Schnitger Corporation Hot Topics

AspenTech getting better

Tue, 31 Jan 2012 16:08:10 -0500

AspenTech continues its turnaround, with total revenue climbing 34% to nearly $67 million for the second fiscal quarter ended December 31. The transition from paid-up license/maintenance revenue recognition to subscriptions has been rocky with the company not yet near prior levels of revenue, but CEO Mark Fusco remains optimistic, saying that AspenTech “again met or exceeded our financial guidance across all key metrics for the second quarter, and we believe the company is well positioned to do the same relative to our full year objectives.”

Subscription and software revenue was $47 million in the quarter, nearly double the $25 million reported a year ago and up 22% sequentially. Services & other revenue was $20 million in the second quarter of fiscal 2012, down from $25 million a year ago but up compared to the $19 million reported in the prior quarter.

The big news is that AspenTech reported income from operations of $7 million, compared to a loss from operations of $9 million a year ago and a loss of $16 million last quarter. The losses had primarily been due to the change in the way it recognizes revenue rather than any underlying customer or product issues, but it was worrying none the less.

Mark Sullivan, CFO, told investors that revenue and income were above guidance because of when the company recognized revenue “associated with a few large contracts with longstanding customers”.

Mr. Fusco said that he was “pleased with the company’s execution during the second quarter. While global economic conditions remain volatile, AspenTech delivered accelerated year-over-year growth in total license contract value for the second quarter and first half of fiscal 2012 as compared to growth in the prior fiscal year periods.”

Total license contract value is AspenTech’s mechanism for trying to compare the old revenue recognition method to the old. Looking at these metrics, AspenTech says total contract value, a way of adding together all subscription payments as if they were group as initial and maintenance payments, was $1.54 billion for most recent quarter, while the license portion of that total contract value was $1.36 billion, up 13% over last year and up 4% sequentially. While the way they come up with the number is a bit fuzzy, if it’s being done consistently from period to period, the signs are good: more people are buying more licenses and staying on with their subscriptions.

It’s not done yet, perhaps the corner has just barely begun to be turned. But increased new revenue and subscription renewals are a good sign.

Delcam reports nice surprise

Mon, 30 Jan 2012 09:00:30 -0500

In case you missed it, Delcam also gave a trading update last week. The UK-based maker of CAM solutions said that it saw a “strong finish” to 2011 with “profit before tax to be ahead of current market forecasts of £3.2m (stated before share option charges of £0.1m). Full year revenues are expected to be approximately £41m, with revenues for the second half setting a new record for a half year period”.

Those results are a bit ahead of earlier predictions. First-half revenues reached a record high of £20.1 million, leading the company to cautious optimism about the second half. Business “began well and the fourth quarter to [November 14 was] good”. The company said on November 14 that sales for the full year were expected to be about £40 million, as “all major trading regions have contributed to the strong performance to date, with the Company's performance in Germany being especially pleasing”.

Coming in with a £1 million upside six weeks after the November announcement isn’t an earthshaking development, but is worth exploring how this came about. Was this a reseller aggressively targeting a new market? A strong new product taking on the competition? A single large deal or many small ones? We’ll know more when Delcam announces results at the end of March.

AVEVA “confident of a successful” F12

Fri, 27 Jan 2012 08:47:52 -0500

The earnings news so far has been almost giddy, both retrospectively as PTC and SAP strong December quarters and looking forward as both companies project strong growth for 2012.

AVEVA tamped that down a bit today, releasing an Interim Management Statement (no numbers, only commentary) on its results for the fourth quarter of 2011. The company says it has “continued to perform well and in line with the Board's expectations” and “remain[s] confident of a successful outturn for the year” ending March 31, 2012. Not giddy in the least, but not awful, either.

The company says it is seeing “continued demand for Engineering and Design Systems and good levels of interest in the new engineering tools”, with “a number of large rental contracts renewed in the period at the same or improved terms compared to the prior year”.

The oil and gas vertical appears to be holding up for AVEVA, while “”EMEA and Latin America continu[e] to perform strongly”. AVEVA is also adding to its backlog for fiscal 2012/2013, signing Enterprise Solutions contracts with "strategically important" new customers.

AVEVA issues these interim statements a couple of times a year. Some have been as cautionary as today’s and some have been more upbeat. Only last year, AVEVA’s January statement cited economic uncertainty in parts of the world, writing about a “successful outturn” exactly as in today’s announcement. Then, in May 2011, AVEVA reported 14% revenue growth for the full year, setting a new record level for total revenue. I don’t think we can read too much into the tone of today’s announcement -- maybe it’s been another dreary winter in Cambridge?

AVEVA typically gives a bit more detail in mid-April, after the fiscal year ends on March 31, and a comprehensive review in May. The average of analysts’ revenue estimates for AVEVA’s fiscal 2012 is £193 million, an increase of 11% over 2011.

PTC has great FQ1, realigns for future

Thu, 26 Jan 2012 09:27:38 -0500

PTC continues to roll, reporting solid results for its fiscal first quarter ended December 31, 2011 and raising its forecasts for fiscal 2012. For the quarter, PTC reported total revenue of $318 million, up 19% from a year ago, helped by $18.5 million contributions from its MKS and 4CS Solutions acquisitions last year. For FQ2, PTC now forecasts revenue between $304 million and $319 million, including roughly $20 million from MKS and 4CS. For fiscal 2012, PTC targets revenue of $1,307 million to $1,327 million, with $90 million to $100 million from MKS/4CS. The full-year guidance assumes license revenue growth of about 17%, maintenance revenue growth of about 10% and services revenue growth of approximately 14%.

Perhaps more important than its FQ1 performance, PTC retired its fiscal 2014 goals since some of them had already been met and established new targets for 2015. As part of this redo, PTC is reorganizing to focus on 5 market sectors: CAD, Application Lifecycle Management (ALM), Supply Chain Management (SCM -- sounds like PTC is more interested in providing analytics and optimization more than actual "management"), Service Lifecycle Management (SLM) and PLM. This new organization will help focus in more closely on the needs of these separate businesses and enable the company to improve operating margins. CEO Jim Hepplemann explained that each sector has different customers and value propositions that PTC will address with a matrixed organizational structure that makes each business unit "thinner" with fewer dedicated sales resources, but more focused on strategy and development specific to each market. This realignment, which eliminates about 3% of the company's 6100 workers, will be completed by the end of the current quarter. No details were given about where staff are being cut. PTC said it will provide much more detail on its new structure and market focus during its investor meeting next month.

Most of PTC's details are provided on a non-GAAP basis (which treats revenue acquired with MKS and 4CS differently than is required by GAAP). For FQ1, non-GAAP revenue rose to $320 million, handily ahead of analysts' forecasts ($314 million) and at the top end of the company's own earlier guidance for the quarter. Interesting details from the company's prepared remarks and the earnings call:

• For the quarter, non-GAAP license revenue was $89 million, up 18% year over year and up 12% without MKS and 4CS. PTC’s forecast for the year includes license growth in the mid-teens on an organic basis, so the company clearly sees this accelerating as the year progresses; CFOJeff Glidden said that “some major customers will give large follow-on orders” in the second half of the year, and that the company is adding sales capacity in all geographies that should become productive in H2. He sees orders coming from “Industrial (especially auto) high tech, and retail”.
• Non-GAAP maintenance revenue was $155 million, up 18% or up 11% on an organic basis. Mr. Heppelmann thinks PTC can maintain “upper single digits [growth] organically” because of the company’s strong license renewal rates, which are in the “mid 80s” for desktop, while enterprise renewals are in the “mid to upper 90s”.
• Services revenue was $76 million, up 27%, far ahead of the company’s guidance of 18% growth. Excluding MKS and 4CS, services revenue was 17%. Margins on the services business are going up (which makes investors very happy) but despite the growth in volume and profitability, PTC has "no plans to become a large services provider", according to Mr. Heppelmann. The growth in the services business in FQ1 was due to engagements that PTC's SI partners did not yet have capacity to handle. Mr. Heppelmann expects PTC's services growth to be slower than license growth over the long term.
• Using the company’s quadrant approach, total non-GAAP PLM revenue was $166 million, up 38% over last year. As expected, direct sales dwarf channel sales in this segment, coming in at $146 million; license revenue was up 45% to $41 million. Excluding MKS and 4CS, direct PLM license revenue was up 34%.
• Total non-GAAP CAD revenue was $154 million, up 5%, even as license revenue declined 1% to $41 million. Direct sales in CAD slowed, with total revenue up 4% to $87 million. In contrast, indirect sales were up 7% to $67 million. Mr. Heppelmann sees 5% to 8% growth in desktop as sustainable, as the company continues “selling all the new stuff in Creo to the base and in displacements”.
• Overall, the indirect business was up for the 8th consecutive quarter, with FQ1 revenue 12% to $86 million.
• The company reports 24 large deals in FQ1, with a total revenue contribution of $69 million, up 18%. The average size of these deals was about $2.9 million, versus the more typical $2.2 million to $2.3 million because of two "mega” deals (over $5 million) to a European automotive company and a US electronics company.
• On a geo basis, revenue from the Americas was $118 million, up 18%. Revenue from Europe was $134 million, up 24%. Mr. Heppelmann said that the European “pipeline is strong, win rate is strong, especially to global companies that ship products around the world, who are not tied only to what's happening in the Eurozone.”
• Revenue from Japan was $31 million, up 22%. Revenue from the Pacific Rim was $37 million, up 11% reflecting a “modest slowing in China in last 12-18 months.” Mr. Heppelmann says this is a “phase; we’re planning on a solid year rather than a blowout year” from China.
• FQ1 is usually a break-even quarter in terms of cash flow; this year PTC generated $36 million in cash.
• PTC's CAD ASPs have been going down -- but Mr. Heppelmann sees this as a good thing. He says that PTC now "has a much broader CAD offering with Creo that appeals to many more users. Sales of direct modeling seats have skyrocketed, also to more casual users, and having lower ASPs."

Analyst questions, interestingly, focused on the company's announcements about Hyundai Kia Motors and Caterpillar (the past) rather than on the restructuring and new market opportunities the company now sees. PTC's press releases covered both of these deals well; the only new news from the earnings call is that PTC is involved in many ALM sales processes around the automotive industry and sees automotive as its biggest ALM opportunity. Analysts aren't usually so polite, waiting until the company's next meeting to probe realignments, and Mr. Heppelmann appeared willing to answer questions about the new areas of focus.

PTC says it is taking on new competitors in the SLM, ALM and SCM markets it now wants to target. What are those competitors not doing that PTC thinks it can provide? How does it plan to sell to those new customers, assuming it has the right products for these new markets? How does PTC intend to segue from its CAD/PDM roots into these new areas -- does its current brand help or hurt? Lots of questions that didn’t get asked, let alone answered.

FQ1 was a definitely good. Revenue up ahead of/at expectations, improved profitability, solid execution around the world and a plan for the future are sending the share price up 18% in early trading on the NASDAQ. More details on that plan are coming in early February.

SAP has great 2011, but cloud is tiny

Wed, 25 Jan 2012 09:43:16 -0500

SAP today announced Q4 and full-year 2011 results that confirm its news release on January 13. In a nutshell, total revenue in 2011 was €14.2 billion, up 14%, while software revenue was just under €4 billion, up 22% from a year earlier (helped by the Sybase acquisition). Revenue in the fourth quarter was €4.5 billion, up from €4.06 billion a year earlier.

The company gave guidance for 2012, which we can use as yardsticks for the coming PLM/engineering software earnings announcements. SAP anticipates that software/new license and software-related service/maintenance revenue will rise by 10% to 12% in 2012. In its earnings press conference earlier today, the company said that it won "significant" market share in 2011 (presumably mostly from Oracle) and that its pipeline of potential contracts even stronger than a year ago.

The interesting part of its presentation (since PLM wasn’t mentioned) is that SAP is “accelerating” its cloud efforts, in part via its proposed acquisition of SuccessFactors, Inc. for $3.4 billion. To give added visibility to its progress in selling cloud-based apps, SAP is redoing its income statement to separate out cloud subscriptions and support. Until today, cloud subscriptions and support were buried in a “subscriptions” line item. Here is SAP’s slide showing the revamp:

(Image from http://www.sap.com/corporate-en/investors/reports/quarterlyreport/2011/pdf/2011_Q4E_Presentation.pdf)

The interesting thing to take from this slide is how tiny SAP’s total cloud revenue is right now. SAP offering is well-suited to the cloud (lots of access, not much real-time computing) and sells to customers with huge, global workforces -- one would think these perfect targets for cloud offerings. Yet SAP only saw $18 million in revenue from cloud offerings, a measly 0.15% of total revenue. Yes, this revenue slice did grow 1.5 times as fast as its traditional software line, but that’s hardly the rocket-style growth that many have been positing for cloud-based offerings.

SAP believes its total cloud revenue will be €2 billion by 2015. To get from near zero to $2 billion in 4 years is going to require massive adoption, some real product innovation, sales channels ... But the company clearly believes that “the cloud is a core of SAP’s future growth, and the combination of SuccessFactors’ leadership team and technology with SAP will create a cloud powerhouse. The acquisition will help us address the top priority for CEOs globally – managing people and talent,” said Bill McDermott, Co-CEO of SAP, when the SuccessFactors acquisition was announced last month. SuccessFactors had around $300 million in revenue for the 12 months ended September 30, 2011, so it alone cannot get SAP to that $2 billion level.

It’s quite brave of SAP to post such tiny numbers in an earnings release, and I hope other vendors follow suit now that we know cloud is not quite the rocket-scale market we’ve been told it is/will be/might be. It’s going to be fascinating to watch SAP’s cloud revenue develop and to measure other vendors’ success against it.

More acquisitions: Hexagon’s turn

Thu, 19 Jan 2012 11:45:00 -0500

Hexagon today announce that it has acquired MicroSurvey Software Inc., a Canadian developer of software used in the surveying, construction, and for forensic reconstruction. I first became aware of MicroSurvey more than 10 years ago, when I worked on my first Daratech GIS market study - the company has been fiercely independent for over 25 years, duking it out with much larger competitors in the PC-based mapping arena. In fact, a decade ago MicroSurvey was the 40th fastest growing company in Canada according to Profit Magazine's annual listing for 2001.

Hexagon CEO Ola Rollen said, “The acquisition of MicroSurvey notably expands Hexagon's product offerings and software development capabilities for several of our key markets including land surveying, construction and public safety. Additionally, both MicroSurvey's software products and Hexagon's instrument products enjoy strong leadership positions in these markets. The ability to offer such comprehensive, market-leading and innovative solutions will undoubtedly benefit both current and future customers of Hexagon."

According to Hexagon, “MicroSurvey's turnover in 2010 amounted to approximately 2 MEUR”; the company employes 30 people.

MicroSurvey posted an FAQ about the acquisition -- read it here. It basically reassures customers that they will see no real changes: MicroSurvey will continue as a separate business unit, the staff stays as is, and development and support remain unchanged. Sales contacts may change, as one objective of the acquisition is to get MicroSurvey products out through Hexagon’s much broader sales channels.

My take: competition for the same customers is getting fierce. Autodesk and Bentley already offer surveying, civil engineering and mapping solutions, often to the public safety, transportation, utilities and communications customers Hexagon addresses with its Intergraph SG&I division. This acquisition, if handled right and if the products are up to the task, gives Hexagon a shot at keeping some of these sales in-house.

Hexagon reports Q4 results on February 8 and we will likely learn more from their perspective at that time.

SofTech: sequential increase

Thu, 12 Jan 2012 16:06:01 -0500

Ahh, earning season. Get ready, ‘cause here we go. By all accounts, 2011 wasn’t bad -- global economies were tense, foreign exchange rates were unpredictable, wars continued and natural disasters too, but consumers kept buying because ... that’s what they do. Over the next 6 weeks or so we get to hear how the leaders in software and hardware technology fared in 2011 and what they see for 2012. Most companies with year-ends on December 31 are still doing the math, but we’re starting to see results announcements from those whose quarters ended on November 30.

As promised last week, SofTech has put itself back on a regular reporting schedule and announced results for its second fiscal quarter. For the three months ended November 30, 2011, total revenue was $1.7 million, down 6% from the same period a year ago but up 9% sequentially.

Product revenue was $333,000 in FQ2, down 3% from a year earlier; service revenue was down 7% to $1,372,000. According to SofTech, the decline revenue decline on a year/year basis was “due almost exclusively to one customer that migrated to a competitor's solution in February 2011.”

CEO Joe Mullaney said in a prepared statement, "While I am pleased with the progress made to date [to regularize the business], the sequential revenue growth and improved profitability, I believe there are significant new opportunities for us to grow profitably. We have great technology, a fantastic customer base and a deeply experienced and long tenured employee group that form a rock-solid foundation from which to build shareholder value.”

