Simulator market growth tied to upgrades, interoperability.

• Author: Erwin, Sandva I.

The demand for military simulation-based training and distance learning products is expected to rise, according to a recent industry study.

Those industries generated revenues totaling $3.51 billion in 2001. That amount could grow to $4.78 billion by 2008, said a report by Frost & Sullivan, a business intelligence firm based in San Jose, Calif.

The study, titled, "U.S. Military Training and Simulation Markets," noted that, to remain viable, simulation and training providers need to develop products that are easy to upgrade.

"Military customers require systems in which they can make long-term investments," said the report. "They realize that upgradeable products will stay in service longer and offer greater continuing value."

Supplying products that can be upgraded "cheaply and easily will be crucial to maintaining customer satisfaction," said Frost & Sullivan analyst Jerry Weltsch.

"At the same time, interoperability has become a key market issue," he said. "As more and more manufacturers develop training and simulation systems that are application specific, interoperability with other products in the market will be essential for success."

Cost-cutting efforts by the Defense Department, additionally, will force simulator providers to adjust the manner in which they offer products and services, he said.

"The Defense Department has been opting to buy time on simulation systems rather than acquire hardware," says Weltsch. "In the case of flight simulation training, the military issued contracts for fee-for-service programs wherein the contractor builds, operates and maintains the training facility and systems, and the military pays by the hour."

Companies that do not diversify their training and simulation competencies into system operation and maintenance will automatically lose our on potential market share," said Weltsch.

Nevertheless, spending on simulators will go up, because the technology increasingly has become critical to military training, he said. "Simulation training is a proven, cost-effective way of doing training. Despite the high cost of simulators, in the long term, it's more cost effective than live training," Weltsch added.

Advances in information and telecommunications technology, meanwhile, are boosting distance-learning applications.

Doctrine shifts, as a result of the war on terrorism and modernization efforts, will lead to changes in training priorities.

The need for rapid-reaction capabilities around the globe, said...