Keeping an Eye On Autodesk

Technology Acquisition Trend May Have Implications for GIS

Adena Schutzberg, GIS Monitor, TenLinks.com, Feb 22, 2002

Last Thursday my Autodesk GIS press contact sent over the press release announcing Autodesk’s intention to purchase Revit. More than one GIS person to whom I mentioned this asked, “Autodesk bought who??” Apparently, Revit’s name is not known in GIS circles.

However, the architectural software company, based outside Boston, is worth a passing look if only to contemplate Autodesk’s future strategies. Revit broke into the market with help from Autodesk competitor, SolidWorks, in 2000. The company boasted a parametric building modeler and subscription pricing. The technology allows a user to make changes anytime, anywhere in the design process and be sure of complete consistency of all drawings in the project. The subscription means that you don’t “buy” Revit in the same way you “buy” AutoCAD, you rent it.

So, why is Autodesk buying Revit? Autodesk picks up some hot technology, aimed, most observers suggest, to eventually replace the now aging Architectural Desktop, which was built on previously acquired technology from Softdesk. Autodesk also picks up a product grounded in subscription pricing that means steady revenue (unlike the dips and swells of the old Autodesk release cycle). That makes investors happy.

The question then, is how this acquisition might illuminate what’s to come from the GIS group. There have been previous GIS acquisitions – some good, such as the technology behind Autodesk Map and – some not so good, such as the technology behind the now defunct Autodesk World. MapGuide was a keeper but I think the jury is still out on GIS Design Server, once known as Vision.

Are more GIS acquisitions in the future? Autodesk’s record speaks for itself: the company is far more interested in purchasing technology to attempt to leapfrog the competition than developing it in-house. The company spends its labor resources on attempting to integrate the technology into the existing products and platforms. To me, that would seem, at times, more challenging than building from scratch. Revit, for example, started with a completely clean slate, which may be one of its keys to success.

Autodesk is showing itself as a wise user of other people’s money. Autodesk spun out Buzzsaw, with the intention of getting other investors to get the company started. Then, after Buzzsaw used much of this pooled money, Autodesk pulled it back in-house. That’s good business. So, when considering future Autodesk acquisitions, publicly or privately funded ventures at the crossroads of success and failure with strong technology that Autodesk can attempt to integrate would be good bets.

Autodesk, amidst the hubbub surrounding the acquisition, did announce earnings last week and the numbers were surprisingly good for these challenging times. Despite a lower Q4 than last year, the company was still managed to pull in US$947 million, up from US$936 last year. And, the company creeps carefully toward that big $1 billion year, raising expected growth for the current fiscal year (‘03) to 8-10%, and eying $1.025-1.045 billion in revenue.

There was a lot of discussion in the conference call of seats in the architectural and mechanical arenas due to new packaging of the mechanical products and the Revit acquisition, but two numbers are pertinent to GIS: Autodesk Map now claims 156,000 seats and PointA portal 300,000 visitors. The Map numbers sound about right, though I’ll suggest the growth rate on that product is slowing. What, we should ask, is the replacement for Map’s technology? As for PointA, I continue to find nothing there to recommend a visit.

This may be scary, if not new, information for resellers: direct sales now account for 20% of revenues in North America with a goal of increasing the number to 40%. Worldwide, the number of dealers has decreased over the years from 2,500 to 1,300. Do I expect to see that number shrink further? Yes. Subscription percentages are low, at 13%, for the Americas. Expect continued pressure to purchase subscriptions across all of Autodesk’s businesses.

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