I don’t think we can read too much into this one announcement. Yes, the results weren’t great -- but they are very specific to SofTech and don’t say anything at all about the state of the engineering software market. SofTech’s year/year decline is due to a customer decision that was made before the current management team was in place; who knows what they would decide today? A better indicator is the sequential increase, which shows that customers are liking what’s happened since last Spring, when Mullaney and his team took over.

Autodesk, Pitney Bowes partner for AEC

Wed, 11 Jan 2012 09:18:14 -0500

Earlier this week, Autodesk and Pitney Bowes Software announced a strategic alliance to “help infrastructure owners and architecture, engineering and construction (AEC) organizations make more informed decisions and drive greater efficiencies across the plan, design, build, manage lifecycle of infrastructure.” If you didn’t know that Pitney Bowes Software used to be known as Mapinfo, this announcement probably left you a bit confused (mailing products, really?) and if you did know that this was an alliance about GIS, you probably wondered what it all meant.

Mapinfo was a nifty little company that provided GIS (Geographic Information Solutions aka geospatial solutions) to businesses to help them place new retail outlets, utilities to locate new cell towers or transmission lines by anticipating demand, and, in general, combine business data with location attributes to make strategic business decisions. In 2007, Mapinfo was acquired by Pitney Bowes (PB) to, according to then-CEO Michael Critelli “deliver a broader range of advanced solutions for retail, communications, insurance, financial services and the public sector.” Pitney Bowes’ Software division is still a tiny part of PB, making up just 7% of overall revenue in 2010, and a few Mapinfo customers tell me that they have occasionally been worried about PB’s longterm commitment to the product set, so this alliance with Autodesk is interesting on many levels, not the least of which is a strong sign that PB is sticking with the brand.

Autodesk has itself has offered geospatial products for years, concentrating on the CAD side of the process with AutoCAD Map 3D, Topobase and other products that integrate design and asset information. Did this announcement mean that Autodesk was abandoning its own GIS offerings?

Not at all. During a call with James Buckley, SVP & GM, Customer Data & Location Intelligence, Pitney Bowes Software, and Rich Humphrey, Director of the Civil Infrastructure Business at Autodesk, a number of things became much clearer.

Both companies see themselves as offering complementary solutions for the plan, design, build, manage stages of an asset’s life. Autodesk will play to its strengths in the design and build phases; PB, to its, in plan and manage. Mr. Buckley and Mr. Humphrey said that there is also the potential to extend further into downstream activities such as master planning and government policy-making and upstream into asset management. It is interesting to note that both also said that this partnership is not in response to any particular competitive threat when Bentley Systems is also working to extend its solutions further into asset management with it AssetWise product line.

Where Autodesk and PB do overlap, Mr. Humphrey said, the potential for streamlining workflows is significant. For example, an asset owner could get existing conditions data via Mapinfo and manage and edit it in a familiar Autodesk CAD (presumably AutoCAD) environment.

Initial target markets for this partnership are local governments, and transportation and natural resources companies. Both vendors feel that their offerings and sales reach can meet the needs of these customers, and are making joint sales calls as early as tomorrow. Other industries (retail, utilities) will be added as the offering matures and as the companies can roll this out through their sales channels. It is important to note that both companies see this as a global venture, and not targeting only North American markets.

One of the key thrusts of the alliance is “freeing up silos of information for better decision making”. Any time we see those words, alarm bells go off: companies are, by nature, siloed, and freeing up information is seen by many as threatening and risky. To pull this off, Autodesk and PB will need to sell high up in their prospects’ organizations, to decision makers with the power to force that type of change and the vision to see that it is worth the disruption.

It’s refreshing to see Autodesk in an alliance after all the recent acquisitions, since alliances are more transparent. There is no question that Mapinfo analytical products can provide significant insights into planning and asset management and also that this partnership, if successful, will push Autodesk even higher into its AEC customers’ consciousness. I’m looking forward to the first customer proof points.

Now THAT’S customer service

Mon, 9 Jan 2012 12:31:58 -0500

Most of you know that I’m an Apple fangirl. I’ve admired their product design concepts, ease of use and ability to make mundane tasks more fun ever since the first Macs hit the market back in the 1980s. I’ve never had much to do with the company other than at the point-of-sale (POS) but am even more a believer today, after my first experience with their customer service team.

I use a MacBook for my utility computing. I have lots of other devices, but the MacBook is my go-to for blogging, email, client work, presentations and so on. Over the weekend the screen on my almost 3 year old machine stopped coming back to light after a sleep cycle -- and it was getting worse, as the screen would go black even without a sleep after a few minutes of inactivity. I tried to diagnose the problem but as things were getting rapidly going downhill, it became obvious this wasn’t a do-it-yourself fix.

At 5PM yesterday (Sunday) I took the laptop, power cord and batteries to the local Apple store to see if their Genius Bar staff could help diagnose the problem and offer solutions. The store was buzzing even though it was just before closing, with everyone seeming happy and excited. While waiting for my appointment, I scoped out which laptop I’d buy then and there if my baby was irretrievably damaged or if a fix would take days. A few minutes before the appointed time, the Genius assigned to me came up to me (the person who welcomes me into the store had identified me by my jacket) and brought me to the counter where he took a look at the laptop. My Genius plugged it in, reproduced the problem, figured out the solution, linked my laptop to their back office systems to verify its warranty status and printed out a work order/receipt -- all within 10 minutes. He thought the laptop would be ready today but couldn’t commit until the repair staff had triaged its work orders and suggested I call if I hadn’t heard from them by midday. I happened to try Apple’s online repair status website at 10 this morning and found that the laptop was already finished, called the store and was told to come and get it. When I showed up at the store, I was greeted, walked over to another person who went out back, got the laptop, powered it on for me and showed me what had been done. This was all under warranty, so at no cost to me, but even if I had had to pay, it would have been one of the best customer service experiences ever.

What did Apple do right?
• First, I was treated as a person, not a case number. The store greeter associated me and my red jacket with my appointment, enabling my Genius to find me in a crowded store. This simple thing got the whole experience off to a positive start.
• Next, Apple’s impressive POS and back office integration streamlined the whole thing. Using the serial number on the device, the Genius was able to immediately see the history of the device and that it was still under warranty. Once he diagnosed the problem and figured out what parts were needed for the fix, he tied into their parts warehouse to ensure that what was needed was on hand and assigned to my repair.
• Then, the Genius understood that this mattered to me. He didn’t know anything about me, that I run my own business or that I am irrationally attached to this little piece of metal and plastic. He didn’t make ridiculous promises, but told gave me best and worst case scenarios along with his sense of how things were likely to come out.
• Finally, Apple over-delivered. I expected a working screen. I got that and new plastic surfaces around the keyboard and screen (the Genius said they looked “worn”), and a new battery because the one in the laptop was failing sooner than it should have. I was expecting to get the laptop back late today or tomorrow, but had it back by 11AM today.

We all have had bad experiences with customer service people who are harried, have been yelled at once too often to remain gracious, or who represent poor products that are simply destined to fail. I’m not sure what would have happened if I had had a more difficult problem, so far, they’re batting 1000. My next laptop will also be an Apple product that I’ll take it to them because I trust their ability to resolve the problem.

Every business can improve its customer service. What can you do better?

ADSK supports T-Splines for Rhino/SolidWorks

Thu, 5 Jan 2012 10:57:23 -0500

Just before the year-end, Autodesk announced that it had acquired the technology assets of T-Splines, Inc., patent holder of the T-Splines surface modeling technology. Many people emailed and blogged their fears that this would spell the end of the popular T-Splines plug-ins for Rhino and SolidWorks; Autodesk didn't immediately address those concerns, which only added to the confusion. On January 3 I caught up with Carl White, Autodesk's director of digital design products for the Manufacturing Industry, about the company's plans for T-Splines. Here's what Mr. White shared with me.

First of all, Autodesk has no intention of doing away with the plug-ins for Rhino and SolidWorks; in fact, links to trial versions of the plugins are back on the tsplines.com site. Autodesk bought the technology assets of T-Splines Inc. but not the back-office systems or Rhino- and Solidworks-focused reseller network, which caused a brief hiccup as Autodesk figures out how to sell the plug-ins to an audience it doesn't currently address. The plug-ins will soon be available on Autodesk's estore.

Mr. White says that Autodesk will support the Rhino and SolidWorks plug-ins for the foreseeable future: "as long they keep buying them, we'll keep making them."

But why an acquisition rather than a plug-in for Inventor or Revit as a way to get T-Splines to Autodesk users? Mr. White said that Autodesk isn't interested in creating an a la carte menu of plug-ins for its core products, since that makes it hard to know the right mix of options for any given user task, so a plug-in was not in the cards.

Too, Autodesk sees enormous potential in T-Splines. Making it available within existing products to a large number of users and paying T-Splines Inc. a royalty for each license, whether or not the customer used T-Splines technology, would have been a very costly to Autodesk. Structuring the deal the way it did gives Autodesk the technology at a reasonable cost, and allows it to make T-Splines available to a much broader audience. The acquisition also gives Autodesk a T-Splines development and support team, as Matt Sederberg and the T-Splines engineering and support team have joined Autodesk.

What does Autodesk plan to do with T-Splines? I can't say but if you think about the industries in which Autodesk currently competes, where T-Splines are already in use via Rhino and SolidWorks and then map that against Autodesk's vision to address large enterprises, small business, individual makers and everyone in between -- the potential is impressive.

Hot Topics changes

Wed, 4 Jan 2012 10:47:10 -0500

I just realized that the first entry of 2012 is listed in the 2011 Hot Topics archive. Yes, it’s confusing but I’m afraid it’s going to stay this way for a little longer. Schnitger Corp’s website is being transitioned to a new theme, and it makes more sense to continue to build on the old structure that change twice. Please bear with us as we work through this -- and know that we’re doing it to make it easier to find and access content. Thanks for your patience!

SofTech’s reinvention continues

Wed, 4 Jan 2012 08:37:27 -0500

Welcome back! I love how quiet the world gets around the end of each year, with even junk email slowing to a trickle. Then the new year starts, full of bustle and purpose. A lot of news tends to get lost in that transition so I’ll try to get us all caught up over the next few weeks.

Leading off, an update on SofTech. Recall that its board of directors brought in a new/old management team to turn the company around, recapitalize it and complete the steps needed to return the company to fully listed status. That process is just about complete as we enter 2012.

Back in March 2011, SofTech brought back former CEO Joe Mullaney. Mr. Mullaney’s team created new relationships with banks and creditors to satisfy a $10.6 million debt and began the process of putting SofTech’s financial house in order. In April 2011 SofTech finally announced the completion of its audit for fiscal year 2010, which ended May 31, 2010. The delay was caused by the negotiations for and completion of March 2011 recapitalization but definitely did not meet US regulators’ criteria for timely release of information for publicly listed companies.

SofTech spent the rest of 2011 getting its financial house in order, announcing quarterly results and filing a registration statement with the US Securities and Exchange Commission that allows the investors who took part in the recapitalization to resell their shares. SofTech doesn’t itself get any money from these transactions but benefits by having a thriving public market for its shares, making it a more attractive place to work and offering the possibility of future share sales to raise money for acquisitions or other purposes.

On January 3, 2012, SofTech announced that the SEC “declared effective” the company’s registration statement, which means that SofTech must now comply with all of the reporting requirements that apply to a public company. The immediate effect is that the company’s share marketplace has been upgraded from the OTC (“Over-the-Counter”) Pink marketplace tier to the OTCQB tier.

OTC is a private company that connects buyers and sellers for stocks from companies that have too small a share volume to trade on an exchange like the NASDAQ. OTC has been around since the early 1900s; its markets operate in tiers, originally called “pink sheets”, to designate levels of risk. The least risky is OTCQX ; next is OTCQB. OTC Pink is typically considered “speculative”, and was not a great place for SofTech’s shares to trade. The move to OTCQB will create a better market for the company’s shares as well as making the company appear stronger and more solid for potential customers. If you want to watch the share, the new ticker symbol is OTCQB: SOFT.

Mr. Mullaney said in a press release that “regaining our public status, upgrading our listing marketplace tier and getting current financial information about our company released in a timely manner, was one of the most important objectives of the new management team since the March 2011 recapitalization transaction. Another important objective that we have devoted considerable time and attention to since the transaction is enhancing our existing business by identifying profitable new revenue streams to complement it. We are making great progress against this goal and look forward to reporting our results.”

SofTech will report second fiscal quarter (ended November 30, 2011) results by January 17, 2012 in a Form 10-Q filing with the SEC.

Technology buyers want their vendors focused on innovation, product enhancements and bug fixes. But these are businesses that must pay salaries and taxes, raise funds for growth and ensure that they are operating profitably. With the steps Mr. Mullaney and his team have taken to put the company on a more sound financial foundation, they should be able to return their focus to meeting the needs of the 100,000 or so users the company says it has for its ProductCenter and CADRA brand products.

Quick Update: Autodesk's T-Splines

Thu, 22 Dec 2011 20:27:54 -0500

Earlier on Thursday, Autodesk announced that it was acquiring some of the assets of T-Splines, Inc., patent holder of the T-Splines surface modeling technology. The news release raised more questions than it answered, and we reached out to Autodesk to see if we couldn’t learn a bit more. Unfortunately, Autodesk appears to still be figuring out answers to a number of key user concerns but provided the following additional information:

Q: Will the SolidWorks and Rhino plug-ins from T-Splines (the company) continue to be supported?
A: Autodesk is still evaluating its plans regarding support for the T-Splines plug-ins.

Q: What remains of T-Splines Inc. after the acquisition?
A: Autodesk has acquired certain technology-assets from T-Splines and did not acquire the company. [We] can’t speak to future plans for T-Splines, Inc.

Q: Are any of the key staff joining Autodesk?
A: Autodesk is assessing how to best integrate key staff into roles at Autodesk as appropriate.

Q: Why was licensing the technology or letting them create a plug-in not sufficient?
A: T-Splines technology assets provide significant flexibility for free-form modeling in industrial design and engineering environments and acquiring these assets gives Autodesk the opportunity to offer its customers even closer integration between industrial design and engineering workflows.

So we don’t yet know the answer to the big question on many people’s minds: will my T-Splines plug-in continue to be supported? One thing many people looking at this announcement seem to have overlooked is that Bob McNeel, of McNeel & Associates (makers of Rhino), is on the board of T-Splines, Inc. and was likely closely involved in the decision to sell technology to Autodesk. Why would he agree to sell to Autodesk in a way that disadvantages his user base?

Obviously, more to come. But not right now, it would appear.

[A blog post with more about the acquisition is here.]

Autodesk acquires T-Spline tech

Thu, 22 Dec 2011 08:41:21 -0500

Autodesk’s buying binge is not over yet for 2011, as the company announced early today that it has acquired “certain technology-related assets from T-Splines Inc., a privately-held surface modeling software company ... Terms of the transaction were not disclosed.” SVP, Manufacturing Industry at Autodesk, Buzz Kross said that the technology will broaden the company’s solutions by enabling them to offer “more flexible free-form modeling [that] will help achieve even closer integration between industrial design and engineering workflows.”

You’ve probably heard of or used T-Spline’s software, even if you don’t realize it. The company patented its T-Splines technology, which it characterizes as “a new way of representing geometry that allows designers and engineers to add detail and control 3D models in ways that were previously impossible.” The company’s board includes industry heavy hitters Bob McNeel of Robert McNeel & Associates, makers of Rhino; Keith Mountain of Dassault Systemes’ Spatial; Frank Azzolino, former CEO of Eigner and other PLMish companies; and Dr. Thomas Sederberg, inventor of the T-Splines concept in 2003.

T-Splines plug-ins for SolidWorks and Rhino have been involved in some extremely cool designs from companies as diverse as BMW, Bose, Burton Snowboards, Dell Computer, Mattel and many more -- a design gallery is at http://www.tsplines.com/applications.html -- with applications in building design, naval architecture and consumer products design. Bringing this technology into the Autodesk family of products can only be good.

A couple of things are still unclear after this announcement: will the SolidWorks and Rhino plug-ins continue to be supported? What remains of T-Splines Inc. after the acquisition? Are any of the key staff joining Autodesk? Once I find out, I’ll update this post.

Happy Holidays from us to you!

Tue, 20 Dec 2011 11:30:35 -0500

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If you don’t see an image above, please use your browser to look at this blog post: link.

ESI reports Q3 revenue up 10%

Thu, 15 Dec 2011 12:52:38 -0500

ESI Group reported today that third quarter 2011 revenue was €17.6 million, up 10% both as reported and in constant currencies on strong demand for its services offerings. ESI CEO Alain de Rouvray said that the third quarter results “show the offensive and defensive quality of our activity and attest to the high degree of innovation that we bring to our business.”

