Niche markets are hot.

Apart from the top five (Dassault, Ansys, MSC, Siemens PLM and LMS), Computer Aided Engineering company average size is as small as $5 Millions. Because big players don’t pursue such small markets before they eventually grow, niche software live a limited competitive pressure, i.e. bigger profits and growth.

Quoting Seth Godin “because everyone in Hollywood is trying to be George Clooney, there are a lot more opportunities for the few Danny DeVito willing to show up.” My advice then is to invest (your time) in niche software companies.

Few engineering companies use movies for marketing purposes, though a movie is worth a thousand pictures.

Take DEM software. It computes the motion of large numbers of small objects (like molecules or pills) for engineering. Now take Realflow software, computation of the same small objects but for the entertainment industry.

It’s amazing how engineering and entertainment became close to each other. Nevertheless the first still promotes through still images, the latter through video clips.

I just learned that Engineous, a competitor of mine, was acquired by Dassault Systemes.  Last year Engineous tied a partnership with IBM, and its acquisition by Dassault Systemes (an IBM company) was in the air.

A colleague of mine in UK writes: “In the interim we should be ok, Abaqus hasn’t bore fruit after being acquired by Dassault Systemes”.

Savvy, in the interim.

Roland Thomas (Moldflow CEO) told me: “the more the Computer Aided Engineering (CAE) market consolidation leads to standardized software, the more opportunities will come for profitable niches to be exploited”.

E-Xstream makes a software that calculates the behaviour of composite materials, like plastics reinforced with glass fibers. The opportunity for E-Xstream came from the multi-phase nature of composite materials. The software Digimat they produce calculates the physical properties of the material to be used for further calculations.

This is an example of what Roland predicted.