My first surprise was being invited in the first place. PTC has hardly acknowledged TenLinks’ existence -- even though our coverage extends to PTC products and our TenLinks Daily newsletter goes to scores of PTC employees. Secondly, who knew there were so many of us media and analyst types! And did you know PTC’s Pro/ENGINEER is practically the standard in the design of bathroom and kitchen fixtures? It’s not something PTC’s marketing department has run with. Maybe “number 1 in the bathroom” would have undesired connotations. Better to stick to race cars. Penske Racing, a Pro/ENGINEER user, was happy to oblige and rolled in an F1 racing car for the event.

What shouldn’t have been a surprise is that PTC maintains a large and loyal user base of mechanical designers -- maybe even the biggest for any MCAD software. That is something all of us editors, authors and analysts should not lose sight of, despite all the noise to the contrary. (See Wohlers Report 2004 Uncovers Nearly 5 Million CAD Solid Modeling Seats Worldwide).

During the press event, we heard next release, Pro/ENGINEER Wildfire 3.0, is due on St. Patrick’s day (March 17). PTC also presented their partners and customers.

But most of all, the press event gave me time to think of PTC, a very important and significant CAD company, and its past, present and future.

Come from Behind

The industry media is fond of calling the MCAD market a two horse race between Autodesk Inventor and SolidWorks. Products such as Solid Edge, VX, Alibre and even the venerable Pro/ENGINEER face the risk of not even being considered during a purchasing decision. How infuriating this must be for PTC, the company that invented modern solid modeling in the late 1980s. PTC’s first name is parametric. And now, Autodesk and SolidWorks, like ants at the picnic, are stealing their lunch.

You could blame PTC themselves for being slow to respond or distracted (more on that later). But now PTC seems to have turned itself around. It has strung together several good quarters. With money jingling in their pockets, PTC now thinks wining and dining the press corps is good idea. After all, isn’t that what Autodesk and SolidWorks have been doing for years, successfully capturing mindshare with the media and with it, the mindshare of the general public?

The Swagger

While PTC’s competitors may have faulted Pro/ENGINEER’s ease of use -- or lack thereof -- no one has dared to impugn its power. We can handle anything thrown at us, say Pro/ENGINEER users, who have long maintained they are better off than other CAD users. They don’t just talk, they swagger. They are proud to tell you they cut their teeth on Pro/ENGINEER since release 14 or 18 or some version released a decade ago. They have tamed a real solid modeler, not some your-momma-can learn, pretty-icon, wannabe CAD system with goofy wizards that promises to blend wings into a fuselage or handle your million-part earthmover with the next release.

Power like Pro/ENGINEER’s is not for the meek. It is not conveyed after a few nights of training at the local school where you can get your certificate for CAD one day and swing dancing the next. This power was earned in the pits with hard work and pain after months, even years of trying arcane commands, poring through a users guide that at first seemed to be written in another language, from busting your hump after others had gone home and from stealing techniques and tricks from them when they where there. That’s what it takes to earn your swagger.

Crowd Behavior

You can spot the Pro/ENGINEER users at trade shows where big crowds gather, lured by pretty young things who promise them t-shirts and prizes. The veteran pitch men start working their wizardry, making their solid modeler do one nifty trick after another in the guise of an imagined design process. Soon the crowd is oohing and aahing, even applauding. The Pro/ENGINEER users, who never bothered to sit down, look at each other unimpressed, and swagger off. One will say to the other “Heck, we could do that years ago.”

Certainly deep in a CAD executive job description must be a line item like “size up the competition.” Although there must be more scientific methods for assessing the competition than the size of the crowds at trade shows, that method is certainly free, easy and legal. It was probably easy for PTC executives to make the connection between their bottom line and the numbers of attendees being seduced by the flashy 10-minute canned let-me-show-you-how-easy-it-is, no-training-needed, be-productive-next-week MCAD programs. Maybe in a eureka moment, someone high up may even have realized that although spending on R&D helps hang on to the current users (PTC spends 17% of revenue on R&D), it is ease of use that gets new ones.

The Good Old Days

Flash back to the early 90’s. PTC was on top of its game. It had single-handedly created a new market. Pro/ENGINEER was flying off the shelf. PTC couldn’t keep up. They even turned away customers who didn’t look like they would buy right away or wouldn’t buy enough. I know. I worked for a $100 million defense contractor and we were looking for a MCAD system. PTC wouldn’t give us the time of day.

But the years have not been kind. Like an aging actress, PTC has seen the spotlight swing away. Upstart SolidWorks not only has won over hundreds of thousands of 2D users but its success has even forced the lumbering giant Autodesk to spawn Inventor--which Autodesk claims is the new leader in units sold.

