Commentary: MCAD Industry View - An August 2007 Update
[ Back ]   [ More News ]   [ Home ]
Commentary: MCAD Industry View - An August 2007 Update


MCAD Industry View - An August 2007 Update

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

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) 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 sixteen quarterly updates in MCADCafé.com, one for each subsequent calendar quarter. URL's on all past articles are available. The entities 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, 2007. As a result, the business has since gone to market as 'UGS PLM Software', a global division of the Siemens Automation and Drives (A&D) Group. Over the years, UGS has bounced back and forth between being a public company and a private company under different ownerships. Although not required to do so, UGS had reported on its financial results even when privately held. However, for the first quarter of 2007, there was only a terse statement from Tony Affuso, chairman and CEO of UGS PLM Software, that, "We had a very strong quarter in Q1 (2007), coming in near 11% on total revenue growth and 16% on software license growth." This translates to about $300 million in revenue for Q1 2007. Unfortunately, according to a recent statement form a Siemens' company spokesperson, now UGS will no longer report financial results separately from Siemens. Unfortunately, this is not an uncommon practice with very large corporations. In the first quarter of this year, the Siemens A&D Group generated euro 3.9 billion of the euro 20.2 billion total Siemens' revenue. So UGS itself is "small change". Alas, we can expect very little insight into UGS quarterly financial performances from public Siemens' reports, going forward.

Accordingly, this seventeenth article in the MCAD Commentary sequel recounts the financial performances of the now remaining group-of-seven (G7) MCAD/PLM entities for the nominal second quarter of 2007.

Recent MCAD & PLM News Highlights

On July 11, 2007, Dassault Systèmes announced the appointment of Jeff Ray as CEO of SolidWorks. Ray is replacing John McEleney. Previously, Ray served as SolidWorks' chief operating officer, responsible for expanding the company's sales, distribution, and marketing infrastructure. Ray joined SolidWorks in 2003 from business software vendor Progress Software Corp., where he was responsible for all customer-facing field operations in dozens of countries as vice president of worldwide field operations. Solidworks did very well under John McEleney.

On August 7, 2007, MSC.Software announced the acquisition of pioneerSOLUTIONS, Inc.

On August 20, 2007, Autodesk announced that it has completed the acquisition of technology and product assets of Opticore, a wholly-owned subsidiary of Design Communication, based in Gothenburg, Sweden. Opticore is a software provider of advanced technology used to produce highly interactive and realistic 3D digital product visualizations and presentations. The Opticore team will be integrated into the Autodesk Manufacturing Solutions business. The purchase price and financial terms were not disclosed.

MCAD Vendors' Financial Performances in Q2 2007

As a group, the G7 MCAD vendors generated combined revenues of $1.35 billion, an increase of 14.6% year-over-year and a 2.8% increase sequentially. ANSYS was the year-over-year percentage growth leader at 48%. Autodesk, Dassault, Moldflow, and ESI Group had year-over-year growth rates in the mid-teens. MSC.Software was the only year-over-year decliner with a drop of almost 11%. On a sequential basis, ESI-Group suffered a major drop of almost 50%. PTC endured a slight decline. All the rest had small percentage sequential increases, with Dassault leading the gainers at 8.3%.

Figure 1 below provides a bar graph showing the revenue trend for each of the covered vendors, for the periods mentioned in Table 2.

For the quarter, Autodesk was the clear revenue share leader, followed in order by Dassault Systemes and PTC. UGS probably exceeded PTC in revenues for the last quarter, but as mentioned earlier, UGS results are no longer disclosed separately by Siemens. The others had low single digit share.

(As always, it needs to be pointed out that unlike the other vendors in this report, Autodesk earns a major portion of its revenue outside of the MCAD space. Autodesk does not break out its mechanical contribution. Also, both Autodesk and Dassault Systemes sell mostly through third parties, while PTC sells mostly direct). Figure 1 excludes UGS which no longer reports revenue for the quarter.

Turning to profitability, the combined earnings of the G7 was remarkably more-than-double the earnings for the same quarter last year, and a 56% increase sequentially. All the firms reporting earnings were profitable for the quarter. All but Moldflow had increased earnings both year-over-year and sequentially. Note that ANSYS booked a $28 million IPRD charge against earnings in the year ago quarter.

