MCAD Industry View – A November 2009 Update




MCAD Industry View – A November 2009 Update

by Dr. Russ Henke and Dr. Jack Horgan
Henke Associates

This November 2009 issue of the MCAD Industry Commentary recounts the financial performances of a selected group-of-five MCAD/PLM vendors (G5) for the nominal Third Quarter of 2009.

In the first MCAD Industry Commentary published May 2003 in MCADCafé.com, then-recent yearly and quarterly financial performances of a selected group of public Mechanical Computer Aided Design (MCAD) vendor companies were analyzed and compared. Expectations of future financial performances of these same MCAD entities were documented.

The May 2003 MCAD Commentary was followed by twenty-five quarterly updates in MCADCafé.com, one for each subsequent calendar quarter. URL's on all past articles are available. The entities initially covered were ANSYS, Autodesk, Dassault Systèmes, UGS PLM, ESI Group, Moldflow, MSC.Software, PTC and Tecnomatix.

As a result of the acquisition of Tecnomatix by UGS that closed April 1, 2005, Tecnomatix was eliminated from coverage thereafter as a separate entity.

On May 7, 2007 UGS announced the close of its acquisition by Siemens AG effective May 4. Thereafter, the business went to market as UGS PLM Software (and later as Siemens PLM Software), a global division of the Siemens Automation and Drives (A&D) Group. Over the years UGS itself had bounced back and forth between being a public company and a private company under different ownerships. Regrettably, we have been able to gain very little insight into UGS’ financial performance itself from public Siemens' corporate reports after the Siemens acquisition. Occasionally we will include Siemens PLM Software news items that bear on the industry as a whole.

Then on June 25, 2008 Autodesk completed its acquisition of Moldflow Corporation, so thereafter Moldflow was eliminated here from separate coverage.

On July 07, 2009 MSC.Software announced that it had entered into a definitive agreement with affiliates of Symphony Technology Group (STG) under which a company controlled by STG would acquire all of MSC's outstanding shares in a one-step cash merger transaction. This acquisition of MSC.Software by STG was finally consummated on October 14, 2009. No financial results for MSC.Software were published for Q3 2009. Unless such data are subsequently made available, MSC.Software will be dropped from coverage herein, although occasionally we will include MSC news items that bear on the industry as a whole.

Accordingly, this twenty-seventh MCAD Industry article in the sequel recounts mainly the financial performances of the remaining group-of-five (G5) MCAD/PLM entities for the nominal third quarter of 2009.

Recent MCAD News Highlights

On October 19, 2009 PTC announced the launch of CoCreate 16.5, the latest release of its explicit modeling software. CoCreate 16.5 is integrated with a wide range of key solutions comprising the PTC Product Development System (PDS). With this release, PTC is said to further expand value for customers.

On October 29, 2009 the ESI Group announced the release of its Welding Simulation Suite version 2009, including Weld Planner and PAM-ASSEMBLY. Dedicated to all engineers who manage the welding assembly of large and complex welded designs, the main objective of the simulation suite is to significantly reduce time and cost to arrive at the bill of material and a feasible process design.

On November 04, 2009 ANSYS announced that Joshua Fredberg has joined the senior management team as the vice president of marketing. Fredberg will help further the Company's vision and strategy, enhance ANSYS’ marketing initiatives, and lead all aspects of the Company's branding. Before joining ANSYS, Fredberg was senior vice president of product and market strategy at Parametric Technology Corporation (where he worked on industry strategy, marketing and business development). Prior to joining PTC, he held leadership roles with both ARIBA and Andersen Consulting Strategic Services.

On November 11, 2009 ANSYS announced the release of the ANSYS Engineering Knowledge Manager (ANSYS EKM) 2.0, a product focused on simulation process and data management (SPDM). ANSYS EKM software is a web-based solution with extensive capabilities for archival and management of simulation data, traceability and audit trail, advanced search and retrieval, report generation and simulation comparison, process/workflow automation, collaboration tools, and capture and deployment of best practices. Release 2.0 enhancements allow for smarter and faster file transfer between remote locations and the ability to run simulation jobs remotely using job submission systems, such as RSM, LSF, SGE and compute clusters.

On November 09, 2009 Autodesk announced the results of a new study that found productivity gains of up to 63% when engineers and designers use AutoCAD 2010 software for common design and documentation tasks. The study, conducted by Cambashi Limited, an independent consulting and analyst firm, compares the time it takes to complete specific tasks using AutoCAD 2010 and AutoCAD 2007 software.

On October 26, 2009 IBM and Dassault Systèmes (DS) signed an agreement under which DS intends to acquire IBM sales and client support operations encompassing DS's Product Lifecycle Management (PLM) software application portfolio, as well as customer contracts and related assets, for approximately $600 million in cash.

DS and IBM have also defined the next steps in their long-standing relationship, and plan to establish DS as an IBM Global Alliance Partner and expand their services.

A little Background Commentary on IBM & Dassault:

DS and IBM have a unique and long standing partnership (~30 years). The typical IBM partnership with software providers requires the partners to port their products to IBM hardware and middleware, if not already running on those environments. IBM Services will then offer support for these products to IBM customers. Depending upon market demand, product complexity and timing, IBM may subcontract some of this service to the partner. IBM looks to partner with firms already established in the top tier of an industry or application area, who have their own marketing and sales operations. IBM will typically partner with multiple partners in a given area. This enables IBM to position itself as a complete solution provider from requirements to installation to training and even to outsourcing of the operation. The partners benefit from IBM sales and the IBM imprimatur that this arrangement entails.

Dassault’s relationship with IBM goes back in several respects to the IBM relationship with Lockheed. In the seventies Lockheed had developed a 2D product called CADAM (Computer Augmented Design and Manufacturing system) that ran on IBM mainframes. IBM became the exclusive marketing and sales operation for this product. As the product became successful, Lockheed formed a wholly-owned subsidiary called Cadam, Inc. in 1983. Lockheed subsequently acquired Calcomp that was the manufacturer and developer of the 5080 graphics terminal that Cadam ran on and that IBM sold, making the relationship even more involved. Cadam, Inc formed a joint venture in Japan with Kawasaki Heavy Industries called Cadam Systems Company or CSC. This entity introduced a mainframe compatible version of Cadam called Microcadam which ran on a special high-end PC. This product became an industry leader in Japan.

Avions Marcel Dassault, the forerunner to Dassault Aviation and an aviation company like Lockheed, was an early source code licensee of Cadam in 1975. They developed a 3D extension called CATIA (Computer-Aided Three Dimensional Interactive Application). IBM entered into a partnership with Dassault similar to the one with Cadam. Since the 3D product required more computer horsepower, more disk space, more memory and so forth, it became IBM’s preferred solution to offer. Over time the CATIA product line grew significantly in breadth and depth through development and acquisition (Abacus, MatrixOne, Deneb…). Dassault formed a subsidiary called Dassault Systemes (DS) which eventually went public in 1966.

Meanwhile in response to a hostile takeover attempt, Lockheed put Cadam, Inc. up for sale. IBM acquired the firm in 1989. In 1992 IBM sold the rights to the mainframe and workstation versions of CADAM to DS. The combined offerings were dubbed CATIA-CADAM Solutions. The strategy was to move the Cadam installed base to Catia. The sale did not include CSC who began to sell its product on a world wide basis through a dealer network. Several years later Kawasaki sold its share of CSC to IBM who put the Microcadam products into maintenance mode and wound down the firm’s operations.

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