“Simple, Powerful, Connected”

Can Pro/ENGINEER add the simplicity to attract new users without losing the power? That was the goal behind Pro/ENGINEER Wildfire, a complete rewrite of the flagship product with a new interface. The new name (rather than just call it another double digit revision) was meant to underscore its difference from previous editions. Ease of use was stressed. The first Wildfire release may have thrown the old-school Pro/ENGINEER power users, many of whom had grown accustomed to its clunky, aging UNIX-look. They complained about a loss of functionality and power which they had come to love, feeling that it had been sacrificed for an ease of use they didn’t need. But with release 2.0, those complaints started to subside. Pro/ENGINEER Wildfire, by all accounts, seems as powerful, if not more so, than the Pro/ENGINEER of old. And Pro/ENGINEER Wildfire 3.0 seems intent on piling on even more power.

Is it the simplest MCAD program now? Let’s not get carried away, says Michael Campbell, PTC’s VP of Product Development. “We know Pro/ENGINEER is not going to be the easiest CAD system out there—it’s just too powerful.”

The theme oft repeated at the press event was “simple, powerful, connected.” It’ll take more than a marketing slogan to convince the masses. However, given that Pro/ENGINEER is a very capable program, PTC seems to have solved the toughest part of the formula for market domination. One has to start with a robust product. Millions of mostly 2D CAD users have yet to make the decision as to which CAD program to buy and big customer wins will certainly not go to MCAD programs that cannot do it all.

Juice is Not Worth the Squeeze

The only chink in Pro/ENGINEER’s armor (as far as capabilities go) seems to be lack of advanced surfacing. This may be only a perceived deficiency as Pro/ENGINEER does indeed have several advanced surface commands. PTC also sells Pro/ENGINEER Interactive Surface Design for free form surfaces, for industrial designers who are famous for using smooth, curvy organic shapes, quite unlike prismatic shapes favored by machine designers, mechanical engineers, tooling designers and the like. Still, PTC acknowledges CATIA’s lead in advanced surfacing, in particular with automotive styling, aircraft fuselage and ship design. PTC will not aggressively pursue that market. Perhaps they think too few potential customers occupy this lofty realm. Or, PTC may consider CATIA, the industry powerhouse, to be too deeply entrenched: the juice is not worth the squeeze.

However, its failure to provide sophisticated tools and the lack of high profile customers could be looked on as a weakness by the market. Let’s face it: planes, trains and automobiles are sexy. Software used to design them is looked at with admiration. In a MCAD market that seems to be playing follow the leader, the strategic decision not to create dominating, world-class advanced surface capability -- and to not pursue the high profile customers who need it -- is a mistake.

For now, PTC claims to be content with winning a few battles. It claims leadership among MCAD vendors in engine and drivetrain design (customers include Toyota, VW and others). Also, even companies that may use CATIA for body design, use PTC’s PDM products, a PTC marketer was quick to add. It’s the Medium AND the Message

Looking for Love in All the Wrong Places

Certainly saying “Hey, look at me, I’m easy to use” would be a start in attracting customers shopping for their first MCAD software. The message must be delivered at the right place and in the right way. PTC does have impressive booths at trade shows but trade show audiences are just the tip of the iceberg. Increasingly, decision makers with money are shying away from national trade shows. The biggest CAD show, NDES, has downsized from the Chicago’s cavernous McCormick Place to a smaller venue in nearby Rosemont and is up for sale. Trade magazines get thinner every month or just disappear. So how many see PTC’s two page color spreads? And for those that do see the ads, how many get the message? Madison Avenue doesn’t necessarily get CAD. Stylish, edgy ad campaigns that show neither the product nor its use aren’t going to hit the mark with engineers. Also, PTC should wake up and consider where MCAD shoppers have been getting the information they need. Hint: where are you reading this? That’s right, the Internet. (The author admits his company has a vested interest in online advertising)

Focus.. and Perspective

In the superheated market that PTC now finds itself, focus seems critical. For an example PTC needs to look no further than SolidWorks. (Easy enough, both are located in the Boston area). Launched in the mid-90s, SolidWorks staked a claim to the midrange – the area they saw between higher cost products like Pro/ENGINEER and low cost products like AutoCAD. Just like PTC, it found gold and then set about happily mining it. It enjoyed unparalleled success for years. Since its inception, SolidWorks has rounded out its portfolio. Not only does it have over a thousand 3rd party vendors, but through acquisition and development, it offers rendering, product data management, analysis and more. But throughout it all, there is no doubt that SolidWorks’ core product is its namesake. SolidWorks’ focus may have expanded beyond its initial core design product, but to its credit, it has maintained perspective.

