How to grow--not! (editor's note).

It's no secret that the mechanical CAD/ CAM/CAE industry has slowed to a standstill. The latest report from market research firm Daratech shows that as a result of market saturation and price erosion of CAD/ CAM/CAE software and services, this $6 billion market grew a meager 2 percent last year and may rise only 3 percent in 2002.

What can be done to re-energize the market? The first step, according to David Burdick, head of Collaborative Visions consulting firm and a keynote speaker at the Daratech 2002 Summit, is for vendors to stop practices that inhibit growth. Here are some of his examples of what not to do:

Get into a price war:. Playing the game of "my CAD system is cheaper than yours" is a race to the bottom. Some vendors are offering 80 percent of the functionality of their software for 20 percent of the price. Others are even offering 80 percent of that 80 percent for free. But dropping prices or giving away products is no way to create a spike in demand. Vendors need to do exactly the opposite: develop products and technologies with greater functional capabilities, for which users would be willing to pay a higher price.

Merge your way to growth: Some mergers and acquisitions make sense, but history has shown that buying a company that's troubled can only lead to more trouble. When one company buys another--to gain access to a technology or installed customer base--users will reevaluate the market, because they think that what the new owner has bought, and what they have installed, is dead technology, no matter what the vendor says. As a result, more often than not, users will switch to whatever they feel is the best technology at the time. If vendors want to gain new customers and attract new business, they'll need to build better technologies, ...