The company reports that license revenue in Q3 was €11.5 million, up 8% while services revenue was €6.1 million, up 13%. Strongest growth was seen in Europe, up 26%, most notably in Central Europe and Germany.

As a reminder, ESI bought IC.IDO in late August, so these results include 2 months of consolidated revenue. IC.IDO contributed about €700,000 to revenue in Q3, meaning that ESI core growth was about 6%. Yesterday’s acquisition, Efield, is not included in these results.

For the first nine months of the year, ESI says that revenue from Europe grew 19%, while Asia was up nearly 8%. Revenue from the Americas "continued to be affected by a negative exchange rate". ESI didn’t give any more details but last year, revenue from the Americas was €19 million (up 13%). All indications from ESI appear to signal softness in the region for the year to date -- but ESI's revenue is heavily skewed towards license renewals in the fiscal fourth quarter, so we shouldn’t read too much into the performance to date.

ESI does not give forward-looking guidance but its highly repeatable revenue model does offer hints as to what’s coming. Q4 revenue has typically been more than double that of Q3, accounting for over 40% of total revenue last couple of years. If that pattern holds for 2011, total revenue should be about €38 million, for an annual total of €90 million or so -- or up about 10%. That’s if prior patterns repeat.

ESI announces Efield acquisition

Tue, 13 Dec 2011 21:14:13 -0500

Last month, ESI Group said that it had opened a 7-year, €30 million credit facility to help fund its acquisition strategy -- and today we learn of the second* deal under the new financing arrangement: the acquisition of Efield, a Swedish supplier of electromagnetic simulation.

[*When it announced the credit line in November, ESI said that the “first drawdown will take place immediately, for the acquisition of IC.IDO carried out in August.”]

Efield is a fascinating little company: In the mid-1990s, Saab (the aircraft systems group) determined that the simulation tools available at the time were insufficient to design stealth products, so started a research project with Ericsson to accurately solve electromagnetic problems for objects whose size was many times bigger than the wave length. Many PhD theses later, in 2006 the Efield AB was formed to commercialize the Efield product set. Today, Efield is used in antenna design; analysis of antennas on platforms such as vehicles, aircraft or ships; microwave design and to gauge electromagnetic interference.

ESI Group sees these solutions as becoming ever more important, saying that “these solutions, originally aimed at the aeronautical and defense sectors, are quickly becoming essential for the increasing proportion of manufactured products that incorporate mechatronics or electronic components ...
This acquisition supplements ESI Group's current electromagnetic offering, and addresses a fast-growing and increasingly regulated sector; one that is important because of the growing use of electronics in manufactured products.

Terms of the transaction were not disclosed, but Efield’s annual revenue was approximately €0.4 million in 2010, with significant proportion from repeat sales to existing clients, which include Saab AB, BAE Systems, Ericsson and the China Helicopter Institute. It has a staff of 5.

Alain de Rouvray, ESI Group's Chairman and CEO, said in the press release about the deal: "This acquisition strengthens our positioning in virtual simulation of electromagnetic phenomena in areas such as active security in transport, interference in electronics, and stealth in defense. The action is fully in line with ESI Group's strategy, which aims to continually enhance our expertise and our ability to deliver comprehensive End-to-End virtual prototyping solutions that are unique in the market."

A peek at the new DS North America Campus

Fri, 9 Dec 2011 08:34:52 -0500

Yesterday was the formal unveiling of the new Dassault Systèmes campus in Waltham MA, about 30 minutes from my office. Waltham lies on what used to be known as “America’s Technology Highway” (Route 128) in the 1980s, a ring road about 15 miles outside of Boston. Amazing companies got their start here -- Data General, Digital Equipment, Computervision, PTC, and Solidworks -- and many more high tech giants have located development centers here to take advantage of the talent coming from the areas’s universities. For DS, the real attraction to this space was the ability to finally co-locate its 3DVIA, Enovia and SolidWorks teams along with the staff from the Boston office. In all, close to 800 people will occupy the new facility, with room for an ultimate staff of 1000.

The buildings and site are showcases for sustainable innovation, using everything from special air-recycling paint, low-flow plumbing fixtures to smart light sensors to make the building energy efficient. The exterior of the building has been awarded LEED Gold certification by the US Green Building Council and the DS team expects to receive gold or platinum designation for the interior as well. I was guided around the building by 3DVIA CEO Lynne Wilson, who explained how the creative design of the interior was intended to facilitate collaboration and interaction. The open plan and play rooms (with game consoles, ping pong tables and unlimited soda and coffee) certainly would appear to do that. I was most impressed with the way the space was used. It appeared that, when standing, one could always see the outdoors from every desk and cube in the place. This gives the space an airy feel. The photo below of one of the “collaborations spaces” give the idea: lots glass, very clean lines, nothing tall to break sight-lines:

Before the tour, ribbon cutting and other hoopla, DS CEO Bernard Charlès and Al Bunshaft, Managing Director of DS Americas, offered a few remarks about DS, the move to Waltham and PLM in general:
• 2011 is going to close well, according to M. Charlès, and the focus now is on 2012
• Taking direct control of all of the accounts that used to be managed through IBM PLM meant that DS had to create a visitor experience that was much more polished than before. The new location includes meeting rooms, a virtual reality center and other spaces designed to showcase DS technology
• “People didn’t know the DS brand -- they often thought CATIA was an IBM brand -- so one goal of this building is to build the DS brand in North America”, said M. Charlès
• 3DVia is a more substantial brand that many realize, according to M. Charlès. He didn’t give a specific number but said that “it’s not $100 million but far greater than $10 million”.

I like ribbon-cutting ceremonies. They are positive, hopeful and upbeat -- full of positive intentions about the future. That bright, shiny (now all-silver) DS logo is visible from quite a distance on “America’s Technology Highway”, 1000 high-tech jobs are staying in Massachusetts, a new state-of-the-art LEED campus. I’d say that’s very positive.

Note: DS provided lunch did not in any way influence the content of this post.

AU Innovation Forum: Everything Changes

Tue, 6 Dec 2011 09:27:17 -0500

Last week, right about now, Autodesk was unveiling its PLM solution for the manufacturing market in an Autodesk University session called “Everything Changes”. I was fortunate to have been invited to speak at the session, along with Oleg Shilovitsky, Randi Zuckerberg (yes, that Zuckerberg) and Steve Bodnar (yes, him) and MC Rob Cohee of Autodesk. Oleg posted his presentation slides here -- worth checking out even without his excellent delivery -- while the gist of Steve’s material can be found at Autodesk’s site for the event: autodesk.com/everythingchanges.

I was asked to give a “TED-style” talk, which means my slides have very little text and showing them to you is rather pointless, even though the images of the mountain bikes are awesome:

The mountain bikes were a recurring theme in my talk. Did you know, for example, that mountain bikes didn’t exist until the 1960s, when riders in Northern California cobbled some together from cruiser bikes (heavy, limited gearing and no sex-appeal) and road bikes (sex-appeal, fragile, skinny tires)? What started as a hobby has turned into a $3 billion market in 2010, accounting for half of all bicycles sold in the US. Why and how this happened -- and the lessons we can learn from this in managing innovation -- was the theme of the presentation.

Rather than try to write the whole thing down, here are the three take-aways I hope the audience got:

1. Everyone innovates, all the time. It’s not a special, creative task assigned to just a few people.
2. Harnessing that creativity, making it work for the enterprise, is what PLM should be all about. Too often, people see PLM as an IT structure that gets in the way of their personal productivity, delivering benefit that they can’t see to the overall enterprise.
3. For PLM to be truly useful, it has to speak the language of all of the functions involved in whatever the enterprise does -- sales, R&D, design, engineering, field service and so on -- receiving data and serving it out in ways that let people act on it in the way that makes them most productive. That means role-based, ubiquitous access.

There was a fourth point, but it was so obvious I hope this specialist audience doesn’t really need it. The “P” in “PLM” doesn’t need to stand for Product -- it can be Project, Program, Patient (in healthcare), Policy (in the public sector), Private label (retail) ... you get the idea. Each has a lifecycle that should be monitored, and lessons learned applied to the next to improve its chances of success.

It was fun brainstorming “P”s. In fact, the whole experience was terrific. I believe the Innovation Forum was live on Autodesk University Virtual but am unable to find a replay of the session. If Autodesk posts it, I will update here and on Twitter. More about AU coming once I catch up.

Quick notes from Autodesk University

Wed, 30 Nov 2011 11:32:48 -0500

If you follow my twitter feed (@monica_schnitge), you’ll know that I’m one of 9,000 attending the 2011 edition of Autodesk University in Las Vegas. Days are crammed, so this has to be brief, but there’s a lot going on:

• Autodesk formally entered the PLM fray, after teasing about it for several months.Autodesk 360 for PLM is a combination of existing Vault (on-premise data management) and Buzzsaw (collaboration) and the new Nexus, a new, cloud-based set of Software as a Service (SaaS) apps for everything from compliance to RFQs. Many details (including pricing) are yet to come. I will write more about the offering and my impressions but Autodesk has a website dedicated to the launch at autodesk.com/everythingchanges. Every customer I spoke with after the unveiling is excited to get involved in late Beta testing.

• The company also today announced that it intends to acquire Horizontal Systems, a provider of cloud-based BIM collaboration solutions. I am not familiar with Horizontal, so need to learn more, but the press release says that “Horizontal Systems technology will be an important contributor to the Autodesk 360 for BIM vision for collaboration, data and lifecycle management ... The acquisition of Horizontal Systems will help accelerate the movement of BIM to the cloud by providing users with the ability to more easily access and coordinate multi-discipline project data wherever and whenever it is needed throughout the entire project lifecycle.” The deal is expected to close by the end of January 2012. Terms of the transaction were not disclosed, but I’m guessing it’s another of the small technology buys Autodesk has been making lately.

• Makers rule. Many of the examples cited during yesterday’s keynotes were individuals doing very quickly what many enterprises can’t: bringing products from idea to market in a startlingly short time because of advances in everything from sketching tools to CAE to rapid prototyping. Very impressive but I hope that the message isn’t too one-sided: just because you work in a large company, don’t think you can’t innovate, too. The tools work just as well for you -- you need to teach your organization to be more adaptive.

Much more soon -- already late for the next meeting.

Bentley showcases ‘extreme infrastructure’

Wed, 23 Nov 2011 10:03:09 -0500

Earlier in November, I was fortunate enough to attend Bentley Systems’ Be Inspired event in Amsterdam, where Bentley showcases the customer finalists in what could be termed “extreme infrastructure” --plants, buildings, roads, construction, utilities-- competing for Be Inspired awards. Many of the projects were jaw-dropping because of their complexity, size, difficulty or number of stakeholders; selecting winners cannot have been an easy task for the juries. [See Bentley’s website for a complete list of winners.] More about that below.

Be Inspired actually began a day early for media and analysts as Bentley staffers hosted a briefing to go over the announcements being made in conjunction with the event: two acquisitions and five product-related. CEO Greg Bentley, SVP Software Bhupinder Singh and a large cast of players presented each of these announcements in the context of Bentley's overall strategy. I can't begin to do justice to their presentation but do want to highlight two major themes:

• Further focus on laser scanning and point clouds with the acquisition of Pointools, a UK-based provider of hardware-neutral point cloud software technology. Bentley says that it plans to “integrate point cloud processing in innovative ways throughout its product portfolio” by making point clouds a “fundamental data type, [that] can usefully serve the function of an “as-operated” 3D model for every infrastructure asset.” That’s big -- many owners are moving away from trying to keep CAD models of their operating facilities up to date and are considering using scanners as part of the design and planning of large projects. Managing, processing and editing point cloud data and then making it more readily available by streaming, on-demand, a desired subset of the cloud makes LIDAR a practical alternative for even more projects. An important note: Pointools’ Vortex plugin will continue to be made available to third parties such as Autodesk, Google SketchUp, and McNeel’s Rhino.

• Information that is accessible from anywhere (assuming you have the necessary access rights) is becoming more of a reality. Bentley showed off its Bentley Navigator and ProjectWise Explorer iPad apps that allow interaction with design and other types of data in the field; a transmittal service offered via the Microsoft Azure platform; and integration with Bluebeam and Adobe to allow PDF authors to embed Bentley’s i-models into PDFs for collaboration, viewing and mark-up. The idea that a project planner can wander to the job sit, iPad in hand, call up drawings, specs and other documents, redline areas for discussion and transmit them back to the project database in ProjectWise is very attractive. I am an Apple fangirl and appreciate the availability of Bentley’s apps on the iPad platform, but Bentley’s Mr. Singh did tell me that they are working on apps for the Windows 7 and Android platforms as well.

The company made lots of other announcements as well, but the highlights for me were the project presentations by the 57 finalist teams, chosen from among 270 submitting organizations from 42 countries. All of the presentations I attended were terrific, but two stand out: CDM’s revamp of the city of Galveston’s (TX) Main Wastewater Treatment Plant and Qatar Petroleum, which created intelligent as-built models of some of its offshore assets. CDM’s job was to fix the Galveston wastewater plant after hurricane Ike devastated the Gulf coast. Galveston is located on a barrier island off the Texas Gulf coast; hurricane Ike’s extended storm surge caused a major portion of the plant, including the 10 million gallons/day wastewater treatment tank, to fail. The CDM team created a complex plan to work around the parts of the plant that were still functioning -- can’t leave a city of 300,000 without working sewage treatment -- and rebuilt the plant in less than a year. CDM said that they were able to explore more design alternatives and work in 3D/4D (using time as the fourth dimension) to fully review their concepts.

Qatar Petroleum’s project was completely different, but no less challenging. Like many asset owners, they found themselves with out-of-date drawings, a mix of hard and soft copies, inconsistencies and duplications; a real mess if something were to go wrong in one of the facilities and a contributor to higher project costs, possible lost production, and flawed decision-making even if there were no imminent danger. So they decided to use laser scanning to create intelligent 3D CAD models. Sounds simple enough, right? No. These facilities were offshore, complicating access. Temperature and humidity affected scanning equipment, which had to be sent to the UK for frequent recalibration. Inconsistent tagging meant that they had to come up with a new scheme. Ultimately, they captured 18,000 panoramic images and 4,200 laser scans for 3 platforms and 1 island; created 1,000 intelligent P&IDs; created 4 AutoPLANT model packages and extracted over 3,000 isometrics. When asked if it was worth it, the team was unequivocal: yes. The single, rich source of data will shorten maintenance and upgrade projects, improve operations, safety and training, and enable better decision-making. They’re already working out how to update data for other facilities.

Be Inspired isn’t the typical user event. The vendor content is kept to a minimum and the focus is squarely on user projects. But that doesn’t mean that there’s not plenty of interaction; CEO Greg Bentley has minute details about how customers are utilizing the company’s software (more on his “Utilization Index” in a future blog post) and the company’s developers and product managers were in each session, noting how their solutions were being used and where there might be room for improvement. Even better, during “roundtable breakouts” while the judges were collating their final votes, Bentley was actively seeking customer input on everything from how a cloud offering should work to asset management and BIM simulation. Bentley (the company) walks its talk: Mr. Bentley said that “Information modeling might be what we do, but information mobility is why we do it, for the context of our projects includes site conditions, weather, terrain, and continuity in design, and point clouds.” Bentley Systems is clearly working to stretch the boundaries of the technology available to practitioners of “extreme infrastructure”.

Note: Bentley Systems graciously covered expenses and registration for the event but did not in any way influence the content of this post.

3D Systems acquires Z Corporation

Mon, 21 Nov 2011 13:24:34 -0500

The consolidation train keeps rolling.

Stay with me now: Ratos AB of Sweden announced that its Danish subsidiary, Contex Group, signed an agreement to sell its subsidiaries Z Corporation and Vidar Systems to 3D Systems Corporation for about $137 million. Contex will use the cash to pay down bank debt and pay a “dividend of the excess amount (USD 50-70m)” to its owners. Nice to be an owner.

Abe Reichental, President and CEO of 3D Systems said, "We believe that the strong strategic fit between our businesses, combined with expanded capabilities in product development, channel coverage, manufacturing and marketing, could present [sizable] cost and revenue synergies that together offer significant long-term customer benefits and shareholder value.” In Z Corp’s press release, Mr. Reichental further highlight the strategic importance of the acquisition: “This is a strategic fit for both businesses that will expand our capabilities in product development, channel coverage, manufacturing and marketing. We share Z Corporation’s commitment to its customers and partners, and look forward to building the 3D content-to-print platform of the future.”