Details on Individual Vendors' Q1 2007 Performances

On August 2, 2007 ANSYS, Inc. reported financial results for the second quarter, the period ending June 30, 2007. Total revenue for the quarter was a record $92.2 million, an increase of 48% from the $62 million in the second quarter of 2006 and a 5% increase from the $88 million in the just previous quarter. The $92.2 million was above the high end of the revenue guidance given last quarter. License revenue, accounting for 64% of total revenue, was $59 million, an increase of 71% year-over-year and an almost 4% rise sequentially. Maintenance and service revenue was $33 million, a 19% increase year-over-year and a 7% increase sequentially. Year-over-year ANSYS comparisons are impacted by acquisition of Fluent in May 2006. Fluent had sales of $121.9 million in 2005 year.

On a geographic basis, 2nd quarter revenue from North America was up 24%, from Europe 45% and Asia Pacific 37% (Japan alone was up 30%).

Paid up license revenue was up 44%, and lease revenue (40% of total revenue) was up 55%. Direct sales accounted for 70% of total sales, versus 30% from indirect sales.

Net income for the quarter was $18.2 million, a huge turnaround from the loss of over $19 million reported in the year ago quarter, and a 13% increase from $16 million in earnings in the just prior quarter. As previously noted, the year ago quarter contained a $28 million in-process research and development (IPRD) charge related to the acquisition of Fluent in May 2006.

On May 14, 2007 ANSYS announced that its Board of Directors had approved a 2-for-1 stock split of the Company's common shares. The stock split will be in the form of a stock dividend to be distributed on June 4, 2007 to holders of record at the close of business on May 25, 2007.

Jim Cashman, ANSYS President and CEO, stated, “This quarter's results continue the momentum that we have seen building over the past several quarters and reflect the strength of our diversified global business. We have made encouraging progress during the recent quarter and first half of 2007 to capture the strength of combining the ANSYS and Fluent businesses into a broad portfolio of unprecedented engineering simulation solutions. Compared to a year ago, this quarter's non-GAAP revenues increased over 35% while non-GAAP diluted earnings per share increased 43%. We have also continued to focus on strengthening our margins and balance sheet. These efforts produced record cash flows from operations of $37 million for the second quarter and $59 million for the first six months of 2007”

On August 16, 2007 Autodesk, Inc. reported financial results for the second quarter of its fiscal 2008. Total revenue for the quarter was $526 million, an increase of 17% from the $450 million in the second quarter of 2006 and an increase of 3.5% from the $508 million in the just prior quarter. The $526 million quarterly performance was in the middle of the guidance given last quarter. License revenue was $394 million, accounting for 75% of total revenue. This was a 14% increase year-over-year, and a nearly 3% increase sequentially. Maintenance revenue was $132 million, accounting for 25% of total revenue. This was an increase of 27% year-over-year, and an increase of almost 6% from the prior quarter.

The Platform segment, which accounts for about 46% of revenue, includes AutoCAD and AutoCAD LT products that service multiple markets. Other segments are AEC (previously two segments: Building and Infrastructure) and Media/Entertainment (previously named Discreet). The Manufacturing segment (which includes the Inventor product lines) accounted for almost 19% of total revenue and grew 31% year-over-year and 5.3% from the prior quarter. A “guesstimate” of MCAD revenue would be about $180 million for the quarter.

3D model-based design solutions -- Autodesk Inventor software, Autodesk Revit software and AutoCAD Civil 3D- accounted for 23% of total revenue or $121 million, up 34% year-over-year and 13% sequentially. In total, Autodesk shipped more than 39,000 commercial seats of 3D in the quarter including 21,000 seats of Revit, 11,000 seats of Inventor and 7,200 seats of Civil 3D. Revenues from 2D vertical products increased 22% compared to the second quarter of fiscal 2007.

The Americas accounted for 37% of total revenue, Europe for 39% and Asia for 24%. All three regions had year-over-year percentage growth rates in the mid teens.

Revenues from the emerging economies in Asia Pacific, Eastern Europe, the Middle East and Latin America increased 37% over the second quarter of fiscal 2007 to $82 million, and represented 15% of total company revenues.

