for product engineering, research, and testing. The segment benefits from the increasing demand for fast, cost-effective product development, allowing companies to introduce new products more quickly while reducing warranty costs.

The shift from physical prototyping to simulation is widespread across industries, with growing investments in areas like 5G, clinical trials, autonomous technologies, electrification, and the Industrial Internet of Things (IIoT). Additionally, cyber threats are a growing concern for industries such as defense and enterprise, driving the adoption of cyber simulation tools. These tools enhance cybersecurity by providing users with situational awareness and helping to identify malicious attacks within networks. With rising concerns over cybersecurity, the adoption of cyber simulation tools is expected to grow, contributing to the segment’s forecasted CAGR of 13.4% from 2024 to 2030.

End-use Insights

The automotive segment was the largest end-user of simulation software in 2023, driven by the early adoption of virtual tools in product development. The automotive industry is shifting toward electric and autonomous vehicles, with simulation software playing a critical role in optimizing production processes and ensuring compliance with safety and environmental regulations.

Other industries, such as construction, retail, and telecommunications, also contribute to the market’s growth. The aerospace and defense segment is expected to grow significantly over the forecast period, driven by the use of simulation tools in designing aircraft and defense equipment. Simulation software is also used for training military personnel. Growing concerns over national security and terrorism have led to increased investments in advanced defense equipment, further boosting the demand for simulation software in this sector.

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