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Issue #275: 11 December, 2001

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Inside this Issue

• PlanetCAD is not For Sale
• Spatial Responds to Autodesk
• Reaction to ShapeManager -- Pro and Con
• Below the Radar

• Lack of meaningful revenues from PlanetCAD's new business despite large expenditures. During 3Q01, PlanetCAD had expenses of US$3.9 million, but gross revenues of only US$0.56 million.
• 95% decline in the stock price, which has fallen from an all-time high of US$10 18 months ago, down to the current 19 cents.
• Large losses reported in the most recent quarter, making it appear that PlanetCAD has very little remaining of the US$25 million it received for selling off its Spatial/ACIS component business to Dassault Systemes.
• Accounting and public disclosure difficulties.

On Wednesday, PlanetCAD rejected PCD's offer because it did not reflect of the company's book value of US$7.3 million, causing PCD to sputter, "We are very surprised that PlanetCAD could conduct a thorough and careful evaluation of our offer in such a short time."
On Friday, PCD countered by announcing it was PlanetCAD's largest shareholder, albeit at a mere 9.7%. And PCD made additional demands of PlanetCAD's board of directors:

• Review its offer, using outside assistance.
• Explore a potential sale of the company.
• Evaluate the company's revenue forecasts and appropriate expense levels.

In an interview with Dow Jones, PCD said it wants to take PlanetCAD private, "thus eliminating the overhead, scrutiny, and pressure of being a public company, and then find partners or buyers for each aspect of the company's intellectual property." This seems to indicate that PCD wants to break up the company, and sell off the pieces, which can sometimes fetch a higher value than as a whole. Is PCD eyeing the four million-dollar difference between its offer and PlanetCAD's book value?

PCD describes itself as "a private company based in Boulder CO USA owned by Colorado investors." Neither president Eric Weissmann, Austin Marxe, nor Gary Jacobs have any other involvement in PlanetCAD. "PCD" is the stock ticker symbol for PlanetCAD. Weiseemann and Jacobs are part of Decisioneering, which makes financial risk-analysis software. Perhaps they applied their software to PlanetCAD's financials? Weissmen said his software "enables you to find opportunities or avoid problems" and allows customers to graphically forecast the risk of a venture over time.

The co-owner of the 9.7% shares is Austin Marxe, owner of the 60-year-old AWM Investment Company. Marxe and Greenhouse also own the Special Cayman Fund, have invested in a similar set of other companies, and hold many shares indirectly. The common thread among the companies in which they invest appears to be "net loss."

Following last week's announcement by Autodesk vp Robert Kross that he was creating a team to develop Autodesk's own kernel based on ACIS but independent of Spatial, I asked Mike Payne, ceo of Spatial, for his side of the story.

Mr Payne does not understand Autodesk's move, and expects it to fail because components are commodities, and shouldering the added costs to develop them in-house seems to be a poor business decision. He says he speaks from experience, that at one time he was "in their [Autodesk's] shoes." While at PTC, he helped develop Pro/E's kernel from scratch. After that expensive and time-consuming experience (back then, it was the only option), he says he vowed to never again do that. Thus, in the development of SolidWorks, components were available, and he specified ParaSolid. Contrary to the opinion of Joe Costello (ceo of think3), Mr Payne says "no one should invest a nickel in developing a geometry kernel" because it is too hard and too expensive.

Mr Payne commented that some of Autodesk's statements contravened the confidentiality clause in the ACIS contract inherited by Dassault (when it purchased Spatial last year). He has problems with "liberal wording" by Mr Kross, such as that Autodesk "bought the source" and that Autodesk "is the largest ACIS customer."

So, did Autodesk purchase a perpetual license to the source code? Spatial says it is the exclusive owner of the ACIS intellectual property. Therefore, Autodesk has no right to expose the ACIS API to a third-party, except through SAT (ASCII file export) or through a license. While data translation won't be a problem, "interoperability with third-parties may become a problem." Mr Payne speculates Autodesk will have to write another layer for its API to prevent third-party developers from accessing ACIS directly.

So, was Autodesk the largest ACIS customer? Autodesk represented less than 10% of revenues for Spatial, in part because Spatial has signed up 400 new customers in the last year. (There are currently 1.4 million seats of ACIS-enabled software on the market, not include the Autodesk seats, or seats that use other Spatial products. Just 25% of revenue is derived from the traditional CAD market.)

Autodesk is ignoring the fact that the highly-successful SolidWorks is based on a third-party kernel.

Although Autodesk says it is hiring a hot-shot team of kernel developers, Spatial thinks Autodesk is hiring the wrong people; many of the new hires have experience with solid modelers other than ACIS who won't understand how ACIS is put together. Instead of making Inventor a bigger success, Mr Payne thinks this move to independence will cost Autodesk customers in increased kernel-related bugs and cost Autodesk shareholders in lowered earnings/share due to the huge development price. Mr Payne gave an example of the kernel's complexity, describing a Boolean bug that took nearly six months to fix correctly. The closer you get to the user interface, he said, the easier the bugs are to fix.

One Autodesk complaint was that ACIS v7 was delivered a month after Inventor v5 shipped. Spatial calls this a non-sequitor; they say ACIS v7 was delivered on-schedule. ACIS v6.3 emphasized bug-fixing, while ACIS v7 contained every request made by Autodesk.