Revenues from new seats increased by 17% compared to the second quarter of last year. Revenues from new seats of Revit and AutoCAD Mechanical were particularly strong, increasing 56% and 54%, respectively, compared to the second quarter of last year.

Upgrade revenue and maintenance revenue from subscriptions combined increased 16% over the second quarter of fiscal 2007 to $178 million. Maintenance revenue from subscriptions increased 27% compared to the second quarter of fiscal 2007, to $132 million.

Carl Bass, Autodesk president and CEO, said, “During the second quarter, we executed extremely well -- driving widespread adoption of our 3D and 2D tools, continuing to increase new seat revenue, and increasing sales and emerging economies. We have been able to grow significantly by addressing our customers' competitive challenges. Our numbers demonstrate that we continue to win market share as our revenues have increased significantly faster than our competitors. As a result, we are again raising our guidance for fiscal 2008, to reflect our confidence in our financial performance for the remainder of the fiscal year."

On July 26, 2007 Dassault Systèmes reported financial results for the second quarter, the period ending June 30, 2007. Total revenue for the quarter was $413 million, an increase of 17% over the $353 million in the same quarter a year ago, and over an 8% increase from the $381 million in the just prior quarter. Total Q2 revenue in euros was 305 million, just above the high end of the guidance given last quarter. Software revenue at $343 million, or 83% of total revenue, was up 14% year-over-year and 6% sequentially. This included $130 million of new license revenue and $212 million of recurring revenue. Service revenue was $71 million, up 34% year-over-year and 20% sequentially.

The Enovia brand, which includes Enovia, MatrixOne and SmarTeam, generated $79 million in the quarter or 19% of total revenue. This was a 39% increase year-over-year, but almost an 11% decrease sequentially. Note that MatrixOne was acquired in May 2006 for $410 million. SolidWorks generated $78 million, accounting for 19% of total revenue. This result represented increases of 11% year-over-year and 7% sequentially. CAD generated $255 million or 62% of total revenue, up nearly 13% year-over-year and 16% sequentially.

Revenue from America was $126 million, or 31% of total revenue. Revenue from Europe was $190 million, or 46% of total revenue. Revenue from Asia was $96 million, or 23% of total revenue. Year-over-year revenue from America was up 24%, from Europe almost 12% and from Asia 20%.

On July 11, 2007, DS announced the appointment of Jeff Ray as the new CEO of SolidWorks. Mr. Ray was previously Chief Operating Officer of SolidWorks.

Net income for the 2nd quarter was $38 million, up 29% from the $29.4 million in the same quarter a year ago, and up 15% from the $33 million in the prior quarter.

Bernard Charlès, Dassault Systèmes President and Chief Executive Officer, commented, “Dassault Systèmes delivered a very solid second quarter with revenue and earnings coming in above objectives. Moreover, given the large customer transaction in the year-ago second quarter, achieving non-GAAP revenue growth of 13% in constant currencies and delivering non-GAAP EPS growth of 14% is rewarding.”

On June 12, 2007 ESI Group announced its consolidated sales for its first quarter to 30 April 2007. ESI Group sales totalled 13.5 million euros for the first quarter of its 2007 financial year, up +11.0% in volume (organic growth at 'constant perimeter'). Due to a substantial currency effect over the period, actual growth in euros was up +5.9%.

Licences activity remained particularly buoyant with a growth of +11.7% in volume. Licence sales recurrence improved in comparison to the Q1-FY06 figures to reach the high rate of 82%, while new business (new products and new clients) recorded a very substantial growth of +31% in both emerging and industrialized countries.

Services activity also showed a renewed growth (+8.7% in volume), notably due to a further strengthening of demand on high added value projects (engineering services) associated with the development and adoption by industry of virtual simulation technologies and methodologies for Simulation Based Design (SBD).

Alain de Rouvray, the ESI Group's Chairman and CEO, concludes: “Despite a particularly unfavorable exchange rate evolution over the period, reported sales for the first three months of our fiscal year demonstrate a fine takeoff in activity. In particular for Licenses, mature products are continuing their transition towards 2G solutions while emerging and innovative products remains efficient growth relays.