Finally, Z Corporation CEO John Kawola said, “Our vision is to help designers create more ideas, more communication, and more innovation; and joining 3D Systems enables to us deliver on that promise even faster. We intend to make multi-color 3D printing accessible to far more designers, provide a more complete customer experience, rapidly advance new applications, and build the foundation for a new generation of Z Corporation innovations.”

In an open letter to customers and partners, Mr. Kawola wrote that “Z Corporation and 3D Systems will deliver the most comprehensive suite of 3D printing solutions available in the industry, together with a single, strong source for service and support. The business model is ideally suited to small businesses that need solutions to grow with them; and to enterprises needing a complex mix of products, services, and 3D content.” Customers should see more frequent product releases and upgrades, and the ability to “mix Z Corporation solutions with product offerings from 3D Systems.”

The acquisitions are subject to customary closing conditions, including regulatory approvals. Closing is expected by the end of 2011 or in early 2012.

It’s a lousy day for world markets, so it’s hard to be certain, but 3D Systems’ shares are down 7% while the rest of the US market is down about 2% -- I’d have to conclude that investors are not happy with the deal. I can see the strategic rationale but have to wonder: sooner or later 3D Systems is going to have to slow down and digest what it’s got or those synergies simply won’t materialize. Is it time for a breather?

Cimatron: new license revenue up 18% in Q3

Mon, 21 Nov 2011 08:45:45 -0500

Last week, I briefly noted that Cimatron had reported Q3 revenue of $9.6 million, up 10% from the $8.7 million reported last year. Here are a few more details about what actually was a really good quarter for Cimatron:

• License revenue was 42% of total, or $4.0 million in Q3 2011, as compared to 39% of total a year ago, or $3.4 million -- an increase of 18% as reported and 15% on a constant currency basis.
• Maintenance revenue was 51% of total or $4.9 million, up 9% from 52% or $4.5 million a year ago.
• By geo, revenue from Europe was $4.6 million up from $4.1 million a year ago; from North America, $2.9 million, up from $2.7 million in Q3 2010; from Asia Pacific: $1.6 million, up from $1.4 million; and Rest of the World $500,000, flat hen compared to last year. CEO Danny Haran gave a little bit of color on the earnings call, saying "We're doing well in the USA, we're doing well in Europe, we're doing well in Asia. Even Japan has come back a little bit from the previous quarters.”

Mr. Haran also offered glimpses on the company’s plans for growth saying that Cimatron continues to look for merger or acquisition opportunities but noting that there aren’t too many candidates that would be a good fit. From an organic perspective (in other words, without acquisitions), Mr. Haran says Cimatron is working to expand its distribution network, to making the “product more and more competitive” and to introduce GibbsCAM to new markets such as Korea and China.

Looking ahead, Mr. Haran said that “These are interesting times. On the one hand, economic uncertainty is very high, and news from Europe and the USA continuously shake the markets; on the other hand, business seems to be strong and healthy in all of our markets.” Mr. Haran would not be pinned down on Q4, saying that "we have early and partial indications showing continuation of momentum... So far so good; it's not like we're seeing any slowdown anywhere."

Autodesk Q3 revenue up 15%

Wed, 16 Nov 2011 12:02:55 -0500

Autodesk's FQ3 earnings announcement yesterday surprised a lot of people, coming in well ahead of analyst estimates and near the top of its own earlier guidance. There had been concerns over Europe, the channel and how buyers would react to the suites offerings, but all of those seemed to fade away as Autodesk reported revenue of $549 million, up 15% over last year. Standouts were the growth in the Manufacturing and Platform & Emerging (PSEB) businesses and, from a geo perspective, Asia.

The details -- highlights only; Autodesk offers a lot of factoids, which you can see here:

• Revenue was $549 million, up 15% year/year and flat compared to FQ2.
• License revenue was $331 million, essentially flat with last quarter and up 18% over last year. Within this, revenue from commercial new licenses increased 11% but decreased 5% sequentially.
• Subscription (aka maintenance) revenue was $217 million, a record high, up 12% over last year.
• By geography, revenue from EMEA was $202 million, up 10% year/year on "particular strength in northern Europe, partially offset by weakness in southern Europe". Revenue from the Americas was $200 million, up 12%. Revenue from APAC was $146 million, up 28% including one large PSEB transaction of approximately $11 million. Within all of this, Autodesk reported revenue from emerging economies of $87 million, an increase of 15%.
• Revenue from Suites was $151 million, and represented 27% of total revenue (not yet anywhere near the 100% the company is aiming for). Suites revenue was up 36% year/year but decreased 4% sequentially, likely due to the initial buzz and promotions around launches that occurred during FQ2.
• By business segment, revenue from the manufacturing segment was $134 million, up 14% year/year but down 2% sequentially. Manufacturing suites revenue was up 15% year/year and down 7% sequentially. Autodesk said the manufacturing segment performed especially well in the Americas. Revenue from the AEC business segment was $152 million, up 12% year/year and down 4% sequentially. Suites increased 40% year/year. The AEC business had a strong quarter in APAC and EMEA, and in the government vertical. Revenue from PSEB was $210 million, up 21% year/year and 6% sequentially. Revenue from PSEB suites grew 145% (not a typo: 145%) year/year on "a small base, driven by an increase in revenue from educational suites and the recently introduced Autodesk Design Suites." Revenue from Media and Entertainment was $53 million, up 6% compared to the third quarter last year.

As of the end of 3QFY12, Autodesk reports an installed base was 3.116 million, up 180,000 or so for the year. Just think about that base for a moment. Autodesk no longer gives info on the number of Inventor or Revit seats, so presume a couple of hundred thousand of those and perhaps a couple million AutoCAD (not LT) seats -- that’s a gigantic potential audience for the PLM offering that the company continues to tease. During the earnings call for investors, CEO Carl Bass said that Autodesk’s PLM will have “a very unique approach” for manufacturing, AEC and media & entertainment customers -- first time I’ve hard of a PLMish offering for media, but why not? They must also have data management, provenance and other issues which a broader offering can and should be able to address. By including them in the target list, Autodesk is clearly thinking outside the typical engineering box -- I doubt that people who create Avatar would suffer through the user interface and interaction mechanisms that prevail in our world.

Mr. Bass also said that Autodesk’s offering is “cloud-based, will be easy-to-use, implement and deploy. It will be scalable, configurable and intuitive, which is a sharp contrast to the decades-old legacy technology in the market now. We think that customers are starving for this new kind of solution, and Autodesk succeeds in introducing this kind of disruptive technology.” Let’s hope this is not over-hyping a repackaging of existing Vault, Buzzsaw and whatever the M&E folks use today. [I honestly don’t think it is, but don’t know one way or the other at this point. ]

Autodesk’s material also pointed out that the company did 10 acquisitions during the fiscal third quarter for a total of $90 million. Most, according to Mr. Bass, are technology acquisitions that either enable the company to expand into adjacent markets with a more complete offering or are platform technologies that will enable Autodesk to offer engineering tools in the cloud. Mr. Bass gave no signs that the pace of acquisitions will slow -- but he also gave no indications of what further technologies he might want to buy.

Autodesk also gave forward-looking guidance. It expects fiscal fourth quarter (ended January 2012) revenue to be between $575 million and $590 million, which would lead to fiscal 2012 revenue of $2.198 billion to $2.213 billon, or growth of about 13%. For fiscal 2013, Autodesk initiated guidance of about $2.4 billion, growth of 10%, with a long-term (2015) target of 12% to 14% annual growth. [The company said that no assumptions about the financial impact of Autodesk’s PLM offering are included in this guidance.]

I’ll be at Autodesk University in a few weeks and am looking forward to the formal unveiling of the company’s PLM solution and to hearing what attendees think of the offering. After all, so far we’ve only heard Autodesk’s hints -- the real success measure is whether customers find it interesting enough to either abandon what they have or implement something completely new to them. Interesting times.

AVEVA revenue up 9% in H1 2012

Tue, 15 Nov 2011 07:40:15 -0500

AVEVA today announced results for the six months ended September 30 that were both true to the the upbeat tone of last month’s interim statement’s and cautiously optimistic about the future. The results mirror what we’ve come to expect in the engineering software world: slow, steady, reliable growth from the design products and less predictable but faster-when-it-happens growth from enterprise solutions. The trick for AVEVA will be to manage the growth while not taking its eyes off the design tools that generate the bulk of today’s revenue and profits.

Even though results came very close to meeting City analysts’ expectations, the share price was down about 4% on the London Stock Exchange.

The details:
• Total revenue for the first half of fiscal 2012 was £85.2 million, up 9% over last year (analysts had been expecting £86.4 million).
• Adjusted pretax profit for the period was £26.1 million (versus an expectation of £26.2 million, and up from £24.6 million a year ago). Profit before tax as reported was £23.8 million, up from £23.1 million last year, leading the company to declare a dividend of 4.0 pence per share, up 19% from last period.
• Earlier this year, AVEVA reorganized its operations into Engineering & Design Systems and Enterprise Solutions to enable the company to focus on what are fundamentally different products and users -- PDMS and AVEVA Marine for engineering/design and AVEVA Net and other products for data management/collaboration, respectively.
• Revenue from Engineering & Design Systems was up 4% to £74.6 million on strong growth throughout Europe, Latin America and parts of Asia. Recurring revenue was £55.5 million (up 12%), or 74% of revenue.
• Enterprise Solutions’ revenue in the period grew 50% to £10.5 million, helped a full six months of revenue from ADB and Logimatic (acquired in 2010). On an organic basis, Enterprise revenue was up about 20%. The Enterprise part of the business currently has a backlog of deferred revenue and services of about £8 million. Not surprisingly, the company says that most of the uptake in H1 2012 was from oil and gas accounts -- its traditional sweet spot. Of note, however, is that AVEVA is working with several systems integrators to boost its service capacity and with Capgemini in France to create solutions targeted at the nuclear industry.
• On a geographic basis, AVEVA reports that it saw strong uptake of its solutions in the oil and gas vertical in emerging markets such as Russia and Latin America and in pockets around the world. Revenue from EMEA was up 28% to £41.1 million with particular strength in Russia and Central Europe. Revenue from Asia Pacific was down 9% compared to the same period last year due primarily to a planned reorganization in China, though performance in South Korea (marine) was strong while the rest of Asia was “relatively flat”. Revenue from the Americas grew by 5% to £15.4 million as reported but grew by 11% on a constant currency basis. Much of this growth was from Latin America,with Brazil singled out but the company, as conditions in North America “remain tough competitively”.
• By vertical, performance was more or less in line with recent periods. Oil & gas represented 45% of revenue; marine, 25%; power 15%; and mining, petrochemical, chemical, pharmaceutical, and paper and pulp combining for about 15% of revenue.
• On the spend side (which I don’t normally cover), AVEVA increased its R&D investment by 18% to £15.2 million in the period -- coincidentally, that’s 18% of revenue. AVEVA has been ramping up it’s R&D spend over the last 18 months to incorporate its acquired technologies into the mainstream portfolio and to build out its AVEVA NET platform. From what I could gather at last month’s user conference, customers are pleased with the results.
• AVEVA gave an update on the Z+F acquisition which Included the factoid that the actual price paid was “total consideration of £7.3 million” rather that the “net consideration of £6.3 million on a debt free/cash free basis” announced in October. At any rate, AVEVA reports that the “integration of the business has gone smoothly and the new team has settled in well”.
• The company also said that it continues to explore further acquisitions.

CEO Richard Longdon said in a press release, “The fundamental growth drivers across our vertical markets remain strong, particularly in the emerging markets, and we are well positioned to continue to exploit those opportunities. We are pleased with our progress in the first half, especially the development of the Enterprise Solutions business and the continued growth in Latin America and Russia. In addition, we have reorganised the business in China and are now better placed to exploit the opportunities that market presents. We have also seen a strong performance in EMEA in the first half. As we enter the second half, we are well positioned to deliver the Board’s expectations for the full year.”

Rand FQ1 slightly under expectations

Mon, 14 Nov 2011 11:26:29 -0500

Rand Worldwide today reported results for its first fiscal quarter ended September 30, 2011, with revenue of $22 million coming in slightly below expectations, but up from $17 million last year (though not an apples-to-apples comparison due to the closing of the Rand/Avatech merger on August 17 2010). A better comparison is sequential; for the fourth fiscal quarter of 2010, ended June 30, Rand reported revenue of $23 million, so the September quarter results represent a 4% sequential decline.

For the September quarter, product sales were $13 million (even with the prior quarter), services revenue was nearly $5 million (down slightly) and commission revenue was just under $4 million (down from $4.8 million). During the conference call with analysts, President and CFO Lawrence Rychlak said that 56% of software and subscription revenue comes from the AEC verticals; the remainder from manufacturing.

North America again dominated the business, with revenue of $19 million. During the FQ3 and FQ4 earning calls, CEO Marc Dulude had said that the company was seeing weakness in its Imaginit (Autodesk resale) business, resulting in an intensive review of its sales process; he expects to see improvement here over the coming quarters. Revenue from Singapore/Malaysia was just under $1 million and Australia, $1.7 million. Mr. Dulude said that Australia closed the company’s largest-ever deal there, $700,000.

Mr. Rychlak also broke out suites revenue, saying that 39% of software and subscription revenue was from suites, the remaining 61% from stand-alone products. It will be interesting to follow this breakdown to see if we can detect a trend regarding suites adoption -- Autodesk says it is going well, but announces earnings tomorrow after the market closes.

Rand didn’t give specific forward-looking guidance but Mr. Dulude did indicate that the review of sales operations in North America was already providing benefit, and believes that December quarter revenue will be up.

Quick update: Siemens/Vistagy, CENIT, Cimatron

Mon, 14 Nov 2011 08:58:39 -0500

I was away from the office all of last week, attending Bentley's Be Inspired event in Amsterdam (more on that soon) and sitting in on meetings in London, but the world of engineering software kept going. Here's news you might have missed:

Siemens PLM to acquire Vistagy
Consolidation continues among the PLM software providers, as Siemens on November 9 announced that it had signed a definitive agreement to acquire VISTAGY, Inc. Vistagy was originally known for its composites design technology but has recently also begun providing solutions for the complex assembly structures in the aircraft industry. Siemens says it is adding Vistagy's aero-industry specific capabilities to its portfolio to make it "the only company worldwide to support the whole value creation for carbon fiber components with its software tools – from product definition and development to manufacturing and service." Terms of the deal have not been disclosed.

Cimatron announces results for Q3
Cimatron reported that Q3 revenue increased 10% to $9.6 million. Investors were underwhelmend and sent the share price down 15%. More details as soon as I figure out why I can't get the earnings call replay to work - the company usually gives more detail on the call than in the press release.

CENIT reports Q3, confirms guidance
Cenit AG Systemhaus reported that sales grew 20% during the first 9 months of the year to €78 million on solid results across the board. The company saw growth in both product lifecycle management (up 20% in the first 9 months to €56 million) and the enterprise information management (up 20% to €22 million) segments; in sales of its proprietary software (up 40%) and third-party products (up 51%); and in higher levels of capacity utilization in its service and consulting businesses (with revenue up 6%).

Given these results for the year-to-date, CENIT announced that for the 2011 business year, the Company projects revenue growth of about 10% to reach about €102 million. Given performance to date, this forecast implies that CENIT sees a slowdown coming in Q4 -- echoing sentiments of other IT companies so far this earnings season.

Earnings coming this week include RAND, AVEVA and Autodesk.

AVEVA showcases integrated design

Sun, 6 Nov 2011 01:04:09 -0500

This is WAY overdue -- but don’t read into the tardiness that AVEVA World Summit Europe 2011 was anything other than a world-class event. AVEVA is hosting three such sessions around the world (in Copenhagen, Rio de Janeiro and Singapore) to bring the summits closer to their customers and, judging by the attendees in Copenhagen, the strategy is working -- quite a few told me that this was their first AVEVA user conference.

Ten take-aways from the event:

1. The theme of AVEVA’s user conferences this year is “joined up thinking”. It’s a new term for me, but it broadly means both better integrating and leveraging all of the information created during the life of a project as well as thinking differently about how that information (and the processes and people that created it) are connected. It was great to see how many attendees wound up comparing their processes with their peers’ and trying to figure out how one might do things differently.

1. Speaking of learning, this event had a large contingent from Russia. For many of these companies, the concepts of 3D CAD are relatively new; they are jumping into an area of technology that has, to a large extent, already “arrived” in other parts of the world. Unlike many American companies who have been using 3D CAD for many years and have built good and bad practices around these tools, these companies had the chance to start at a more advanced point. Did they? Not so much -- it appears they are struggling with many of the same issues we’ve been discussing for decades. A bit discouraging.

