Analysis & Commentary:

PCs OPEN NEW MARKETS FOR ADVANCED VISUAL SIMULATION APPS

As microprocessor power and the graphical capabilities of computers accelerate rapidly, low-cost personal computers (PCs) will increasingly seize market share from high-end image generators in markets for visual simulation tools.

New analysis by Frost & Sullivan, defense.frost.com, World Visual Simulation Markets, reveals that this industry generated revenues of $2.33 billion in 2000 and is projected to increase steadily to $5.37 billion by 2007.

"Much of this growth will be realized in the PC-based image generator scene and terrain database development software market subsegments," says Frost & Sullivan Senior Consulting Analyst Jerry Weltsch. "The commercial sector will have much stronger growth than the military sector through the long-term."

An important benefit of the use of PCs for visual simulation applications is the opening of commercial markets. By 2007, nearly two-thirds of the total revenues generated by the visual simulation markets will come from the commercial sector.

Visual simulation has traditionally been a military technology used to create terrain and scenes for training. Given the saturation of these training tools in militaries around the world, participants will have to look beyond this sector to generate new sales. With lower-cost PC visual simulation technology readily available, commercial applications are emerging as lucrative areas of growth.

"To win military and commercial customers in a competitive field, market participants will have to ensure scalability and interoperability with other visual simulation products on the market," says Weltsch. "Customers want to maximize their return on investment, selecting only products that are sure to work with existing and future systems."

The introduction of open architecture standards is already facilitating interoperability. Both commercial and military sectors have moved from proprietary architectures to open systems and industry-wide standards. The result has been an influx of new applications for visual simulation.

"Companies not preparing for this paradigm shift in the visual simulation market will soon lose out to their competitors who are better situated to meet the looming demand for visual simulation in the commercial sector," warns Weltsch.

Frost & Sullivan presents the 2001 Marketing Engineering Awards to companies that have worked diligently to make a positive contribution to the visual simulation industry. These market-specific awards are presented to: CAE Electronics, eNGENUITY Technologies Inc, Quantum3D, and Silicon Graphics Inc.

Frost & Sullivan is a global leader in strategic market consulting and training. This ongoing research is part of the Modeling Simulation, & Training (MS&T) Monitoring Service, which also includes market analyses on U.S. Military Training and Simulation Markets and U.S. Commercial and Military Flight Simulation Markets. Frost & Sullivan also offers custom consulting to a variety of national and international companies.

World Visual Simulation Markets

Report: 7974-16

Contact Cynthia Cabral of Frost & Sullivan, 210-247-2440, ccabral@frost.com.