Regarding Services, booking order prospects are again encouraging, and confirm the expected upturn in this activity through FY 2007.”

On August 23, 2007, after a two-week delay, Moldflow Corporation reported preliminary results for its fourth quarter and the full 2007 fiscal year. Total revenue for the quarter was $15 million, an increase of nearly 17% from the $12.9 million in the same quarter a year ago and a 2.3% increase from the $14.7 million in the just prior quarter. The $15 million was above the guidance given just last quarter. Total revenue was split very evenly between product revenue and service revenue. Product revenue was $7.6 million, an increase of 20% year-over-year, but a decrease of 6% sequentially. Services revenue was $7.5 million, an increase of 13% year-over-year, and a 12% increase sequentially.

North America accounts for about 20% of total sales, Europe 30% and Asia 50%.

Net income for the quarter was $571K compared to a net loss of $440K in the year ago quarter, and compared to $8K in the previous quarter.

For the full fiscal year, total revenue was $55.9 million, an increase of 14% from the $49 million in the previous fiscal year. Product revenue was $28.4, an increase of 16%, while Services revenue was $27.5, an increase of 12%. Net income for the year was $3.8 million, up almost triple from the prior year.

On June 21, 2007, Moldflow announced the promotion of Gregory Magoon to Executive Vice President, Chief Financial Officer, Treasurer and Assistant Secretary. Mr. Magoon joined the Company's executive management team, effective June 21. Mr. Magoon has worked in the capacity of Corporate Controller for Moldflow Corporation for the past 6 years.

On June 25, 2007, Moldflow Corporation announced that it has signed an asset purchase agreement pursuant to which it will sell substantially all of the assets related to its Manufacturing Solutions division to Husky Injection Molding Systems Ltd. (TSX: HKY) located in Bolton, Ontario, Canada. The sale, which is expected to be completed during the fourth quarter of fiscal 2007, is for $7.0 million and the assumption of certain Moldflow liabilities by Husky, and is subject to certain closing conditions.

In December 2006, Moldflow received a comment letter from the US SEC's Division of Corporation Finance which was made in the normal course of the SEC's review of the Company's periodic filings. Specifically, the firm is currently discussing with the SEC its policies for determining the fair value of maintenance contracts when they are sold to customers together with perpetual licenses for software products. As a consequence, any announced financial results should be considered preliminary until the company issues its 10K report.

Roland Thomas, Moldflow Corporation's president and CEO, said, "We are very pleased with the (fiscal) fourth quarter results which were in line with the upper range of our expectations. Particularly noteworthy was the strength of the sales performances in North America, which provided its highest quarterly year-on-year growth rate in Moldflow's history, and in Asia which continues to produce strong results quarter after quarter.”

Thomas concluded, "The sale of our Manufacturing Solutions business division to Husky Injection Molding Systems Ltd. in the fourth quarter, and the subsequent transition of this business division, have been smooth. … The sale, which included substantially all of the net assets of the division, did not include the software portion of the Moldflow Plastics Xper (MPX) product, which Husky will resell.”

On August 7, 2007 MSC.Software Corporation reported its financial results for the second quarter, the period ending June 30, 2007. Total revenue for the quarter was only $60.7 million, a 10.6% drop from the $67.9 in the second quarter of 2006, but a 5.4% increase from the $57.6 million in the just prior quarter. Software revenue at $23 million accounted for a mere 38% of total revenue. This $38 million was a massive 27% decline year-over-year, and essentially flat compared to the previous quarter. Maintenance revenue was $31.8 million, accounting for 52% of total revenue, a 9% increase year-over-year, and an almost 11% rise sequentially. (Relatively speaking, when software revenue declines and maintenance revenue increases, these are definitely areas of real concern for management). Revenue from services was $5.9 million, accounting for about 10% of total revenue. This was a 20% decline year-over-year, and a 0.6% drop sequentially.

On a geographic basis, America accounted for 28% of total revenue, EMEA 41% and AP 31%.

There were 105 transactions over $100K in the quarter, versus 118 in the year ago quarter. The average transaction size was $211K, versus $272K in the previous quarter. SimEnterprise accounted for only 13% of software license revenue in the last two quarters. There are now only 17 resellers in the Americas, out of a total of 122 originally.