1. Also a bit discouraging was learning how much Statoil spends on data migration. Asbjorn Mangerud, Leading Advisor Operations & Maintenance, Technical Information, Statoil ASA, talked about how, over the last ten years, Statoil has tried remodeling, laser scanning plus remodeling, and a variety of translators to get CAD models into its format of choice (PDMS): remodeling cost 6 million NOK, scan + remodel cost 20 million NOK and translators range from under a million NOK to 11 million NOK. It’s hard to compare all of these data points since some may represent smaller projects, different levels of detail and so on, but if I add it all up, Statoil has spent 52 million NOK converting 3D parts from one format to another. Not adding anything, just moving data around. Appalling.

1. To try to remedy this, Statoil and AVEVA are working on a direct translation mechanism between Intergraph’s PDS and AVEVA’s PDMS. The project started in December 2010, with the goal of reducing the time to do a conversion from months to days/weeks and improving the quality of the conversion over what was then possible using XmPlant. A team of people from Statoil and AVEVA have been working on this ever since, bringing together knowledge of PDMS and its data structures with Statoil expertise about PDS and its own catalog and specification requirements. I missed it, but I heard from attendees that the demo Mr. Mangerud’s team gave of a conversion was very impressive -- clearly this project is working and could lead to other, similar efforts.

1. Statoil is very clear: EPC firms can use whatever tool makes them most productive but when there is existing PDMS data for a project, it must be used and modified. Ultimately, everything needs to wind up in PDMS. Interfacing to PDMS should be done via ISO 15926 -- unless a direct interface produces better results, which this project has shown to be the case right now. I’m hearing this same approach from other asset owners, too: EPCs should use the tools that get the project done as quickly and cost-effectively as possible but then deliver data in the form the owner specifies. Where this often falls apart, EPCs tell me, is in the owner’s unclear specification of what, exactly, that is.

1. The other point that this brings home, again, is that there is no one set of solutions in the plant design world that is perfect for every job. Contractors will likely have to continue to maintain capability (trained users and software licenses) in many tools for the foreseeable future. The software vendors that help users navigate the pitfalls of such heterogeneity will ultimately be more successful than those who prefer a more closed model.

1. In keeping with the “joined up thinking” theme, AVEVA showcased its project execution, marine and plant design offerings. The company says that they are built around its concept of a digital information hub, which captures the associations between information sources across an enterprise, centrally controls the data, defines workflows and manages change processes. Basically, AVEVA’s authoring tools allow the user to publish to AVEVA NET; approved information from 3rd parties can be checked for compliance to standards and added to AVEVA NET and then both types of data can be viewed and consumed by all authoring applications. This integration between engineering, design and other functional areas will improve efficiency, up to 30% according to AVEVA’s research, and reduce errors.

1. I spent one morning in the marine track, learning about all of the new features coming in AVEVA Marine. A lot of what’s coming is very useful (space management and pipe supports, for example) and some is just cool: AVEVA Design Reuse, which allows a designer to start a new design with parts of an existing one and the ability to overlay 2D and 3D information, CAD and point clouds.

1. In the marine track, I learned how to rescue a distressed submarine -- vessel and submariners. Very complicated engineering.

1. AVEVA CEO Richard Longdon began the conference by talking about how important the customer relationship is to AVEVA, saying that “everything begins and ends with our customers”. Most companies say something like this at a customer-focused event, but AVEVA’s customers felt that AVEVA actually means it. Several told me that they see user conferences as a vendor’s way to intensely marketing to them; they like how AVEVA was actually listening and interacting to better understand what customers were trying to say. I saw that over and over again during my time at AVEVA World Summit.

AVEVA announces results for the first half of fiscal 2012 in about 10 days. More then.

Note: AVEVA graciously covered expenses and registration for the event but did not in any way influence the content of this post.

ANSYS reports solid Q3

Thu, 3 Nov 2011 09:00:22 -0400

Earnings keep rolling on in, with the September quarter looking good but some companies nervous about the fourth quarter economic outlook. Not ANSYS, though. It’s time for another quick update:

ANSYS records record revenue with help from Apache
Ansys today reported that Q3 revenue was $172.9 million versus the consensus estimate of $172.4 million - not a world-beater, but very good and, once again, a record level -- helped by the $9 million contributed by Apache as part of combined operations for two months. Software license revenue was up 32% in Q3 to $104.5 million; maintenance revenue grew 19% to $68 million.

The company says that it saw strong performance across all major product lines, supplemented by two months of Apache as part of the combined operations. ANSYS recorded 14 deals over $1 million, up from 8 last quarter.

For Q4, ANSYS expects GAAP revenue of $189 million to $195 million, bringing the year to GAAP revenue of $683 million to $689 million, up around 18%. For fiscal 2012, the company expects GAAP revenue in the range of $815 million to $837 million, and increase of about 20% that will be driven in large part by the addition of Apache revenue for a full year. ANSYS says it is so bullish in its outlook because of “the positive customer sentiment” it is seeing in interactions with its base, planned increases in sales capacity, the upcoming release of ANSYS 14.0, current deal pipelines and sales forecasts.

More after the earnings call, if warranted.

Quick Update: AspenTech, Trimble

Wed, 2 Nov 2011 09:10:39 -0400

Day 4 of no power and spotty connectedness to the Interwebs, but earnings season rolls on so it’s time for another quick update:

AspenTech exceeds targets for FQ1
AspenTech yesterday reported results for its first fiscal quarter that were up nicely by most metrics and show that the company’s reinvented business model is gaining traction. Total FQ1 revenue of $51 million was up 19% from a year ago, subscription and software revenue was $32 million, up 68% over last year and up 11% sequentially. Services revenue of $19 million was down about 20% both sequentially and year/year. But the news was not al rosy: the company reported a loss from operations of $16 million due primarily to the change to a ratable revenue recognition offering -- but, this, too is an improvement: the loss from operations was $20 million a year ago. AspenTech still has plenty of cash on the books, with a cash balance of $145.4 million at September 30, 2011, a decrease of only $4.6 million from the end of the prior quarter as the company generated $5.3 million in cash flow from operations.

In other news, AspenTech's Board of Directors approved a share repurchase program for up to $100 million.

Trimble benefits from Tekla, cautious about Q4
Trimble also announced results yesterday, reporting third quarter 2011 revenue of $417 million, up 31% percent over the third quarter of 2010 but issued a cautious guidance for Q4. with CEO Steven Berglund saying that “the economy remains uncertain, [but] we are encouraged by the progress we are making in integrating our acquisitions, expanding geographies and extending our reach into new adjacencies.” For Q4, Trimble expects revenue between $415 million and $420 million.

Trimble operates in four business units; the one that acquired Tekla is Engineering and Construction, which reported Q3 revenue of $241 million, up 27%, driven by “strength across most product lines, the positive effects of the SITECH dealer channel and the acquisition of Tekla”, according to the company. I still need to parse the results, but Tekla contributed about $15 million for the quarter, which would be a bit short of expectations.

The Field Solutions unit reported revenue of $91 million, up 35%; Mobile Solutions revenue was $58 million, up 54% and Advanced Devices revenue was $27 million, up 15%, all year/year.

And, since I’m sure some of you want to know, Halloween in Andover is now postponed to Saturday. I didn’t know a town could postpone a holiday tied to a date (October 31 is pretty specific, after all), but they’ve done it. Good thing, too -- lots of candy still awaiting kids in costumes! National Grid crews have been sighted in my neighborhood. This is progress.

Quick Update: PTC, DS, Nemetschek

Mon, 31 Oct 2011 08:53:22 -0400

Day 2 of no power here in the Merrimack Valley of New England, resulting in no WiFi and spotty 3G coverage, so this has to be quick -- more soon on PTC and DS.

PTC has boffo Q4, cautious about 2012
PTC last week announced results for Q4 and fiscal 2011 that exceeded both analysts’ and the company’s own expectations for revenue in all categories and across all product lines. The company reported GAAP revenue of $339 million (up 26%), including a $21 million contribution from MKS, which PTC acquired on September 2. Excluding acquisitions, revenue was $319 million, just below the low end of guidance. For the full year, PTC reported GAAP revenue of $1,167 million, up 16% from a year ago. In significant news about customers’ buy-in to the PTC story, the company reports closing its highest number of large deals (30 in total, up from 28 last FQ4). Investors also loved the net income news, (EPS of $0.47, well above guidance of $0.42) and sent the share price up over 15% at one point. For fiscal 2012, PTC forecasts FQ1 GAAP revenue of $303 million to $318 million (which would be an increase of about 16%), and FY12 GAAP revenue of $1,327 million to $1,337 million, including contributions from MKS and 4CS of about $87 million to $97 million.

DS revenue up 7% on strength in PLM, Europe
Dassault Systèmes also reported September quarter results that were ahead of plan, with total revenue of €433 million, up 7% as reported, over a tough comparable a year ago. Total software revenue was up 7% to €394 million with PLM software, the far larger component, up 8% and Solidworks up 6%. Revenue from the Americas was essentially flat,Asia was up 2% and Europe was up 16%. At the same time, DS announced that it was acquiring Elsys, an “innovative provider of interactive electrical engineering and disruptive multi-discipline generative schematics solutions [,which] enables the automatic creation of millions of 2D schematics from functional-logical master data, thereby eliminating the tedious, costly, and error-prone process of interactive manual creation of schematics.” Elsys is new to me, but I hope to learn more -- and whether this technology can be applied to process industry P&IDs, too. If so ...

Nemetschek revenue up 9% so far in 2011
Nemetschek reported a 9% percent increase in sales for the first nine months of 2011, to €118 million
increase, on 13% growth in maintenance and only 6% growth in license revenue. Revenue from outside Germany rose 9% and now accounts for 60% of total revenue. Among the various businesses, revenue from Design was up 8% to €95 million; Multimedia grew 32% to €10 million; the Build segment revenue was up 2 percent to €10 million; and the Manage business unit, which is being restructured, saw essentially flat revenue at €2.7 million. Nemetschek also gave interesting guidance for the remainder of 2012, saying it has experienced “a marginal weakening of the business climate in some foreign markets and in project business” but not in Germany, where construction industry forecases show accelerating growth. In an event, Nemetschek confirmed its forecasts for the current fiscal year.

One last, completely unrelated note: this freaky snowstorm managed to postpone Halloween -- now to be celebrated on Wednesday!

Hexagon: strong Q3, ‘cooling’ China

Thu, 27 Oct 2011 11:06:52 -0400

Hexagon reported a solid third quarter 2011, with total revenue of €521 million, up a whopping 55% as reported and up 13% excluding acquisitions and foreign exchange effect -- meaning Intergraph and other recent acquisitions accounted for about €150 million in revenue for the quarter.

CEO Ola Rollén said that organic growth was driven by a recovery in Western markets and strong demand across the manufacturing sectors served by the company’s measurement technologies. Revenue performance by Intergraph’s two divisions was decidedly mixed, as PP&M reported “double digit” growth over a very strong third quarter 2010, while SG&I saw “negative growth” in Q3 2011 but strong order intake. According to Mr. Rollén, “this [order intake] should feed into revenue growth as projects are completed and can be invoiced. We are fairly happy with the situation.”

Hexagon gave quite a bit of information on how its various customer segments performed in Q3:
• Problems continue with China’s plans for a network of high-speed rail lines and the halt in further construction has affected Hexagon’s revenue. Excluding high-speed rail revenue from both the current and year-ago quarters, the Geosystems business grew 6%.
• Surveying, which makes up 24% of the company’s revenue, saw a revenue decline due to the rail project and a general slowdown in construction in China. Surveying in general is “still not very strong but growing in mature markets; South America, Middle East/Africa and Asia are growing at above long-term trend lines.”
• Power and energy (18% of total revenue) reported very strong growth in all regions except North America, which was dragged down by sluggish performance in the US while “Canada performed quite well”.
• Aerospace and defense (13% of total revenue) saw good activity from all regions.
• Public safety & security (11%) had weak quarter in invoicing but strong order intake. Negative growth in western Europe, weak performance in North America but strong performance from South America.
• Construction (10%) is still sluggish in mature markets; while South America saw “significant growth”. Mr. Rollén sees a “cool down” in China, and the rest of Asia.
• Automotive (9%) is growing substantially for Hexagon, as Mr. Rollén sees “virtually all auto manufacturers investing in new plant and equipment for new models being introduced”.
• Manufacturing (7% of revenue) performed well in all areas but China, where the company sees a general slowdown due, in part, to government economic policies

Summarizing the overall geographic performance, Western Europe, the Middle East and Africa are “strong”; the only real problem the company sees right now is a general slowdown in China. Performance in the Americas was stronger than expected in Q3, and accelerated from Q2. Mr. Rollén said that Geosystems in general did not show impressive growth but that laser scanning and new technologies such as mobile mapping were growing significantly in North America. Too, he noted that a recovery in defense-related markets such as unmanned aerial vehicles presents a good opportunity for Hexagon. South America continues to grow at double-digit for all segments and was “probably the strongest region in the quarter”.

Mr. Rollén also gave the first glimpse into the commercial possibilities presented by combining Hexagon’s traditional metrology offering with Intergraph’s public safety solutions. “La Grande Frana di Ancona”, in Ancona, Italy is a monitoring system to predict landslides that uses Leica sensors tied to Intergraph’s GIS database to provide early warning of disasters. The company sees the opportunity for this type of solution as “huge”.

Of course, investors are giddy because of the bottom line results: third-quarter pretax profit was up 58% to €84 million, just 1% lower than market consensus. Net income grew 45% to €6 million in Q3 and 56% to €212 million in the first nine months of the year.

Not much was said about Intergraph PP&M, other than that the division posted “strong double digit growth” in Q3 2011. That’s impressive, since revenue was up 23% in Q3 2010 to nearly $94 million. I’ve asked for more details and will update if anything new comes to light.

MuM starts earnings with a bang

Mon, 24 Oct 2011 08:52:42 -0400

It’s going to be a busy week, with earnings news coming from Mensch und Maschine (MuM), PTC, Dassault Systemes, Hexagon and Nemetschek. Let’s get right to it, with good news from MuM.

You probably recall that MuM is reinventing itself, buying up VARs and selling its distribution business in order to increase the value it provides to clients and build up a more profitable services-oriented business. One risk in so much change, of course, is that management takes its eye off the routine business of serving customers but MuM’s results appear to indicate that this is not the case.

Total revenue in Q3 was €47 million, up 4% over a year ago; for the first nine months, revenue was €155 million, an increase of 9%. For the first nine months of the year, MuM’s software segment reported revenue of €21 million in Q3, up 17% over last year; the distribution segment (still included for this quarter since the sale to Tech Data won’t close until the end of October, assuming regulatory approval) reported revenue of €85 million, up 2% while the VAR business was up 19% to €49 million.

MuM says that it accounts for about 7% of the overall CAD/CAM market in Europe, and about 20% to 25% of Autodesk’s sales there through both the distribution and VAR channels. MuM is an Autodesk Platinum Partner, one of only four in all of Europe. The company says that this gives it better dealer discounts and closer cooperation for major accounts.

Clearly, the sale of the distribution business will cause total reported revenue to decline starting in Q4. The company now forecasts revenue of around €180 million for 2011, and expects to return to 2010’s level of €200 million in revenue in 2014.

The point of the whole transition at MuM has been to focus on higher margin businesses, software and VAR. MuM believes that gross margins, which were 25% in 2008, will double to about 50% “as early as 2012”.

CEO Adi Drossler characterized the business environment in Q3 as “quite orderly, in spite of all the negative comments around on economic development”. He continued, “[W]e still are expecting a strong closing quarter, the business in the continued segments Software and VAR D/A/CH should come in as targeted.”

A side note: the positive comments on the business environment in Europe bodes well for Autodesk, which is still in its third quarter and won’t announce results for another month.

MSC’s customer focus pays off

Fri, 14 Oct 2011 16:12:03 -0400

The tagline for the MSC Software user conference last week was “MSC Reloaded” -- and, in many ways, that appeared to be the case. I didn’t think to ask, but if the analogy of “aim --> fire --> reload --> fire” is being made, MSC is very nearly ready to “fire”. Lots of new employees, new energy, revitalized products, contented customers ... It was a solid showing by a company that, according to CEO Dominic Gallello, is still a “work in progress” but has turned the corner to a healthy position financially and is again looking outward for new opportunities.

Mr. Gallello and SVP, David Yuen started the conference by providing a few statistics about the “new” MSC:

• MSC’s surveys show that 96% of customers are “happy to delighted” with MSC, a rather startling number given the turmoil the company has seen over the last few years. Customers are clearly responding to the product release schedule (random before, now twice a year, about to be every 9 months), repackaging (combining the MD and MSC flavors of products such as Nastran) and the company’s customer-driven focus.