So, why did Autodesk cut lose from Spatial? "I can't imagine why." Mr Payne says Mr Kross never indicated he was dissatisfied with ACIS. Mr Payne stated he is willing to publicly debate Mr Kross. Perhaps that could be a feature of next May's COFES meeting.

"SDRC couldn't sell a proprietary kernel, and I-deas will lose it soon. Pro/E's proprietary kernel is considered a liability these days. EDS-PLM is poised to win the kernel war [with ParaSolid] more so then ever.

"AutoCAD's strategy sounds like Microsoft vs. Open Source. A proprietary solution that can be modified rapidly but will be prone to bugs vs. a solution that is widely used and therefore widely debugged but one that must move very deliberately when adding innovation.

"A CAD manager tells me that translation problems between CAD systems are now his #1 overhead cost. And AutoCAD wants to move away from inter-operability?"
- Jon Rush

"I think the Autodesk-ACIS split is excellent. Now there will be two very powerful PC-based parametric solid modelers (PSM) that are free to develop features and the supporting architecture as they and their individual customers see fit.

"Having ACIS in the hands of Dassault was always going to be a problem for Autodesk in the same way that Microsoft's control of the operating system and the leading applications is for every Windows application developer. Some of the remaining questions I have are:

1. When (if ever) will SolidWorks be switching to ACIS? [It appears not anytime soon.]
2. Does this now make Cadkey the biggest ACIS customer? [Spatial won't say.]
3. What have you heard from Mike Payne about this decision? [See above.]

I was also happy to see the announcement in this issue of upFront.eZine that ParaLogix from A3DS (which I co-founded but am no longer with) has decided to offer a light version to the market. This product is lightyears ahead of both Inventor and SolidWorks in its architecture. It has a sketcher and modeler that are vastly more complete and efficient in keystrokes than any other package. There is no distinction between a model with one part and an assembly with multiple parts. This issue alone took several years to solve, but ParaLogix is the only package that permits this more natural way of modeling when compared to the Big Three (SolidWorks, Solid Edge, Inventor)."
- Jeff Hall

In a videocast at http://www.mcaduncensored.com/pastevents/Nov30_1.htm, Joe Costello, ceo of Think3, laughs at Autodesk's change of heart, which changed from "being pleased" with Dassault buying ACIS, to going their own way with ShapeManager. "[Autodesk] should have panicked when their foundation technology was bought out from under them. If you don't control the technology, you can't innovate; you can't respond quickly" -- just as Think3 does with its own kernel.

Further Solid Works vs. Inventor commentary at http://www.tenlinks.com/NEWS/ARTICLES/cad_report/120301inventor.htm

Structural Desktop (US$2,250 until Jan 1) is an add-on for AutoCAD 200x and is used by engineers to create structural drawings. It reads files from design/analysis-software programs, creates an object model of the structure, and derives 2D drawings and 3D models.

Cad Publisher has been updated to version 1.9.010, and is priced at US$95 until December 21.

Oasys released Columbus version 2.4a, their free document management system. They've teamed with CADopia to provide Columbus with IntelliCAD. Oasys says their software is in use by 7,500 companies.

Nemetschek North America is shipping a free update of VectorWorks, RenderWorks, ARCHITECT, SPOTLIGHT and LANDMARK 9.5 running natively under Mac OS X.

Arc Second says its PocketCAD PRO will support MicroStation V8 DGN file format via an add-on DGN-CAD-DGN converter (US$195) due sometime in December.

Informative Graphics Corporation released MYRIAD v5.2 (US$195) for viewing and redlining SolidWorks, SolidEdge, Inventor, AutoCAD, Microstation, HGPL, TIFF, CALS, and Office formats. Pro/E, CATIA, and UG support is an additional US$100.

Spicer has released Image aoX 6.3, an ActiveX control for native file viewing of AutoCAD 2002, Gerber, SVG, Office XP, and others.

Ashlar-Vellum is now shipping its Argon (US$995), Xenon (US$2,795), and Cobalt (US$3,995) [cool names!] 3D modeling software.

Spatial hired Jerry Walters as vp of sales, the Americas. Mr Walters was previously vp of business development for GeoTrust.

EDS appointed Bill Carrelli as president of marketing and portfolio management for PLM (the merged UGS and SDRC). Mr Carrelli was previously vp of business development at SDRC.

Acer Communications and Multimedia chopped its name to Benq [is that a sound effect?], and will operate independently from Acer. The difference between the two: "While Acer's business centers on its role as an e-enabler through IT products and mega-micro services, as a stand-alone brand Benq will now reinforce its core focus on digital life devices." [I have no idea what that means.]

http://news.bbc.co.uk/cbbcnews/hi/club/your_reports/newsid_1697000/1697132.stm
http://www.theregister.co.uk/content/4/23274.html
"Exclusive Bill Gates interview"
Mr Gates avoids answering most of 15-year-old Sarah's questions.

“The AutoCADet's Guide to Visual LISP”
by Bill Kramer
List price: US$54.95; incl. CD-ROM
For more info, or to purchase online:
http://www.amazon.com/exec/obidos/ASIN/157820089X/XyzpublishingltdA

“Thank you for your thoughtful newsletter. I always enjoy your insight regarding the CADD world.”
- James R. Miller
Ziger/Snead LLP

Spin Doctor of the Moment

"Market researcher Stanford Resources estimated the OEL display market would be worth US1.6 billion in 2007, although another company, DisplaySearch, has forecast US$3.1 billion in 2005."
- CNET

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