On August 7, 2007, MSC.Software announced the acquisition of pioneerSOLUTIONS, Inc. Bruce Webster, founder and CEO of pioneerSOLUTIONS, said, “FluidConnection, our innovative OpenCFD product, fits perfectly into MSC.Software's SimEnterprise strategy complementing its simulation based design paradigm with abstract modeling for CFD. This combination will not only extend SimEnterprise to be CFD compliant, but will do so in ways that MSC.Software's customers will have unprecedented ease of use, reuse, flexibility and choice. This acquisition is a win/win for us, our customers and the CAE/PLM community at large."

On August 10, 2007, MSC.Software announced the signing of 16 new channel partners since the inception of the new channel partners program six months ago.

Net income for the quarter was $2.3 million, an increase of 180% over the same quarter in 2006, and a large turnaround from the net loss of $6.2 million in the just prior quarter. The previous quarters had restructuring charges of about $7 million.

Bill Weyand, CEO and Chairman of MSC.Software, said, "We are pleased that the cost reduction program and operational improvement initiatives we implemented over the past several quarters have resulted in a decrease in our operating expenses in the second quarter. These improvements and efficiencies in infrastructure have resulted in SG&A decreasing by about $6 million sequentially from the first quarter. However, our revenue results continue to be impacted by our product evolution from engineering tools to enterprise solutions. Our experience to date shows that selling enterprise solutions results in lengthening our sales cycle and leads to delays in the licensing of our products.”

On July 25, 2007 PTC reported financial results for its third fiscal quarter, the period ended June 30, 2007. Total revenue for the quarter was $225 million, an increase of almost 4% from the $217 million in the same quarter a year earlier, but down 1.3% from the $228 million the just pervious quarter. This result of $225 million compares to original 3-month ago guidance of $235 million to $240 million, but it's consistent with an update given on July 5th. License revenue, accounting for 28% of total revenue, was $62 million, down 5.5% year-over-year and down almost 13% sequentially. Maintenance and Service revenue combined accounted for 72% of total revenue, and at $163 million, was up 8% year-over-year and up 4% sequentially. Maintenance revenue at $103 million was up 9%, while service revenue at $60 million was up over 6%.

Desktop Solutions total revenue declined over 3% to $138 million, driven by a license revenue decline of 12% and service revenue decline of 22%, while maintenance revenue grew over 7%. Enterprise Solutions total revenue growth of 18% to $86 million, was driven by training and consulting service revenue growth of 26%, maintenance revenue growth of 17%, and license revenue growth of nearly 8%. Total revenue from the reseller channel was $47.6 million, an increase of 3%, but business in AP was weaker than the recent trend.

Revenue in North America was 39% of total revenue, Europe 38% and AP 23%. Asia-Pacific revenue reflects 9% growth in the Pacific Rim offset by an 18% decline in Japan.

In the quarter 4,150 seats of Pro/E were sold, bringing the cumulative total to 362,850 seats. Also in the quarter, 16,400 seats of Windchill were sold, bringing the cumulative total to 491,500 seats.

Net income for the quarter was the highlight. It was $87.2 million, a 417% increase from the $16.9 million in the year ago quarter, and an increase of 400% from $17.4 in the prior quarter. GAAP net income for the quarter includes a non-cash $65.5 million adjustment due to the reversal of PTC's valuation allowance against US deferred tax assets, as well as a one-time tax benefit of $5.3 million due to the favorable resolution of a tax refund claim.

In response to the quarter's fiscal performance, PTC said it will reduce discretionary spending, slow down hiring and reduce headcount by 200 employees (restructuring charge ~$10 million in the next quarter). Also in the future, PTC will more aggressively offshore its workforce to reduce cost and to develop a more strategic presence in emerging geographies.

C. Richard Harrison, president and chief executive officer, said, "Our third quarter license revenue shortfall reflects two major factors: several large transactions that we expected but did not close, and a reduction in add-on sales of Desktop Solutions in North America and Japan. Though our third quarter results did not meet our expectations, we continue to have confidence in the strength of the PLM market and in PTC's competitive position. As evidenced by our record maintenance revenue in the third quarter and our revenue growth year to date, we have a large and loyal customer base that continues to benefit from the use of PTC's differentiated solutions."