• “Customer-driven” came up a lot, especially when talking about future directions for the company’s products and policies. Mr. Gallello was very clear on this: MSC is focusing on bringing its current products up to par, modernizing user interfaces and creating an analysis framework to enable customers to simulate real-world behaviors.

• Mr. Yuen told the audience that maintenance renewal rates are now over 95% globally and over 99% in the Americas -- also surprisingly high given the recent past, but a clear indicator of customers’ approval of the direction forward.

• The company says it is winning in the marketplace, signing over 295 new clients in the last 12 months.

• Mr. Gallello said that he is focusing on adding R&D resources; in a hard-to-read chart it appeared that R&D added 100 people mostly PhD hires. R&D is working with customers on new methods and techniques as MSC builds “deep expertise”.

In a very nice moment during the keynote session, a video was played of Mr. Gallello interviewing MSC founder Dick MacNeil. Mr. McNeil is now 88 and quite opinionated -- hates the latest MSC logo, likes the fact that MSC is profiled as one of the “original 10 software companies”, worked on linear FEA because non-linear was “too hard” -- and made a great segue to Mr. Gallello’s introduction of the “new” MSC. The audience seemed happy with what they heard: When Mr. Gallello asked whether they liked the changes he outlined, the gentleman behind me emphatically shouted 'yes' (it was early; most others murmured or clapped).

In meetings with Mr. Gallello and his team, a few other highlights emerged. The company is growing revenue and cash flow, enabling it to invest in both product development and acquisitions. Growth is strongest in the roaring economies of China, India, Brazil and Russia, and in the company’s traditional auto/aero base but 40% of revenue now comes from other industries.

As those who read this blog know, I love user conferences. Love hearing how people use technology, the problems they are trying to solve, what they need and expect from their suppliers --- all of it. MSC’s event was filled with terrific presentations that proved, once again, how complicated our world is. Three things I didn’t know:

• Boeing says that ratio of designer:analyst has gone from 5:1 to 1:1 over the last 25 years because advances in materials have lead to significantly more complex design processes. (Yes, more analysts per designer). The drive to reduce weight, lower fuel burn and improve maintenance/repair/disposal have led the development cycle to go from 5 years for the 767 to 7 years for the 787 -- unacceptable when the market wants shorter cycles to take advantage of innovations.

• Litens pointed out that even in technologically advanced companies, simulation is still usually validated by test -- it seems to me that every company still struggles with this, even as MSC gets ready to celebrate its 50th birthday.

• According to Lockheed, the Orion craft that will eventually replace the Space Shuttle will have 13 million lines of code. Simulating software-in-the-loop, across lifecycle of the asset, is clearly no longer an option.

MSC’s presentations included lots of demos of the nice new UI for Adams, added capabilities in Marc, nifty Simulation Generation (part of SimManager, developed with BMW) and much more. Look for a release before the end of the year for many of the company’s products.

I was also at the last MSC user conference in Phoenix in 2009. That was a time of transition, when the path forward was anything but clear. This time, all signals were positive: customers are excited about trying out the coming releases, already thinking through how to use product X to solve a particular problem. That’s what a good user conference does: it takes people out of their normal environment and lets them explore new ways of solving thorny problems back at the office. MSC’s focus has shifted back to customers and their engineering challenges -- and that’s a very good thing.

Note: MSC Software graciously covered expenses and registration for the event but did not in any way influence the content of this post.

AVEVA hints at good start to F2012

Fri, 14 Oct 2011 08:16:17 -0400

AVEVA today hinted at results for the six months ending September 30 and announced that full details will be published on November 15. As expected, performance was strongest in Latin America, South Korea and Central and Eastern Europe, especially in oil and gas. Demand appears to have been strong in China, but the company’s change in business structure there affected revenue reported in this period.

Investors seem happy with the news, sending the share price up slightly on the London Stock Exchange, even though the company signaled that profits would take a hit due to the product line reorganization announced earlier this year. In its press release, AVEVA said that “Enterprise Solutions ... revenue [is] substantially ahead of the same period last year. As planned, the cost base for the Enterprise Solutions division has increased as a result of the annualised effect of the investment made in 2010/11 together with the additional investments this year facilitating our revenue growth.” In other words, revenue is up but expenses are up, too.

The company provided a peek into the results for the six months ended September 30, 2010 that break down revenue as if Engineering & Design and Enterprise Solutions had been separate lines of business. For that six month period, Engineering & Design dominated the revenue picture, reporting £71.5 million of AVEVA’s total £78.5 million. As one would expect for a new product in its ramp-up phase, the Enterprise business posted an operating loss of £3.75 million. Many selling and operating expenses were shared, so this isn’t an exact picture of the new business line’s performance, but it will be interesting to see how “substantially ahead” the Enterprise business is this year and how it has developed in the year since this data.

AVEVA’s revenue is typically weighted towards the second half of its year (October - March) and the company expects that to be true again this year.

AVEVA will be announcing interim results on November 15, 2011.

DS strengthens composites sim

Tue, 4 Oct 2011 16:52:04 -0400

Dassault Systèmes today announced that is has acquired Simulayt Limited, a provider of composites and advanced draping simulation technology. We all know composites are where it’s at in terms of reducing weight while meeting performance requirements, so this acquisition makes a great addition to DS’ offering for the aero, auto and other industries.

Simulayt’s has been a part of DS’ partner ecosystems for years. The company was founded in 2004 to commercialize a product called “Layup Technology”, which is used for advanced fiber simulation and ply modeling capabilities. Layup Technology was first developed by Dr. J. W. Klintworth in 1991 for the aerospace composites industry but also found resonance with Formula 1 racing teams. Simulayt's products include Advanced Fiber Modeler for CATIA V5, Composites Link for CATIA V5, Composites Modeler for Abaqus/CAE, Composites Modeler for SolidWorks and Composites Modeler for Femap. Layup Technology is also licensed for use in MSC Software's Patran Laminate Modeler and Anaglyph Limited's Laminate Tools. No mention was made in DS’ press release about whether non-DS partnerships would be affected by the acquisition.

Simulayt CEO John Klintworth said in a press release, “I am very excited to actively contribute to Dassault Systèmes’ leadership in this market,and to focus my efforts on further advancing the next-generation PLM design to simulation to manufacturing composites solutions.” DS, for its part, seems ecstatic that Mr. Klintworth will be joining DS, writing (without attribution), “John Klintworth’s extensive network and wide recognition in the global composites community will be instrumental in reinforcing Dassault Systèmes thought leadership and targeted partnerships.”

Dominique Florack, Senior Executive Vice President, Products, R&D, Dassault Systèmes added: “Simulayt’s strong technical expertise is widely recognized and its manufacturability simulation technology is systematically winning in all benchmarks. The ability to further integrate this technology within our Version 6 platform is critical in addressing the composites materials and processes of tomorrow, with lifelike modeling and product/production simulation experiences.”

The DS press release doesn’t include any data, such as the price paid or how many employees are involved, but I believe Simulayt to be a very small company.

This is clearly a technology tuck-in for DS which wants to bolster its offering for its key markets, auto and aero, and address new areas in consumer products, marine and other industries.

Vero acquires Edgecam

Mon, 3 Oct 2011 12:43:33 -0400

Vero Software, the UK-based provider of CAD/CAM and CAE solutions for the tooling industry, today announced that it is merging with Planit Holdings, a developer of CAD/CAM software for the production engineering, sheet metal, metal fabrication and woodworking sectors whose brands include Edgecam, Alphacam, Cabinet Vision, CabnetWare, Javelin and Radan.

Vero cites CIMdata research to say that this combination creates “the world’s leading CAM specialist, and third largest CADCAM vendor - only behind Dassault Systèmes and Siemens PLM”. Since my research doesn’t focus on CAM, I can’t comment on this other than to say that it is not surprising that niche vendors find that they must combine in order to succeed against the reach of a broad supplier like DS or Siemens.

The CEO of Vero, Richard Smith, said in a press release that this newly expanded offering will accelerate the company’s growth. “With greater critical mass we will be able to continue to provide excellent service and support to both existing and new customers. We fully recognize the importance of product branding and customer loyalty, and therefore, it is important to emphasize that we will continue to invest in all of the products. We will move forward together with the expertise, knowledge and resources necessary to deliver even higher levels of productivity to our customers."

The deal was financed by Battery Ventures, a Boston-based private equity firm with $4 billion under management. Planit had been owned by August Equity, a London-based private equity investment firm with approximately £300 million of capital under management. Financial details of the merger were not disclosed, though it is interesting to note the global nature of the deal.

AVEVA acquires Z+F UK

Mon, 3 Oct 2011 08:04:42 -0400

AVEVA today announced the acquisition of Z+F UK Limited, maker of the LFM software suite of 3D laser scanning software packages. AVEVA and Z+F UK have been partners for years, releasing increasingly sophisticated tools to integrate the output from laser scanning with AVEVA’s 3D CAD models. With this acquisition, AVEVA will be able to achieve tighter integration between laser point clouds and AVEVA Laser Modeler, addressing the needs of plant construction and refit projects.

Laser scanning is a technique used to measure the current state of plants and other large objects by using LIDAR (Light Detection And Ranging) to detect how far objects are from the laser source. Scanners aim a laser at the object and measure the time to a reflected signal, which yields the distance from the scanner to the object. A scanner can capture around a million points per second and creates an enormous point cloud that represents the objects in its path. But the cloud, in raw form, is only so useful; it contains noise, must be aligned to account for the earth’s curvature (in case of rally large plants or pipelines) and so on. The LFM software suite includes 5 products that clean up the data make it more useful. LFM enables users to import point clouds from many laser scanning devices, process the raw data to knit together individual scans, view the scan data from on the job site, produce 3D CAD models and export intelligent 3D models to CAD packages such as AVEVA’s PDMS.

Z+F UK was the software arm of parent company Zoller + Fröhlich GmbH, a leader in non-contact laser scanning devices. Under the agreement with AVEVA, Z+F GmbH has been granted a license to continue to distribute LFM software together with Z+F GmbH's hardware products. The initial license was granted free of royalty up to the value of the first £1m of royalties over the next five years.

AVEVA CEO Richard Longdon said, "We’re quite delighted with this acquisition. We had been watching the laser scanning space for a while and liked L+Z’s innovation and neutrality. They were one of the first to enter the market back in the 1990s and have built a set of tools that add value to laser data captured from any hardware vendor, used by many software vendors. We are keen to maintain this neutrality and all partners who currently work with Z+F UK can continue to do so.”

Mr. Longdon says that AVEVA’s salesforce will be able to broaden the reach of the LFM brand and that, while small in terms of the cash spent, the acquisition is strategically important because it “brings under AVEVA's control a core technology that supports products that will offer substantial efficiencies and cost savings over currently available technology". The company will showcase the combined offering at SPAR Europe and at the AVEVA World Summits user conferences in October and November.

AVEVA is acquiring Z+F UK for a net consideration of £6.3 million in cash. The acquisition is expected to close on October 7, 2011.

RAND focuses on profit

Thu, 29 Sep 2011 08:24:20 -0400

Rand Worldwide yesterday reported fiscal 2011 revenue of $89.2 million and net income of $1.8 million. Since this is the first year of reporting after the reverse merger of Rand and Avatech, along with a change in the fiscal year-end, it is difficult to draw comparisons to prior years -- but the company is pleased, saying the total exceeded their internal targets. CEO Marc Dulude characterized fiscal 2011 as a “great year for Rand Worldwide ... we [continue to] add new customers in both our traditional markets as well as beyond.”

For the fourth fiscal quarter, ended June 30, Rand reported revenue of $23.3 million. Again, year over year comparisons are tricky, but we do know that the company reported revenue of $27.4 million in total revenue for the quarter ended March 31. The company says this sequential decline is typical of its historical seasonal weakness in the summer quarter.

In FQ4, 2011, revenue from product sales was $13 million, down from $16 million in FQ3; revenue from services was $5.3 million, down slightly from $5.4 million and commission revenue of $4.8 million was down sharply from $5.6 million in FQ3.

On a geographic basis, FQ4 revenue was predominantly from North America (over $29 million), but the company says that revenue from its Singapore/Malaysia and Australia operations is growing much more rapidly than from North America.

The company had noted during its June earnings call that it was starting to see weakening in its Imaginit (Autodesk resale) business, especially across the AEC and manufacturing verticals. Mr. Dulude explained that the company looks at what it calls its “transactional” business, in which deals are typically closed within 7 days of a customer contacting Rand regarding purchasing a particular product. This part of Rand’s business dropped slightly over the summer, which they believe precedes weakening in the non-transactional parts of the business. Indeed, the company reports closing fewer big deals over summer than they had expected.

One other interesting note: Rand sells training and other services to Dassault Systèmes and PTC customers (even though it does not resell PTC or DS products). Rand specializes in customizing training courses for these clients as they increasingly look for comprehensive training programs that are tailored to their work processes. This business is doing very well, and Rand is expanding its team in response to this demand.

Finally, the “beyond” that the company referred to in its remarks has to do with its new offering for digital data archiving, RAND Secure Archive, developed in partnership with Autonomy. Rand sees the archiving space as a “multiple billions of dollar market with >25% CAGR” and feels that the engineering community is underserved in this respect. The company would only say that its archiving-related business is small at this point, but has great potential.

The transitional year of the merger is now behind it and Rand really focus on growing its business. Mr. Dulude’s says that the company’s strategy is to build on the core design/engineering business while continuing to look for strategic relationships -- no real change from the pre-Avatech days, except that the company now has expanded resources available to make this all happen. The September quarter (which ends this week) will finally show where and how the combined companies are succeeding -- and the company’s optimism gave clear hints that things are looking positive.

Acquisition mania

Tue, 27 Sep 2011 11:51:00 -0400

I've been working on a mid-year update of my market numbers for CAE (which show better than expected growth to date in 2011) and am stunned by the rapid pace of acquisitions we've seen this year. It's one thing to note them as they happen, but when you line them all up and try to assess their impact, the full magnitude becomes visible. Most years see a deal or two but we’ve had at least 6 outright acquisitions in the CAE space --Altair acquired Acusim; Autodesk, Blue RIdge Numerics; MSC Software, FFT; ANSYS, Apache; ESI, IC.IDO; SGI, OpenCFD-- and at least one majority investment, as LMS acquired 60% of SAMTECH.

(This list doesn't even include the bigger PLM picture, where Siemens acquired Active SA; PTC, 4CS and MKS; SAP, Right Hemisphere; Trimble, Tekla; Bentley, SACS; Dassault Systèmes, Intercim; Autodesk, Instructables and others .... I’m sure I’ve missed some, but you get the idea: lots of deals.)

It's been a busy year. And we're not even 3/4 of the way through it.

One or two acquisitions show that companies are trying to fill gaps in their offering, expand into new markets or geographies, or in some other way address specific problems. But the engineering software domain has seen such a rapid pace with these deals that it's worth reexamining the bigger implications for vendors and users.

The economic downturn clearly plays a part in precipitating the consolidation. Smaller companies may not have the cash flow or access to credit necessary to withstand a longterm delay in new orders or renewals by key customers, and may suffer disproportionately from license model decisions made in better economic times. As I written about before, new software companies often start with a perpetual/maintenance revenue model since that yields larger larger influxes of cash at the outset but then a smaller maintenance revenue stream ever after. Those that started out with a lease model may have been better suited to making it through the downturn because of a more modest but steadier cash flow, but even they were vulnerable if enough customers pulled the plug.

Cash flow aside, running a software business nowadays is not easy. The pace of tech evolution has sped up to the point where most companies have to partner to survive -- they can concentrate on their core technology (a solver or post-processor, for example) while someone else worries about cloud computing, HPC, various tablets, security ... all important to the ultimate buyer but having nothing whatsoever to do with the problem that the inventor originally set out to address.

Finally, the big CAE companies are constantly looking at make vs. buy. Is it better/cheaper/faster to expand the current offering themselves or to integrate a third party offering into the existing line-up? If it’s a third party, is a partnership or acquisition mode desirable? Only one vendor (that I'm aware of) made a "make" bet on a new technology area and is willing to take the time and resources to bring to the market a new product that they believe will beat what is commercially available now, and what was available to them as an acquisition. Most of their competitors are acquiring or partnering to expand their reach.

Why are companies even looking at expanding? Because they have to. ANSYS has to keep delivering growth to Wall Street or its share price will go down. MSC Software is reinventing itself and needs to show growth and movement in its target verticals, so FFT made sense. Altair wants to expand its multiphysics capabilities and saw Acusolve as a key part of that puzzle. And Autodesk wants to be taken seriously as a provider of engineering and design tools to major enterprises -- and these customers need CAE.

