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Dassault Feature

Dassault Q2 Earnings Call

reprinted by permission of Ralph Grabowski, editor

September 12, 2007

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PTC likes poking fun at Dassault Systeme's triple-headed PLM software, but ceo Bernard Charles got his chance to verbally strut over his company's ENOVIA revenues: up 32%. (ENOVIA is the name of Dassault's PLM division, whose three products are SmartTeam, MatrixOne, and Enovia.)

"If you remember, when we acquired MatrixOne a year ago, there were some questions and doubts about how complementary the product family is. We see today that the portfolio is extremely competitive on three fronts." He took credit for PTC's lower sales, which he stated was due to MatrixOne wins over Windchill.

A second dig: "I am confident that Airbus will standardize on everything we have" -- meaning the elimination of Pro/E from Airbus.

A third dig against PTC came during the Q&A session: "We're not far from doing twice the revenue of one of our competitors that was supposed to be the biggest competitor a few years ago -- twice the revenue." No mention of Autodesk having overtaken Dassault in revenues.

Mr Charles noted a significant trend among companies in the automotive industry. They are consolidating all aspects of design under a single software brand. "All new car programs at Mercedes Benz are now 100% CATIA of everything -- electric, power train, chassis, engine, body, interior, everything." If true, this could create a problem for CAD vendors who are unable to offer "everything" to an auto company. On the other hand, I wonder whether a car company give up on exquisite software, such as Alias, just because it was not offered by Dassault or UGS.

He didn't think that the acquisition of UGS by Siemens would have a negative impact on DELMIA, their factory simulation software.

For end-users, he seemed to imply that a single user interface would be applied to all of Dassault's software. It may have been he was referring specifically to PLM; it was not clear to me.

Dassault Systemes was very pleased at its year-to-date revenue growth of 17%. Mr Charles did admit, however, that the CATIA division's -8% slide "might be a little bit disturbing."

SolidWorks seats were up 6%, but the average selling price fell 4%. "It's a little bit below what we expect for SolidWorks." He blamed part of it on change in distribution in Japan, and thought that lower-cost versions of SolidWorks were selling better. An analyst taking part in the conference call guessed that SolidWorks' growth would have been 30%, excluding Japan. Mr Charles denied another analyst's suggestion that Jeff Ray took over as CEO because of the Japan problem.

Inventor? Never heard of it: "We continue to put a lot of attention taking AutoCAD design data and migrating it extremely easily to a [SolidWorks] 3D environment. We believe that there is a huge installed base there looking for 3D adoption."

The Future of Dassault Systemes

And then there is the issue of 3DVIA. First, the promise of the technology: "You have heard about Second Life; we want to do 'First Life.' We do real things."

3DVIA is the future of Dassault: "This is where Dassault Systemes is going -- online applications that connect to PLM. The only thing [people] have are just little drawings and sketches. They cannot see the product; they cannot see the packaging. That's the fundamental goal of 3DVIA."

But there is problem. To visit www.3DVIA.com, Mr Charles admitted, "you need to have a good configured PC. Don't go with a small graphics card. I know we are still sensitive to the PC configuration, so sometimes it does not work." In practice, it is more than just the graphics board; 3DVIA also limits which Web browsers work with it. And then there may be customer confusion over the proliferation of names attached to interactive 3D. What is the difference between 3DLive, 3DVIA, and 3DSWYM?

An analyst asked if Dassault was worried about Google being a disrupter in 3D worlds. "No, I think it's a great opportunity to expand," responded Dassault. "We will be able to do design online. I'm not saying SolidWorks online, but for sure better than Google [SketchUp]."

I suspect the problem will not be Google; instead it is that Dassault has too closely linked itself with Microsoft. "We believe that we can take advantage of the MSN community."

Fiscal Year Estimate

For the year, Dassault expects to make e1.3 billion (US$1.72 billion), growth 14% - 15%. And it expects to have double-digit growth for the foreseeable future.

[All quotations paraphrased.] http://www.3ds.com

 

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