MCAD Vendor Stock Performances

The combined year-over-year stock prices of the MCAD vendors declined 5.6% in absolute dollars, and declined 5.5% in average price over the first quarter of 2006. This compares to an average increase of 8.2% for the major stock indexes over the same period. PTC was the only firm with a year-over-year gain in stock price at 16.4%. The largest decliner was MSC.Software at -31%. The others had a drop of low to middle single digits. On a sequential basis, the combined stock prices rose 3.3% in absolute dollars, and 2.7% in average price. The major stock indexes were essentially flat relative to the prior quarter. ANSYS was the sequential growth leader at nearly 17% with Moldflow and PTC trailing with 8.2% and 5.4%, respectively. MSC.Software and Autodesk had the largest quarterly drop at nearly -10% and -7%, respectively.

Forecast Guidance from Individual MCAD Providers

Those MCAD companies providing guidance for the next quarter, forecast a growth of almost 14% compared to the same period last year, and a meager 2% gain sequentially. All firms are calling for quarterly year-over-year quarterly growth. On a sequential basis, Moldflow is most bullish at 33%, with PTC a distant second at 7.4%. ANSYS and Dassault are projecting small sequential drops in revenue.

As guidance ANSYS expect revenue in the next quarter to be between $89 million and $90 million compared to $92.2 million in the quarter just reported, and compared to $71.1 million in the same quarter a year ago. For fiscal 2007 ANSYS forecasts revenue on the range of $367 million to $371 million ,compared to $263 million in fiscal 2006.

CEO Jim Cashman said, “Based on our first half performance, we are increasing our 2007 full year guidance and believe we are poised to drive 2007 to be the most successful year in the Company's 37 year history."

As guidance Autodesk expects net revenues for the third quarter of fiscal 2008 to be in the range of $530 million to $540 million. This compares to $526 million in the quarter just completed, and compares well to $457 million in the third quarter a year ago. The firm also expects revenues for the fourth fiscal quarter to be between $575 million and $585 million. For fiscal year 2008, net revenues are expected to be between $2.14 billion and $2.16 billion, compared to $1.84 billion last year.

Thibault de Tersant, Senior Executive Vice President and CFO of Dassault Systemes, commented, “Looking to our full year 2007 objectives, our non-GAAP constant currency revenue objective is for growth of about 14-15%, increasing from 13% previously. Thanks to our strong second quarter performance and the inclusion of ICEM following completion of its acquisition, we are increasing our revenue objective. In addition, we are adjusting our yen currency exchange rate assumption, leading to 2007 reported revenue range of about £1.285 to £1.30 billion. We are reconfirming our earnings per share and operating margin objectives.”

This means a third quarter non-GAAP total revenue objective of about £300 to £305 million, and a 2007 non-GAAP revenue range of about £1.285 to £1.30 billion, updated from the prior range of £1.275 to £1.285 billion.

Moldflow CEO Roland Thomas said “… our total revenue (should be) 14% higher year-over-year, a marked improvement over fiscal 2006. As we head into fiscal 2008, we are confident in the strength of our core business and believe we are strongly positioned to take advantage of the continuing growth of the worldwide CAE market and further our leadership position."

MSC.Software did not provide guidance for the next quarter. The company said, “It will evaluate its decision to provide guidance in the future, as it continues to move through this transition period and visibility improves.”

As guidance PTC expects revenue in the next quarter to be between $240 million and $250 million, compared to $225 million in the quarter just completed, and to $245 million in the same quarter last year. This is a reduction from prior guidance. Full year revenue is projected to fall between $915 million and $925 million, or 8% year-over-year growth.