But acquisitions are risky for the companies involved and many don't live up to their expectations -- the products don't ever really integrate or interoperate, the company cultures are so different that key people depart, or the acquirer changes some key aspect that alienates formerly loyal customers. The first few years after an acquisition are critical because that’s when the cracks would appear, if they are going to.

Consolidation also typically means that consumers have fewer choices, if not in the number of products then in the number of vendors from which to buy. If this creates pricing pressures and enough large companies complain, there could be regulatory action. But that's rare. It's more likely that the product pricing models will be aligned with those of the acquirer, which could be good or bad depending upon each situation. Too, many buyers prefer to work with a smaller number of vendors (bigger deals, better pricing, less paperwork), so this may be to their advantage.

The best news in all of this: consolidation creates a clear path for inventors and entrepreneurs. Got an idea? Go for it! You stand a decent chance of being acquired if your product is good enough. Even with all of this consolidation, my list of independent CAE suppliers keeps expanding (over 200 now), so there is lots of innovation still driving this market.

News you may have missed, 16 Sep

Fri, 16 Sep 2011 07:03:34 -0400

The industry’s acquisition binge continues, with news of a new deal just about every week:

Bentley invests in TEEC
Bentley Systems announced yesterday that the company has taken a minority equity stake in The Engineering Essentials Company (TEEC) and placed a person on its board. TEEC’s SpecWave product enables AEC companies to manage the massive amounts of information related to codes, standards, and engineering specifications that are required for just about every project today. A project’s spec writer or master (yes,that’s a job function) typically takes a specification through preparation, approval, and publishing; the spec is then used and augmented through a project’s duration. If the spec isn’t carefully managed and controlled, standards or industry standards may not be met and the project fails inspection. Bentley’s announcement didn’t say what TEEC intended to do with the invested capital, but the press release did hint at job openings. Bentley often invests in companies that it later acquires.

PTC acquires 4CS
Last week, PTC announced that it had purchased 4CS, developer of the iWarranty, iSupport and other warranty management and service lifecycle management products. According to PTC, 4CS’s approach ”leverages a product-centric data model to capture service history and product updates in the form of an "as-maintained" bill of material (BOM).“ From my perspective, iWarranty take a manufacturer through the entire warranty process, from accepting a client claim to processing the claim through systems that involve creating a return authorization, providing a refund or new product, assembling quality data -- and tying all of this into the relevant ERP, SCM or CRM systems [I have to presume that PLM is implied in that list]. 4CS was privately-held and terms of the deal were not disclosed but PTC did say that the acquisition is expected to be neutral to its financial results in fiscal 2011 and 2012. It is likely that we will find out more during the company’s next earnings call.

SAP brings Right Hemisphere closer
FInally, SAP acquired Right Hemisphere, a business partner since 2008. Right Hemisphere’s design visualization tools are based around its Deep Server, which serves product information from multiple data sources to downstream users who use client applications Deep Exploration and Deep View for authoring, publishing and viewing. SAP said the acquisition is “consistent with SAP’s strategy to complement existing applications and solutions with innovative technologies and capabilities while maintaining its successful track record of organic growth” and believes the acquisition will lead to “[n]ew solutions [that will] increase the speed of decision-making across all lines of business.” SAP has been trying to craft a PLM solution for its legions of manufacturing customers with little success so far; Right Hemisphere’s products are solid but are unlikely, by themselves, to bring manufacturers back to SAP for PLM. it will be interesting to see if and how this acquisition reinvigorates SAP’s overall PLM efforts -- and exactly how the combination of SAP+Right Hemisphere will, in the words of Michael Lynch, CEO, Right Hemisphere, “change the way businesses of any size create, manage and deliver products and services across their enterprise and their supply chain.”

---

The last few months have seen acquisitions by ANSYS, Autodesk, 3D Systems, ESI, MSC, PTC, SAP and SGI. Most have been small, strategic technology acquisitions and likely point to the difficulties of doing business as a small player in a tough selling environment. However, this consolidation also means that the big get bigger and more diversified in their offerings. How will this diversification affect their core business areas? Will these combination follow the pattern Harvard found, and ultimately negatively impact the overall business’s ability to serve customers? On the upside, these smaller technology offerings are now being brought to a far wider market and could have real impact. Only time will tell.

ESI: CAE Virtual Reality

Thu, 15 Sep 2011 16:27:32 -0400

ESI Group reported today that revenue for the second quarter was up 11% to €19 million, on license revenue growth of 12%. CEO Alain de Rouvray said, “The second quarter saw an acceleration in the growth of our activity, particularly in Europe. Over the first half, the rate of repeat business for licenses remained at a high level and new business improved significantly... Despite the turmoil that can be expected in the current economic context, the Group’s prospects remain very positive.”

The details:
• License revenue was €13 million in Q2, up 12% as reported and up 15% at constant currency.
• ESI said that new business (a mix of new products and new clients) recorded a significant increase, up 28% to €3.5 million, with Europe seeing disproportionally high growth, albeit off a very small comparable.
• Services revenue was up 8% to €6 million, led by Asia, which was up 51%.
• For the first two quarters of the year, revenue from Europe was up 16%; performance “improved” in Asia, while the Americas were affected by the “postponement of some business as companies globally aligned license renewal dates”. Revenue from Europe was €13.5 million; Asia, €16 million; and the Americas, €7 million, in the first half.
• By vertical, the company characterized performance as “exceptional” in the aeronautical (up 43% over last year), energy (up 29%) and education (up 42%) sectors.

ESI has also made a number of other announcements recently that deserve mention. In August, the company signed a five-year agreement with BIAM, the Beijing Institute of Aeronautical Materials of AVIC (Aviation Industry Corporation of China) for “close scientific collaboration in innovative and complementary technologies... to create a future joint research activity for the digital technology of aeronautical materials.” This is a big deal -- all of the PLM and CAE vendors would love closer ties to AVIC and the giant aerospace market it represents in China and greater Asia. All hope that these agreements to work together to create future engagements really mean “large deployments in the not-too-distant future”.

Later in August, ESI announced the acquisition of IC.IDO, a vendor of immersive virtual reality solutions. IC.IDO (“I see I do”) sells The Visual Decision Platform, an immersive environment, to companies that design and manufacturing very complex products. They use IC.IDO’s products (IDO:Explore, IDO:Packaging and so on) to present, manipulate and exchange product information, enabling participants to experience the product from all angles, and try various what-if scenarios. Financial details were not disclosed but ESI did say that IC.IDO had sales of “around €4.6 million” in 2010, with a double-digit growth rate. At the time of the acquisition, Vincent Chaillou, President and COO of ESI, said, "This high performance 3D visualization technology is key for our customers to bridge the gap between the virtual and physical prototyping worlds because it combines a remarkably intuitive and robust immersive user interface with unique real-time physics simulation." ESI intends to build on the acquisition by enhancing the virtual prototyping visualization capabilities of its other products and solutions and to quickly grow revenue by making IC.IDO’s products available around the world -- far beyond IC.IDO’s own reach.

I am very interested to see how ESI integrates virtual reality with CAE -- will one, for example, be able to get inside a PAM-CRASH crash simulation, pull apart components to examine crumple zones and perhaps try out alternative configurations for the structural components? A very interesting idea.

MuM sells distribution business

Tue, 13 Sep 2011 16:30:56 -0400

Mensch und Maschine Software (MuM) just announced that it had sold off its software distribution business to the Tech Data Group for around €25 million, about 2/3 of which which will be paid in at closing and the other 1/3 to be paid out depending on business performance over the next three years.

As a quick reminder, MuM has been transitioning its business from distribution to value-added sales because VAR sales typically have higher margins and establish stronger relationships with customers. MuM has been acquiring European VARs to broaden its network and areas of expertise and last reported that it has 40 locations in Germany, Austria and Switzerland, giving it “nearly full area coverage” with its VAR business.

Under the agreement with Tech Data, MuM will retain its subsidiaries in France, Italy, UK, Belgium, Poland and Romania. These will “serve as the base for building up the VAR business, which will be partly supplemented by acquisition of former reselling partners in the German speaking countries.” This new segment will be called “VAR Europe”; MuM expects it to have sales of €30 million to €40 million in 2012.

MuM CEO Adi Drotleff said in a prepared statement that “the sale of our distribution activities and [the] rolling out the VAR business to Europe, we are rigorously transitioning our business model towards higher value and margins... The particular beauty of exiting from distribution first is that, other than in the German speaking countries, we do not expect negative operating margins during transition to the VAR business, as we can support the business during that phase from the purchase price rates until it achieves the target margin from its own activities. Thus the new segment will provide a positive EBITDA contribution from the beginning.”

MuM’s investors appear lukewarm to the idea, with the share price essentially flat today. The deal is dependent on various conditions including antitrust consent, which is expected by the end of October.

This is clearly a good thing for MuM, enabling it to build out the higher margin VAR business and creep ever further away from a world where we increasingly buy software in app stores, online. I’m not sure what it means for customers who currently rely on MuM as a distributor -- perhaps they are indifferent to whose label is on the box?

Siemens PLM, Boston, Rain

Mon, 12 Sep 2011 13:38:19 -0400

Last week I got to spend several days with the Siemens PLM team at their annual analyst event. Rain poured down outside as the remnants of another hurricane washed by but we were toasty dry inside, taking in over 20 hours of presentations, demos and meetings. I know I can’t do the whole event justice, but here is what I found most compelling:

The business is doing quite well -- I think. Siemens PLM is part of a very large public company and is constrained in what it can make public about its financials. Chairman and CEO Tony Affuso said that Siemens PLM has seen six quarters of “steady” growth, with license growth in the “strong double digits: 50%, 25%” and that 3,000 new customers were added in the last 12 months -- leading to a total of 70,000 with 7.2 million seats deployed. Paul Vogel, EVP of Global Sales and Service, gave a number of data points to show that 2011 has so far been a good year: by geo, sales in the Americas are up 12% (US, up 11%); EMEA up, 23% and revenue from AP is up 31%, excluding Japan (no word on the total if Japan is included -- but one could guess that it’s less impressive). By vertical, the year-to-date data shows growth in auto, aerospace & defense and CPG of between 8% and 9%; fashion, energy and technology of 11% to 12%; and machinery of nearly 20%. Shipbuilding, on a very small base, is up nearly 80%. According to the company, Siemens PLM “outperformed everyone with the strongest organic license growth” in 2008, 2009 and 2011 YTD (yielding 2010 to PTC). I’m still working on my model, but it looks as though the arrows are pointing upwards.

The channel strategy is solidifying. (Pun intended.) Mr. Vogel also shared data about the company’s channel strategy, saying that its named accounts team, some 5000 feet on the street that belong to Siemens PLM and its partners, has seen 37% year/year revenue growth and accounts for roughly 50% of revenue. The midmarket represents the other 50% of revenue and includes 220 new partners since 2008, yielding over $50 million in license revenue. Like Autodesk, Siemens PLM uses a pyramid model (although without the visual) to describe the opportunity: 5,000 accounts at the named level, 15,000 in territory sales at the midmarket and another 25,000 in channel sales to the midmarket. Siemens PLM does not, at this time, appear to be addressing the consumer market. Mr. Affuso characterized the outlook for 2012 as “strong” and “robust”.

Where is the growth coming from? Siemens doesn’t talk about many of its deals but did say that it is winning technical benchmarks across the board and believes its collaboration tools are the best on the market, that it is regularly displacing competitors (always a contentious claim, since vendors rarely 100% displaces all others), and that it is executing more effectively. It would appear that some of the growth is coming from untapped markets like Brazil and shipbuilding, and from increased marketing of Velocity/Solid Edge -- but the majority of the growth seems to be coming from churn as the major PLM vendors vie for a relatively small number of named accounts.

A new org to focus on growth. Siemens PLM President Chuck Grindstaff gave a whirlwind tour through his vision of the PLM word and how Siemens PLM will drive it. He unveiled a new organization structure that, he said, “will sharpen our focus on the industries we serve with new business segments that clarify ownership of decisions within our business.” Mr. Grindstaff’s new organization creates business segment leaders (Jim Rusk/Product Engineering Software, Karsten Newbury/Mainstrean Engineering Software, Zvi Feuer/Manufacturing Engineering Software, Eric Sterling/Lifecycle Collaboration Software and Kevin Eustace/Product-driven Services) that have profit and loss responsibilities and draw upon sales, service, development and operations resources in a “simplified and lean structure” that will “work hand in hand with our industry organization”. Establishing P&L responsibility is a proven way of focusing people’s minds on growth but can also be divisive as groups jockey for limited resources; it’s an interesting shakeup and one that the Siemens PLM staff at the analyst event seemed to find exciting. This new structure would also appear to enable Siemens PLM to more readily absorb acquisitions; it hasn’t been on a spending spree like PTC and Dassault Systemes. This new structure and the (apparent) financial success seem to position the company to start looking outwards, at opportunities that may not have been possible a few years ago. Perhaps an industry-specific acquisition is in the cards ...

The focus on CAE is strong -- although it’s often not that visible in the complexity that is Siemens overall offering. Synchronous Technology lets people (experts and casual users alike) tweak models for analysis and some of the advances in multi-discipline simulation certainly deserve more time than they got on the program -- and I’ll be taking a closer look.

Presidents blog, too. Mr. Grindstaff was putting the finishing touches on his first ever blog entry using his smartphone during the event’s opening cocktail party. [Such a dedicated guy.] Check it out here, as well as links to other content from Siemens about the event.

We were also treated to excellent customer presentations showcasing large and small companies using Siemens PLM technology to “make better decisions” (the theme of the event). In all cases, the problems were multidisciplinary and required collaboration by a broad cross-section of stakeholders. The key takeaways: customers rely on Siemens PLM software to accelerate product development -- move faster but with fewer errors, create collaborative structures within their enterprises, improve sustainability by consolidating information for tradeoff studies and, oh yes, enable them to design, engineer, evaluate and manufacture higher quality products.

One of the concepts Mr. Grindstaff introduced was “future proofing”, the idea that Siemens PLM needs to anticipate future developments, take action to minimize any negative consequences and also to seize opportunities that these changes might present. His comments focused on IT infrastructure but I think he was also taking a much broader view, looking at work processes, long-term needs and business issues. It would appear that Siemens PLM has begun future proofing itself, taking the first steps to a more growth-oriented market approach. I’m looking forward to the strategic initiatives that come out of the new org structure. And maybe an acquisition or two.

Note: Siemens PLM provided lodging but did not in any way influence the content of this post.

MSC acquires FFT, Actran

Tue, 6 Sep 2011 08:30:12 -0400

MSC Software today announced that it has acquired the Belgian company Free Field Technologies (FFT), a provider of acoustics and NVH simulation software for the automotive, aerospace and other industries. MSC’s press release says that “bringing FFT together with MSC’s existing NVH solutions family in MSC Nastran, positions MSC as a powerhouse to deliver robust acoustics and NVH solutions to customers worldwide.”

Dominic Gallello, MSC CEO, said laid out the rationale for the acquisition: “Passenger comfort and increasing noise regulations are driving a rapid increase in the need for acoustic simulation technology in the automotive and aerospace and other industries. Further, perfecting customer-pleasing sound is simply a must in consumer products. FFT is the best in the world at satisfying both of these needs and we are excited to bring these technologies to the MSC global user base and beyond. We are delighted to have such a talented team join MSC.”

FFT was founded in 1998 by Jean-Pierre Coyette and Jean-Louis Migeot and today operates three areas of business: developing the Actran software suite; providing services such as training, engineering consulting, methods development and CAE process automation; and research in acoustic CAE and related fields. Nearly half of its staff of 39 is dedicated to engineering services.

FFT will be a wholly-owned subsidiary of MSC that will continue to operate from its Belgian, French, US, and Japanese offices, with sales, support, and R&D departments remaining unchanged. FFT says that “new product integration roadmaps will bring FFT technology together with MSC’s structural analysis solutions in order to deliver a comprehensive acoustics and NVH simulation platform. Our integration within the MSC group will help us provide a larger customer base with our constantly enhanced acoustic CAE solutions and offer related services in more regions.”

John Janevic, MSC’s Vice President, Strategic Operations, tells me that FFT’s founders have joined MSC and that the FFT team is “completely intact”. He also provided a bit more detail on why the acquisition happened now, given the long partnering history between MSC and FFT: “It was great timing. They have been growing very nicely, they are an “easy” acquisition because of the affinity between Actran and Nastran, and had reached the point where they would have needed to scale up a sales organization to sustain their growth. They have also completely rebuilt their product line from the ground up over the last few years and it is ready for prime-time.”

Finally, Mr. Janevic reassured FFT’s non-MSC customers: “We have no plans to change FFT’s partner relationships.”