Arbortext: Distraction or Diversification?

SolidWorks detractors may say that Cosmic Blobs-- a children’s modeling software incubated at SolidWorks -- constitutes a diversion. But SolidWorks is smart enough to keep it low profile. In fact, you’ll not find Blobs listed among its products on the SolidWorks website.

Contrast that with the PTC’s home page. At the time of this writing, much of it was taken up with Arbortext. What is Arbortext? It is text-publishing software, like Framemaker. What is the connection? Jim Heppelmann, executive VP at PTC, explained it very succinctly: “It’s like Pro/ENGINEER but instead of creating assemblies out of parts, Arbortext creates documents out of text.”

The Arbortext acquisition happened naturally enough. During a site visit to a big customer (Solar Turbines, Inc. a Caterpillar company), Dick Harrison, CEO and president of PTC, observed the customer’s difficulty in handling the huge task of assembling the manuals that accompanied the company’s products. He noted that CAD data (from Pro/ENGINEER) was “thrown over the wall” to the technical publication department, who often redrew many of the illustrations. The sheer amount of work—and rework--done by tech pubs had created a delay in the sales of the product. Products were sitting and waiting to be shipped because their manuals were not printed. This led to a visit to Arbortext headquarters in Ann Arbor, Michigan. PTC ended up buying the company. It paid a premium: $190 million for a $40 million company--4.75 times revenue when 3 times revenue is a rule of thumb. PTC justified it because Arbortext was growing 40-50% a year. CAD CEOs drool over growth like that because they are used to single digit growth, if any.

Like the parent of a new child, Harrison happily discussed Arbortext and how it will help PTC grow. And the fact that it ought to revamp and streamline the whole process of throw-it-over-the-wall-to-the-techpubs-and-wait process ought to make it an easy sell to all sizeable Pro/ENGINEER customers, most of whom are probably experiencing the same frustration Caterpillar had. In fact, many of the customers that were paraded before us at the press event were not only aware of Arbortext but were considering it. On the other hand, none have bought it yet and Framemaker is an established industry standard.

Lesson not Learned

Those who cannot remember the past are condemned to repeat it. -- poet philosopher George Santayana

PTC readily admits that there was a time it lost focus on its core product. For years, it sought to distance itself from its core product, Pro/ENGINEER. We’re a data management company, said previous CEO Steve Walske when the company launched Windchill, their data management product. After all, wasn’t CAD just data? Despite products like Pro/INTRALINK and Windchill having now achieved some measure of success, the company’s distinct shift in focus from its core – coupled with a loss of perspective--did lead to several quarters of decline and loss of market share in the MCAD market.

Now, as I listen to PTC people who claim its focus is back and locked on MCAD, I see the unabashed emphasis on Arbortext.

Arbortext is not the only example. PTC also bought Polyplan. I looked in vain to see what Polyplan was good for on the Polyplan website, but descriptions were so vague I gave up. A PTC employee told me it was a manufacturing process control program (like Tecnomatix). PTC had not yet figured out what to do with Polyplan. It is not currently marketing or selling it.

The Billion Dollar Club

Dick Harrison should not be faulted for wanting to grow his company. That is definitely in his job description as CEO. That Harrison appears happy is also understandable. PTC is in the black. He also stands to make $4.8 million from salary, bonuses and stock. (see article on Yahoo! Finance).¹

PTC made $721 million last year. Not enough. Already Autodesk, Dassault and UGS have claimed $1 billion dollar years. Harrison may have taken a page out of Autodesk’s playbook—but is it the wrong page?

Cash-rich Autodesk has long sought to diversify and has acquired many companies along the way. It has spent recent years seeking to downplay its core product, AutoCAD. Carol Bartz, CEO of Autodesk, has been known to befuddle her CAD users by showing them movies made with 3D Studio. It’s not uncommon to find non-CAD products emblazoned across Autodesk’s home page, too. Recently, it was King Kong, the movie.

Conclusion

Now that PTC appears to be back on solid ground, the challenges ahead seem to be more marketing than technical. Pro/ENGINEER Wildfire 3.0 will probably keep current PTC customers happy but the trick will be to get on the short list of the millions of 2D users looking to upgrade to 3D. PTC’s corporate mindset is geared to growth by acquisition but care must be taken that the focus does not appear to wander from the core design software.

Footnote

1. According to PTC, it is a potential of $4.8 million which includes  restricted stock over three years contingent upon achievement of goals

----------

More Select Pro/ENGINEER Articles