MCADCafè.com currently tracks the financial performance of multiple public companies in the Mechanical CAD market. Eight (8) companies were chosen for the authors' first (May 8, 2003) Commentary. Four of these companies (Autodesk, Dassault Systemes, PTC and EDS PLM Solutions (now named UGS, a privately-held company) represented approximately 85 percent of the total revenue in this grouping, and each of these four companies offers a wide array of software and services products across the entire design to manufacturing space. The remaining four public companies (ANSYS, Moldflow, MSC.Software and Tecnomatix) offered specialized software/services products in specific MCAD niches and together they created the remaining 15 percent of the then total group-of-8's revenue. Indeed, these latter four companies frequently partnered with the initial four to provide end-customers with broader solution suites.

For the authors' August 2003 Commentary in MCADCafé.com, a ninth company, the ESI Group, was added. All nine were studied thereafter for comparison purposes. Tecnomatix has since been acquired by UGS (2005) and hence has been removed from this report. As a result of the acquisition of UGS by Siemens, UGS no longer provides separate financial data starting in Q2 2007, and therefore UGS has also been dropped from the aurhors' list of covered vendors.

The combined worldwide total annual revenue of these companies is over $4 billion, not an insignificant sum. But it is, in fact, less than 3 percent of the > $200 billion spent annually on all types of software (source IDC). So why study MCAD companies at all? The key to MCAD's importance lies in the leverage its users apply to create the everyday durable goods with which we are all familiar: automobiles, trucks, military gear & weapons, appliances, farm & construction equipment, aircraft & aerospace vehicles, etc. In short, MCAD is arguably responsible for enabling today's manufacturing industries, which are the centerpieces of creating real productivity and wealth in every modern economy.

Understanding the comparative MCAD revenue content of various vendors is not merely academic. For example, it helps observers better understand the likely future competitive MCAD strength of each vendor relative to its peers in such areas as amount of money available for R&D, for potential new acquisitions, for financial stability to weather economic cycles, and for other key business factors.

In comparing financial performances of the four largest MCAD companies tracked by MCADCaffè.com, it's instructive to account for the actual MCAD content of each. For example, the revenues of Dassault and PTC can arguably be considered 100% MCAD in nature, whereas Autodesk's total revenue is only partially made up from its business in MCAD. Some Autodesk revenue (~15%) stems from a segment which provides systems and software for creating and animating imagery. Even in the remaining 85% of Autodesk's total revenue, derived from its Design Solutions Segment, is divided among solutions for Manufacturing, GIS, AEC, and the platform technology group. Only the solutions of the Manufacturing Group (Inventor, AutoCAD Mechanical, Mechanical Desktop, Streamline, Point A, etc.) might be thought of as "pure" MCAD revenue.


Comments? Feedback? Tell us what you think about this topic, or share any additional information you may have on the subject! Submit your comments to: Email Contact

About the Authors:

Since 1996, Dr. Russ Henke has been president of HENKE ASSOCIATES, a San Francisco Bay Area high-tech business & management consulting firm. The number of client companies for Henke Associates now numbers more than forty. During his corporate career, Henke operated sequentially on "both sides" of MCAD and EDA, as a user and as a vendor. He's a veteran corporate executive from Cincinnati Milacron, SDRC, Schlumberger Applicon, Gould Electronics, ATP, and Mentor Graphics. Henke is a Fellow of the Society of Manufacturing Engineers (SME) and served on the SME International Board of Directors. He is also a member of the IEEE and a Life Fellow of ASME International. In April 2006, Dr. Henke received the 2006 Lifetime Achievement Award from The CAD Society, presented by CAD Society president Jeff Rowe at COFES2006 in Scottsdale, AZ. In February 2007, Henke also affiliated with Cyon Research's select group of experts on business and technology issues as a Senior Analyst. This Cyon Research connection aids and supplements Henke's ongoing, independent consulting practice (Henke Associates).

An part of the HENKE ASSOCIATES team since 2001, LA-based Dr. John R. (Jack) Horgan co-authored this August 2007 MCAD Industry Commentary. Dr. Horgan's prior corporate career has included executive positions at Applicon, Aries Technology, CADAM and MICROCADAM, as well as a stint at IBM. Dr. Horgan is also an editor of EDAcafe Weekly.

Since May 2003 the authors have now published a total of fifty-seven (57) independent articles on MCAD, PLM, EDA and Electronics IP on IBSystems' MCADCafé and EDACafé. Further information on HENKE ASSOCIATES, and URL's for past Commentaries, are available a