Commentary: Straight Talk from SolidWorks CEO John McEleney

by Ira Breskin

The top executive of SolidWorks, the world's largest producer of 3-D MCAD software, is more concerned about the competitive threat posed by an upstart than its largest rival. That's because recent sales gains posted by two-year-old Inventor -- the head-to-head product offered by Autodesk - are outpacing those posted by No. 2 Unigraphics Corp.'s older SolidEdge offering, John McEleney, SolidWorks CEO, said this week during a telephone interview.

"The reason for Inventor's gains are twofold," says McEleney. First, Autodesk, a major player in the 2D CAD market, is offering Inventor for a nominal amount ($75), to customers that purchase an upgraded version of Mechanical Desktop, the company's core product. Second, SolidEdge's distribution arm isn't fully extended because that company's direct sales force and indirect Value Added Distributors are working at cross purposes, McEleney contends. SolidWorks continues to grow moderately, McEleney says.

While he won't quantify SolidWorks' sales increases for 2002 or for the year, to date, McEleney didn't quibble with the 16.9% industry growth projection recently offered by Daratech Inc., the respected market research firm based in Cambridge, Mass. In fact, SolidWorks still continues to post the Help Wanted sign outside company headquarters in Concord, Massachussetts. It plans to moderately increase payroll this year, like last, McEleney said.

SolidWorks generates most of its incremental revenue selling Windows-based 3D CAD software to its core customers: smaller, agile manufacturers and design-intensive production shops. Only about 5% to 10% of SolidWork's customers are large enough to be prime candidates for Catia, a sister product also owned by parent company Dassault Systemes, that offers pricier and more powerful CAD software, according to McEleney.

In 2001, seven-year-old SolidWorks increased sales by 28% to $115 million from $90 million. Introduction of SolidWorks Office software in the 2001 third quarter has helped spur company sales, McEleney said. The company's operating income last year exceeded 28%, he said. According to McEleney, the geographic break out of SolidWorks sales is 40% in North America; 35% in Europe; 10% in Japan and 15% in the rest of the world.

Ira Breskin, a freelance editor/writer specializing in business and technology issues, is a frequent contributor to Business Week, Newsday, and the New York Times. He holds a B.A. from Columbia University and a Knight-Bagehot Fellowship in Economics and Business Journalism, Columbia University Business School. He may be reached at Email Contact.

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