The Workstation Market’s Road to Recovery
The workstation market posted another round of steadily improving results for the first quarter of 2010, taking one more solid step in its recovery from the lows of 2009. That finding by Jon Peddie Research (JPR) comes after the firm’s first-quarter analysis as part of its “JPR Workstation Report” series. The technology and market research firm reports that the industry shipped 725,000 workstations worldwide in the first quarter, resulting in sequential growth of 1.1 percent and a year-over-year increase of 25.7 percent.
While a welcome number, the 25.7 percent gain over the same quarter a year ago should be taken with a grain of salt, as it’s more of a reflection on how bad the first-quarter 2009 market performed than how good Q1 2010 turned out. Instead, it was the sequential gain that this time proved a better indicator of the progress the market is making in its climb back up to pre-recession levels.
In periods of flat or even modest growth, Q1 sales tend to lag those of Q4, so even a modest sequential uptick is a bullish sign. And from that perspective, this year’s first quarter was stronger than might first appear, as a 1.1 percent sequential increase for Q1 signals a market ahead of its normal pace—more evidence of sustained momentum for its recovery from the ugly days of last year.
That said, it’s beginning to look like HP’s coronation as the new king of workstations might have been premature. After years of closing a major gap to market leader Dell, HP flirted with volume leadership for three consecutive quarters, essentially deadlocked with Dell for Q4 2008 through Q2 2009. Finally, in the third quarter of 2009, HP surged ahead to take the workstation shipment crown outright for the first time.
But HP didn’t get much time to revel in the top spot, as the very next quarter Dell’s shipments surged, and in the process, virtually eliminated the scant lead HP had been able to manage. And in the first quarter of this year, the company had an upside once more, jumping back in front of HP 39.3 percent to 38.1 percent. Since HP looks to still have a slight edge in revenue, JPR’s calling it a tie, and Dell has been successfully served notice that workstation market leadership is back up for grabs.
Amazingly, the professional graphics hardware market set a new record for shipments, surpassing 2007 and early 2008 numbers: The market shipped 1.26 billion total units, up 17.6 percent sequentially and a whopping 77.9 percent year-over-year. Not only was growth surprisingly hot, but the market managed to set a new record for units shipped, besting totals from the bullish days of late 2007 and early 2008. Given the exceptionally precipitous downturn of 2009, a new record wasn’t expected quite so soon, but the major beneficiaries—Nvidia and AMD (ATI)—certainly aren’t complaining.
Now in its sixth year, “JPR’s Workstation Report–Professional Computing Markets and Technologies” has established itself as the essential reference guide for hardware and software vendors and suppliers serving the workstation and professional graphics markets. Subscribers receive two in-depth reports per year, providing a comprehensive analysis of the vendors and technologies driving the workstation platform. Clients also receive four quarterly reports detailing and analyzing market results for each calendar quarter. n
CG Market: More Growth to Come
The computer graphics industry has been a growth industry since it was established in the late 1970s. Weathering the storms of the recession of 2009, the CG industry is back on track and showing new, invigorated vitality and potential. To this end, Jon Peddie Research is expecting that the computer graphics hardware market—which was worth $59 billion in 2009—should exceed $63 billion in 2010.
In 2009, the CG software market was worth $11 billion (not counting services, maintenance, and other aspects) and should grow to $11.6 billion in 2010 as the industry shakes off the remaining effects of the recession and starts replacing software tools.
As a result of the pullback due to the recession, more people will be buying computer graphics software programs, and we will see the development of traditional segments, like CAD/CAM, expand as new design approaches in automotive, aerospace, and architecture are brought forth. Visualization, a market that has been almost dormant for the past few years, is poised now for great expansion due to exciting and lower-cost technologies.
Today, software programs for making movies and computer games, designing products, and creating simulations are exploiting the features of current CG hardware. We’re seeing the results in amazing realism and real-time capabilities for the next generation of films and designs, and the trend is accelerating.
The demand for programmers, artists, scientists, and designers has picked up again, and firms are actively looking for people who can use and exploit these new programs and their associated hardware accelerators. The economic recession has caused a slowdown, but it’s going to look like a small bump in the road by 2013. n
According to JPR, we are seeing new opportunities growing out of more mainstream applications for the Web and consumer applications. The Web is growing as a distribution medium for graphics content, which, in turn, encourages people to pick up the tools, learn them, and then create content for pleasure and even look for jobs in the field. What used to be a very closed society of experts is opening up.
Given these trends, JPR expects the rate of growth continuing to increase over the next few years, at the very least.
CAD Industry in Slow Recovery
Right along with the rest of the world, the computer-aided design (CAD) industry suffered severe setbacks in the recession of 2008–2009. Fortunately, in 2010, world economies are recovering, and so are parts of the CAD industry.
Because CAD tools are used in architecture, manufacture, plant design, assembly, tool design, mapping, and geographical information systems (GIS), recovery is decidedly uneven. For example, the architecture industry was the first to feel the recession, and it will take the longest to recover.
On the other hand, the automotive industry, which saw a spectacular meltdown in 2009, is coming back more quickly. As with all recessions, there are benefits to be realized in a slowdown, and, in some cases, those benefits are already showing up this year.
Jon Peddie Research (JPR) estimates the CAD software market to be $5 billion in 2009. This is a 23 percent decrease compared to 2008, when the market reached a high of $6.7 billion. All industries in all geographies felt the effects of the recession. The market will grow in 2009, but it will not recover to the high levels seen in 2008, which were unnaturally fueled by financial bubbles.
As difficult as the recession in 2009 has been and will continue to be for many companies, it will serve as a jump-start for long-term growth, as many companies take the time afforded by a slowdown to move to advanced technologies and retrain workers.
Inevitably, this same process is driving many workers out of the CAD industry. The contraction is tightest at the bottom rungs of the CAD workforce, where CAD operators or CAD drafters move on to find new opportunities. JPR estimates that at least 200,000 workers have left the CAD industry worldwide. In the coming years, there will be increased opportunities for CAD workers who can take advantage of new software capabilities to increase their companies’ efficiencies.
In the architecture-related fields, these opportunities will come to people who can help their companies move to a building information management (BIM) workflow. In manufacture, we are seeing new opportunities appear in improving product data management/product life management/customer relationship management (PDM/PLM/CRM) workflows and analysis. In all segments of the CAD industry, rendering is become a mainstream capability across the board as workers become interested in creating their own visualizations.
In 2010, the CAD market will grow to $5.4 billion, a modest increase of 5 percent, according to JPR. And, the consulting firm expects the CAD market to fully recover by 2013/2014.
The “2010 JPR CAD Report” looks specifically at the CAD market, and includes information on worldwide CAD software revenues, market share, and information about the user base. The 2010 report includes forecasts for the major CAD segments: architecture, MCAD, process and power, civil, GIS/mapping, and others. In addition, the report looks at the growing interest in the Mac among CAD users, and breaks down CAD use in geographic areas. The CAD report is available now for $5000 for a single license and $7500 for a sitewide license.