Actran is in use at over 250 companies, most with nameplates that are instantly recognizable leaders in automotive, aerospace, consumer products and other industries. With this acquisition, MSC claims ownership of a leading acoustics simulation technology and access to new customers for its Nastran and other brands; FFT gets much wider distribution and the support of a large, global company. “Sounds” like a win.

Autodesk ramps up its plant offering

Fri, 2 Sep 2011 10:59:29 -0400

Earlier this week, Autodesk announced the release of the Autodesk Plant Design Suite, 3 flavors of integrated apps that support multidisciplinary plant design. You can go here for the details of what is in the standard, premium and ultimate suites packages or to Autodesk’s Plant Youtube channel for quick demos, but I find four things significant about this release:

1. Pricing. The MSRP (manufacturer's suggested retail price, not necessarily the price set by any individual reseller) ranges from $6,000 for the basic, standard version to $13,000 for the ultimate package. One can (and should) ask questions about specific features that may be required for a particular job, but this is a great value for small to moderately sized projects.

1. Isometrics. Autodesk also introduced AutoCAD Isometrics, a way to quickly create 2D production documents to assist manufacturing of complex pipes. An iso is typically not drawn to scale, may break a long pipe into sections and shows valves and other elements using symbols (rather than a complete representation) but must have accurate dimensions and parts lists. The most commonly used iso package is ISOGEN from Hexagon Intergraph, which Autodesk had licensed with great fanfare in 2009. According to company spokesman Brett Smith, Autodesk decided to develop its own iso product because customers "wanted a more improved, modern isometric tool. We developed AutoCAD Isometrics so that we could continue to enhance it into the future... To provide compatibility between AutoCAD Isometrics and ISOGEN, we added PCF Compatibility. Not only do we generate PCF files that can be read by ISOGEN to create an ISOGEN isometric, we can also read in ISOGEN Isometric PCF files and create the iso’s in AutoCAD Isometrics." It will be interesting to see how AutoCAD Isometrics is received -- the quick demo I saw showed a highly-featured offering but only user experience will tell how it stacks up to ISOGEN. From Autodesk’s perspective, not relying on a competitor’s product as a core part of the offering makes a great deal of sense.

1. Clash detection. Finding and resolving interferences before starting any sort of construction has long been cited as THE reason to opt for a 3D plant design tool. When Autodesk said during the webinar announcing the 2012 Plant Design Suite that this would be available only in the ultimate (most expensive) version, I asked Mr. Smith for an explanation. He said that customer research showed that “while almost all disciplines and designers benefit from design review, not every designer needed clash detection. The Ultimate version provides these capabilities.” It would appear that Autodesk chose to go this route to keep down the price of the standard and premium suites -- but perhaps also to drive users to the ultimate package.

1. Integration. The biggest problem in plant design is that it still happens in silos and across many different applications. In the ultimate package, Autodesk has grouped together AutoCAD P&ID and AutoCAD Plant 3D for pipe and equipment layout; and drawing production; AutoCAD Structural Detailing and/or Revit Structure for structural detailing; Navisworks for design review and clash detection; Inventor for equipment and skids; and Showcase and SketchBook Designer to present and illustrate the design. The company says this grouping (and those in the standard and premium packages) will simplify project installation, deployment and management since all tools come from one supplier. To be determined, from my perspective, is how easily data is moved between the products in the suite -- during the demo I saw, it appeared seamless, but that’s a demo. If you’re trying out the new Plant suites, let me know: Are the products well integrated? Does the suite simplify your workflow? Was the learning curve reduced?

The bottom line: Autodesk’s Plant Design Suite offers significant value as well as the simplicity of dealing with one supplier for compatible tools in a single purchase. In an environment where engineering firms use dozens to hundreds of tools, that can be a significant savings in itself. But it comes down to functionality. I’ll be really interested to see how AutoCAD Isometrics stacks up to ISOGEN and how the suites sell: will more people opt for the ultimate flavor because it includes clash detection?

One thing is certain: Autodesk’s pricing (along with Bentley Systems’) is putting pressure on Intergraph and AVEVA to prove that their price tags are worth it. If one can get from place to place in a Honda, does one need a Maserati? And if a single answer doesn’t cover all projects, when is that Maserati the right choice?

What you might have missed, 1 Sept

Thu, 1 Sep 2011 10:53:22 -0400

A lot happened while I was on vacation, and I’m still trying to catch up. A couple more headline-y bits from the overflowing inbox:

Spaceclaim 2011+
Spaceclaim last week announced the 2011+ release of its eponymous software. This release has a heavy focus on building out the sheet metal offering as the company leverages its partnership with TRUMPF, a global leader in sheet metal fabrication machinery. Blake Courter, SpaceClaim’s Director of Customer Development, told me that the 2011+ release gives sheet metal users the vast majority of the tools needed to get the job done and puts SpaceClaim far ahead of its competitors. They’ve put online the sheet metal demo (here) and you can see the hinge, double wall, gusset, bead and notch capabilities. Also in the release are model prep enhancements for CAE and integration with COMSOL, Optimus, modeFRONTIER, and Enmesh; and performance improvements.

Spaceclaim is an interesting little beast. It started with a big splash, then got more modest as it grew a bit and wanted to coexist with the other CAD players. But now it seems the gloves are off, as Spaceclaim starts to talk about competitive displacements departments of large enterprises.

Delcam reports revenue up 13% so far in 2011
Delcam, the UK CAM company, reported results for the first six months of 2011 while I was away. Sales increased 13% to £20 million, continuing the trend of record performance for each of the last three six-month periods. Software revenue was up 17% to £10.5 million while maintenance revenue was up 10% to £9 million. The company says that it has seen “improved performance in most of the territories in which we operate”, with strongest overall sales is the US and Germany, and fastest growth in new software licenses in China, Korea, Indonesia and India. Pre-tax profit for the period was £1.51 million. up a very healthy 87% over last year. The company believes that the second half of 2011 will continue the trends set in the first half. Delcam says that the high level of machine tool sales that were reported for the year so far are typically followed by higher levels of software sales, which the company hopes will lift it to it traditionally strong fourth quarter. But Delcam did hedge its bets a bit, telling investors that “the impact of the current global financial markets on our performance remains difficult to judge with certainty”.

Autodesk acquires Numenus ray tracing technology
Numenus is a 2 year old German company that sought to commercialize the founder’s PhD thesis work. RenderGin creates creates photorealistic design renderings for designers, engineers and marketing professionals. With this acquisition, Autodesk believes users will see higher fidelity surface visualizations while spending less time preparing quality visualization data.

Autodesk typically buys a technology for a specific vertical or use and then makes it more broadly applicable and available. RenderGin is originally intended to the automotive design workflow -- but don’t be surprised if it crops up elsewhere in the offering.

Robots and speed at SolidWorks 2012 launch

Wed, 31 Aug 2011 11:19:48 -0400

I spent yesterday in Concord, Massachusetts, home of the Minuteman, the "shot heard round the world" and other US Revolutionary War sites, but I wasn't there for the history. SolidWorks invited press and analysts to its world headquarters for a preview of SolidWorks 2012. This release contains some 200 enhancements but the details are embargoed until next week, so this post is light on details but, I hope, conveys some of the vibe of the event.

Bertrand Sicot, SolidWorks CEO, kicked off the day by listing the six "CEO principles" he's using to inform his leadership. He sees "listening" as key to creating SolidWorks 2012, with new functionality that must "serve 90% of users". "Keep it simple" applies to every aspect of SolidWorks, both as a brand and a company: the product needs to be easy to use and the company's business processes easy to work with. "Users first" was next, but is perhaps the most important; said M. Sicot, "We must not forget that we exist to serve them; without them there is no company". "Invest in the channel" has been a core principle of SolidWorks from the start and "extend the professional market for 3D" describes the future: SolidWorks wants to expand the use of the data created and stored in its product throughout its customers' enterprise and supply chain. An important part of realizing this vision comes out in SolidWorks 2012 -- but I can't tell you about that until next week.

I had the chance to sit with M. Sicot for a few minutes later in the day yesterday, our first meeting. He is very personable and credibly describes his vision for Solidworks, both as a company and a product. He describes the company's mission as needing to be slightly ahead of its users, but not too far ahead. We talked about the idea that technology companies need to understand what their users want to do but not get bogged down by focusing only on their immediate needs. Yes, bugs need to be fixed and productivity enhancements made, but software companies also need to figure out how to leverage new technology (such as mobile devices) to meet the needs of their customers in 3 and 5 years. He wouldn’t talk specifics, but it’s good to know that he and his team are thinking that many years out.

There seems to be a trend these days for the CEOs of engineering software companies to be seen as users of their products. M. Sicot is a certified SolidWorks user and challenged the media and analysts to take (and pass) the Certified SolidWorks Associate Exam. I think I'm going to try -- it's been a while since I've dived that deeply into a CAD tool. Can’t remember when I last took a test...

Following M. Sicot, SolidWorks CFO David Stott offered a company update. Most surprising: SolidWorks today sees roughly 20% of its revenue come from simulation, data management and environmental analysis solutions. Fastest growing: data management. [I later spoke with product managers about SolidWorks Simulation and plan to blog in greater detail about simulation -- lots is happening there, though it's not all that visible given the breadth of the SolidWorks portfolio.]

Fielder Hiss, VP of Product Management, next presented a retrospective of each of the 20 releases of SolidWorks so far. it's quite amazing to see how far the product has come -- and how much we take for granted in a modern CAD solution. This was a perfect segue into customer panels, where designers and engineers talked about how they use SolidWorks and what they see as its most important benefits. Best take-away quote: “SolidWorks is a ‘business in a box’ for a small shop like ours”.

The last session of the morning was a total treat. Those of you who follow me on Twitter (@monica_schnitge) got to see me play with a motor and a magnet and, ultimately, build a little orange robot mouse. It was a good lesson/refresher on some engineering fundamentals and drove home the point that engineering and design are fun, and that we need to encourage that spirit of play in how we teach it to kids. SolidWorks has an extensive academic program, creating curricula for learners from grade school through college, made available in 14 languages, that aims to leverage each release’s new content to both teach SolidWorks and inform on issues such as sustainability.

From this point in the day, the content was embargoed until next week since it focused on several of the key elements of the 2012 release. And since I don't appreciate teases, I'm not going to tease anything other than the date and time: next Tuesday, 2ish PM Eastern is when the SolidWorks 2012 site goes live.

At the end of the day, we were exposed to one innovation that I can blog about right now: speed “dating”. Analysts/media sat still while company representatives rotated from analyst to analyst every 7 minutes. Typically at these events, I submit a list of people I’d like to meet with or topics I’d like to discuss and then do that for maybe 30 minutes per topic; SolidWorks worked it out so that we each had 7 minutes with 8 different people. It was interesting in that I got to speak to many more people than would have been possible under the other scenario -- but just as each conversation got interesting, the horn sounded and we had to stop. It was an interesting way to connect people.

It’s too early to tell what impact SolidWorks 2012 will have, on the market, on the company and on its customers. I was impressed by the people I met and by the approach that is “evolutionary, not revolutionary” and keeps the 1.5 million people who use SolidWorks firmly top-of-mind. The demos were cool, too, and I’ll tell you more about that next week ....

Note: SolidWorks provided lunch and tchotchkes but did not in any way influence the content of this post.

What you might have missed, 23 August

Tue, 23 Aug 2011 17:39:56 -0400

So I went on vacation last week. And the world of engineering software kept going, perhaps even ramped up a bit even though I wasn’t around to pay attention. Here are a few of the news bits I found most compelling from my time away:

SGI acquires OpenCFD
Last week SGI announced that it had acquired the privately-held OpenCFD, enabling SGI, according SGI CEO Mark J. Barrenechea, to “provide our customers the market's first fully integrated CFD solution, where all the hardware and software work together."

OpenCFD is the developer of OpenFOAM, an open source CFD solution of solvers and utility apps that is gaining traction among commercial and research institutions interested in trying open source solutions.

It will be interesting to see how this pairing fares. SGI says that the entire OpenCFD team has joined SGI and that it has formed the non-profit OpenFOAM Foundation to “make OpenFOAM accessible to everyone and allow for community contributions. SGI is fully committed to the continued development of OpenFOAM, which will continue to be open under the GNU Public License (GPL).” SGI told investors (without disclosing terms of the deal) that it would grow revenue via OpenFOAM support subscriptions, training and professional services for deployments on SGI hardware and, of course, a CFD code offering that is optimized for SGI hardware.

With this acquisition SGI reestablished itself in the CAE world, where it had been losing ground, while OpenFOAM benefits greatly from the resources available in the larger SGI organization. Free software and (comparatively) expensive hardware. Does that sound familiar to anyone else?

Changes rattle plant design distribution networks
Autodesk has for many years sold AutoCAD into the process plant world, either as a standalone tool or as the platform for products such as COADE CADWorx and Bentley AutoPlant. But as Autodesk creates its own suite of solutions for this vertical, the competition is heating up for resellers. Last week we learned that ECAD, Inc., one of the largest North American CADWorx resellers, has decided to switch to AutoCAD Plant. ECAD is one of Autodesk’s largest resellers so this isn’t really surprising, and we should expect similar transitions as the Autodesk plant offering picks up steam. Intergraph and CADWorx are encouraging customers to work with one of its North American resellers that is focused solely on plant design and to stick with CADWorx which reports increasing its development staff by 50% and doubling support resources since it was acquired by Intergraph in 2010.

Exa files for an IPO
Exa Corporation filed an S-1 registration in early August with the US Securities and Exchange Commission signaling their intention to raise $86 million in a public offering of their shares. According to the filing, Exa had revenue of $37.7 million in the year ended January 31, 2011, up slightly from $36 million in fiscal 2010 and $34 million in 2009. There’s lots more in the 130-page filing and I’ll post a longer review when I’ve read the whole thing but one question springs immediately to mind: why now? No one is calling the stock market “strong” and I’m not hearing anyone predicting a boom ...

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There’s lots of other news, too: Autodesk released AutoCAD for the Mac and reported solid earnings for its July quarter; HP is buying Autonomy; ESI Group acquired IC.IDO GmbH, a vendor of immersive virtual reality solutions; and Spaceclaim announced its 2011 release and got a bit giddy in discussing competitive displacements -- but more about these as the week goes on.

It’s good to be back. No, wait ... yes. It’s good to be back. What else did I miss?

News roundup for August 12

Fri, 12 Aug 2011 12:10:22 -0400

Last week’s earnings fever has died down, but there were still a couple of items of note this week when much of the northern hemisphere is on vacation:

CENIT
CENIT reported this week that it saw “increased demand ... especially from the manufacturing industry and from automotive suppliers, leading to sustained growth in the product lifecycle management (PLM) field” during the first six months of 2011. For the year so far, revenue was €50 million, up 22% from a year ago, with the PLM business up 17% to €36 million. Perhaps most astounding is the increase in software revenue (3rd party and proprietary): up 50% to €23 million. On a regional basis, sales in North America nearly doubled to €5 million and swung to a €0.7 million EBIT profit due, the company says, to a large one-time project.

For the second half of the year, CENIT expects the strength in its software business to continue and has raise its sales and earnings growth forecast for fiscal 2011 to 15%.

CENIT resells products from Dassault Systèmes, SAP, IBM Filenet and others, as well as its own add-on products and services. This strengthening of the PLM side of its business is a good sign that the recovery in Europe continues and that CENIT’s customers, at least are optimistic about the future.

Help for displaced workers
Autodesk wants everyone to know that out of work designers, engineers and architects can still take advantage of the Autodesk Assistance Program. If you’re interested in another vendor’s product, try asking them -- even if there’s no official program, you may be able to sit in on a class or get a short-term license to keep your skills up to date.

Whatever happened to Quark?
Remember Quark, the people who made QuarkXPress? Back in the day, one had to specify with a complex set of characters how something was supposed to look when printed. There were no WYSIWYGs for headers, indents, fonts and the like; it was a lot like today’s html, where characters like “/H” meant something about the text to follow. In the late 1980s, QuarkXPress changed all that, making it possible to define typography, layout and color. The company says that, today, “more than five billion pages have been produced using QuarkXPress, and more than three million QuarkXPress users worldwide are benefiting from a new generation of rich design capabilities for print, Web, and interactive media”.

For many people, Quark faded away as word processing tools became ever-more sophisticated and as Adobe’s publishing brands became widely known because of the ubiquitous PDF format. Quark no longer has the market prominence of its earlier days, although it is still the preferred tool of many graphic designers. Earlier this week it was announced that Platinum Equity, a private equity firm, has acquired Quark for an undisclosed amount. Platinum Equity plans to “focus on Quark’s core markets and create an acquisition strategy focused on expanding the breadth and depth of Quark’s product capabilities and geographic coverage”, according to the press release announcing the acquisition.