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There have been a number of us over the years that were wondering when it would happen. When would CAM finally consolidate into a few major players from the literally dozens of small companies servicing the market, much the same as CAD and PDM before it?
As recently as 2006, there was no dominant player or players with the top 2 participants (Dassault Systems and Siemens at that time) only holding less than 28% of the market together. The next 40% of the market was occupied by no fewer than 8 companies with the bottom 1/3 of the market relegated to “Other” companies each with less than 2% market share (ref: CIMdata).
Well the scramble has been on and continues (See also PLM M&A update 2014). Over the last few years or so at least 10 smaller companies have been gobbled up or merged with like entities. During this time:
- Autodesk has become a major player in the market acquiring first HMSWorks (2012) and then Delcam (2014), while establishing a manufacturing sector as part of the Mechanical Group (our words not theirs) and is now in the process of filling out their portfolio with yet to be named strategic acquisitions.
- Battery Ventures backed Vero has been at the heart of the consolidation for some time, gobbling up Tecnocam (2000), Planit (2011), Sescoi (2013) and Surfcam (2013) among others. Now Vero has been acquired by Hexagon (July 2014) who plans to make it part of their Materials division.
- And of course, one of the mergers that started it all, the 2008 Gibbs/Cimatron merger is still impacting the market, while sorting itself out.
So what does it mean? Well the snowball only rolls downhill. Translate this to mean the consolidation will only continue until there remain just a few major CAM competitors akin to their CAD counterparts. Smaller companies will find it increasingly difficult to compete against these behemoths, who will in turn continue to acquire to complement existing capabilities until their portfolios are complete. This leaves only a couple of options for smaller CAM companies to consider:.
- Join in the fray – remember it’s a seller’s market.
- Find a niche, exploit it for as long as you can, and then join in the fray.
- Become a consolidator yourself to accelerate growth and scale.
Whichever way you decide to go, the consolidation in the CAM market is underway and is going to continue. You may also find more information in our recent report on M&A in Manufacturing Automation Software.