Digital Twin Market Size By Application (Product Design & Development, Machine & Equipment Health Monitoring, Process Support & Service), By End Use (Manufacturing, Healthcare, Automotive, Aerospace & Defense, Energy & Utility, Infrastructure Buildings, Retail & Consumer Goods), Industry Analysis Report, Regional Outlook (U.S., Canada, UK, Germany, France, Italy, Spain, Netherlands, China, Japan, India, Australia, South Korea, Brazil, Mexico, South Africa, GCC), Growth Potential, Competitive Market Share & Forecast, 2019 - 2025

Industry Trends

Digital Twin Market size surpassed USD 3 Billion in 2018 and will grow at a CAGR of over 28% from 2019 to 2025.
 

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The digital twin market is projected to exhibit an accelerated growth between 2019 and 2025 due to the increasing adoption of the Internet of Things (IoT) and Industrial IoT (IIoT), a rapidly evolving global e-commerce landscape. With the rising need for cost-efficient operations and the increasing need to control & reduce supply chain, inefficiencies are contributing to boost the growth of the market. The digital twin is a digital replica of the physical asset or environment, which helps in monitoring, analyzing a physical asset, and optimizing system & processes. The growing trend of Industry 4.0 coupled with the proliferation of smart connected devices, rising internet penetration, and 3D simulation modeling is anticipated to improve application of data analytics and mining in the manufacturing sector. Additionally, the digital twin facilitates effective tracking, monitoring, and optimization of industrial operations, resulting in cost & time savings in the manufacturing sector. The digital twin innovation is anticipated to enhance trending applications such as diagnostics, smart cities, and monitoring of traffic congestion due to its huge potential to improve product analysis, decision making, and process advancement.
 

Another key factor facilitating the digital twin market growth is the rising need to control inventory shrinkage in supply chains. According to the National Retail Federation’s National Retail Security Survey (NRSS) on retail theft, global retailers incurred shrinkage losses amounting to USD 49 Million in 2016. The four major sources of inventory shrinkage in the retail industry include shoplifting, employee theft, supplier fraud, and paperwork errors. As inventory shrinkage can significantly affect profit margins of SMEs, the demand for modern digital twin systems in the retail sector is expected to increase over the forecast timeline.
 

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Digital Twin Market, By Application

The machine & equipment health monitoring segment holds a significant market share in 2018 and is anticipated to dominate the market over the forecast timeline. The increasing need for efficient & cost-effective operations in the manufacturing & automotive sector is driving the demand for digital twin systems. The use of advanced analytics, such as big data analytics in digital twin, provides real-time tracking & monitoring of physical assets, which will help in diagnosing the faults in equipment or systems beforehand, resulting in reduced downtime.
 

Digital Twin Market, By End Use

The automotive segment is expected to hold a significant share, over 16% by 2025 in the digital twin market due to the increasing adoption of IIoT in the automotive industry for several purposes such as manufacturing, assembly line, and designing. The growing demand for telematics services and the need to improve customer experience in automotive marketing will contribute to the market growth. In addition, rapid adoption of Augmented Reality (AR), Virtual Reality (VR), mixed reality, and 3D simulation in designing and maintenance & repair of vehicles will positively impact the growth of the market over the forecast period.
 

The retail & consumer goods sector is expected to have a moderate CAGR of 28% during the forecasted timeline. With the advent of e-commerce, the growth in the retail sector has been impressive due to the advantages of economies of scale and business expansion across the B2C (Business to Customer) and B2B (Business to Business) levels. Also, due to the increasing retail shrinkage levels in SMBs as well as large organizations in the sector, the need for effective digital twin model is being increasingly recognized by retailers around the world.
 

Digital Twin Market, By Region

North America held a dominant share of over 34% in the digital twin market in 2018. The major share is attributed to the rapidly expanding e-commerce landscape in the region, increasing adoption of IIoT, and the availability of extensive cloud infrastructure. According to the U.S. Department of Commerce’s International Trade Administration (ITA), the manufacturing industry in the U.S. received Foreign Direct Investment (FDI) amounting to USD 1.6 trillion in 2017. In 2016, the manufacturing sector contributed nearly USD 350 Million to the U.S. GDP.
 

APAC Digital Twin Industry Share, By Region, 2018 (USD Million)

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Europe is the second-largest market in digital twin and is expected to hold a market share of over 22% by 2025. The growing concern of narrow profit margins among retailers due to increasing retail shrinkage will result in the rising need for monitoring and tracking of inventory in real-time. This increasing retail shrinkage is fueling the growth of the digital twin market as digital twin offers real-time tracking & monitoring of inventory with its digital twin in virtual space.  The retail sector is one of the major sectors in the European Union (EU) economy with almost 1 in 10 people employed in more than 3.6 million retail companies. Also, the demand for solutions is likely to increase consistently over the forecast timeline in the automotive sector in the region due to the surge in the production of electric vehicles (autonomous vehicles) and passenger cars in response to the rising global demand.
 

Competitive Market Share

The digital twin market is highly fragmented due to the presence of several multinational and regional players. Prominent global players such as Oracle Corporation, SAP SE, Microsoft Corporation, and IBM Corporation dominate the market with a major market share and an extensive global presence. These companies invest heavily in R&D to develop more robust digital twin solutions and innovate their existing solutions. For instance, in 2016, GE with its over 660,000 digital twins, invested more than USD 300 million in new business values for services to maintain wind turbines, gas turbines, jet engines, and other machines it manufactures for its clients in various industries. Additionally, a bearing anomaly detection for jet engines gives a 15-30-day heads up on potential failure, resulting in the efficient operation of aircraft. Also, the lifting prediction for stage 1 blades leads to nearly USD 44 million in savings in engine maintenance. 
 

The major companies are focusing on strategic acquisitions & mergers to facilitate inorganic growth and expand their technological capabilities and product lines. Some of the key players operating in the market are ABB group, Accenture plc, Autodesk Inc., Dassault Systèmes, General Electric Company, IBM Corporation, Infosys Limited, Microsoft Corporation, Oracle Corporation, Rockwell Automation, SAP SE, and Siemens AG.
 

Industry Background

The digital twin originated from the “conceptual ideal from PLM” as it has the elements of digital twin including virtual space, real space, link for data, and information flow from data to link & vice-versa and virtual subspace. The advent of IoT technologies coupled with the proliferation of smart devices is helping the digital twin concept to become cost-effective and efficient. Empowered & backed by big data analytics, AI algorithms, and deep learning, digital twin systems are helping in efficient real-time tracking & monitoring as well as providing predictive analysis for future performance of physical assets. The growing digital transformation across various industries and supportive government initiatives will further increase the deployment of digital twin systems in enterprises.