Issue #1,137 | Inside the Business of CAD | 22 August 2022
Netflix earlier this year stated that the greatest upcoming danger to its business is inflation, as it lost a million subscribers in the last quarter. In England, 590,000 dropped Amazon Prime subscriptions. A survey by Statista that shows every-day Americans’ #1 area in which to cut back spending is subscriptions.
With inflation happening now, followed by a possible recession next year, CAD-using firms may well be looking where to cut costs. You should be thinking about putting a strategy into place to counter the sometimes assertive sales tactics of CAD vendors, who might be fighting to prevent you from reducing their lovely, lovely subscription income, as occurred during the previous recession.
During the 2009 quarterly conference call with financial analysts for Q1, PTC described what it was doing to prevent customers from reducing maintenance payments, a precursor to today’s subscriptions (ref: upFront.eZine #590):
“A customer can’t cancel maintenance now and start it up again two quarters down the road. We don’t allow that. If you stop maintenance, you’re off the train. The only way to get back on the train is to re-buy the software.
“So then they’re [the customers of PTC] in a situation of having to pay essentially five times the price to re-buy the software, and then get back on maintenance again, so this problem doesn’t re-occur.”
PTC was asked about customers wanting lower maintenance fees to cut costs during the recession. The response by the company back then was, “They’re asking, and we’re resisting.”
Back then, this put CAD-using firms into a bind, where a consideration might have been to cut costs like laying off employees to afford the full maintenance cost, or keep valuable employees and face a 5x software bill later. Today, with subscriptions, the conditions for off- and on-ramping are different, but still merit investigation.
On a Leash
The primary point of subscription payments is not to benefit customers, but to benefit shareholder-owned CAD vendors, who desperately need to show Wall Street predictable, smoothly upward trending profits. Privately-owned CAD vendors do not suffer from this flaw.
(The benefit of subscriptions to customers is that fees can be written off corporate income taxes 100% each year, unlike permanent licenses. As well, a level of support and automatic upgrades are typically included in the price. The drawback is that quicker support can cost more, and that upgrades can be lackluster, as CAD vendors no longer need to justify to customers the cost of upgrades, as in prior times.)
Here’s why smoothly-increasing revenues are important: During the recession of 2009, the share price of PTC fell 25% after it warned that revenues would be flat. The company was punished by Wall Street for managing to maintain revenues during the biggest recession since 1945.
Following the recession, some CAD vendors looked at how to lock in customers financially so they could impose price hikes, irregardless of economic conditions. Annual subscription [aka SaaS] payments became the bedrock, and as a bonus included the threat of remotely shutting down CAD programs when customers failed to renew. Autodesk was the first to go hardcore into subs, followed by PTC. As well, new CAD vendors tend to be subscription-only.
Some CAD vendors offer large customers “enterprise subscription plans” of a three-year duration. The benefit to design firms is the predictable cost over the longer timeframe. The drawback is the unwelcome, possibly huge increase that follows in year four, as uncovered by Martyn Day.
Considering the Counter-tactics
Software systems are so embedded into corporate practices that ripping them out is nearly infeasible. Pay the money, or lose the soul of your business. There are, however, some counter-tactics that design firms can consider:
-
Recognize the maneuvers that might be used by CAD vendors to stop you from paying less, and be prepared to counter their arguments
-
Negotiate a lower subscription fee for the duration of the recession, in exchange for not cutting out licences
-
Form alliances with other design firms to support each other through ideas, purchasing groups, and social interactions; you are not alone
-
Examine alternative CAD vendors for permanent-license and no-license options; see below
-
Determine which seats at your design firm don’t need high-end CAD, and then substitute them with lower-cost, permanently-licenced packages; one of my clients, for instance, changed 40 AutoCAD seats to 10% AutoCAD and 90% BricsCAD
You need to to stay in business, no matter the economic climate.
Sources of Permanently-license CAD Software
Of the many CAD programs that don’t require annual payments, here are a few to consider:
In the field of mechanical CAD, there is Siemens with its mid-range Solid Edge and high-end NX; it also offers several simulation and data management products.
Amongst architectural CAD programs, consider the range of software from Nemetschek — ArchiCAD, Vectorworks, and Allplan, along with supporting simulation and data management programs.
General CAD users could examine BricsCAD (from Hexagon), ARES (Graebert), and a long list of variations of IntelliCAD.
There are many more, such as ArchLine.XP (Cadline) and TurboCAD (IMS/Design); I cannot list them all. In addition, free CAD-related programs are available through https://osarch.org.
What Ralph Grabowski Thinks
If you fail to pay, you fail to play. The only subscription I hold is with Netflix. The entirety of my business runs on software with permanent licenses; even my cloud storage service provider (pCloud) runs on a permanent license. It’s the only way to survive.
== Converting 3D CAD & DCC
to Virtual/ Augmented Reality ==With the explosive growth of VR/AR, the ultra-massive 3D datasets produced by CAD and DCC programs need efficient conversion to the popular Unity and Unreal development platforms. Okino of Toronto is the long-time provider of the PolyTrans|CAD translator, which easily handles the interactive datasets required by VR and AR for Microsoft HoloLens, HTC VIVE, Oculus Rift, Meta, and other VR headsets.
PolyTrans provides you with
Massive dataset handling
Node compression
Adaptive CAD tessellation
Intelligent polygon reduction
Popular CAD data sources include SolidWorks, ProE/Creo, Inventor, AutoCAD, Revit, Navisworks, DGN, IGES, STEP, Parasolid, and JT. DCC data sources are Cinema-4D, 3ds Max, Maya, FBX/Collada, and many more.
Perfected over three decades, we know 3D data translation intimately, providing you with highly personalized solutions, education, and communication. Contact CTO Robert Lansdale at [email protected].
And In Other News
Solidspac3 releases Spac3 2022 for getting interactive QA/QC variance reports within 12 hours (down from 24 in earlier releases), and to visualize discrepancies between reality capture (made with point clouds) and design intent in Web browsers.
For each variance, you can click between 2D, 3D, or BIM drawings and point clouds, simultaneously comparing plans to reality in 3D, and then sorting variances by severity. Learn more from www.solidspac3.com.
- - -
Lattice Technology offers its XVL format as a lightweight (100x smaller) universal file for viewing all data in major CAD formats for downstream use, such as in bills of materials, servicing instructions, and interactive part catalogs. www.lattice3d.com
- - -
Zoltán Tóth moves from international channel partner at Cadline (ArchLine.XP) to channel development expert at “next-door” Graphisoft.
- - -
Here are some of the posts that appeared recently on my WorldCAD Access blog:
-
Financial: PTC feels good leaving China
-
News: Twitteratti dunk on Zukerberg’s interpretation of France
You can subscribe to the WorldCAD Access blog’s RSS feed through Feed Burner at feeds.feedburner.com/WorldcadAccess.
Letters to the Editor
Re: Peeking Behind Iron Curtain II
I’ve been wondering when you would explore this topic of peeking behind the iron curtain. Of all the writers covering engineering technology, you are in a class by yourself in your wealth of foreign contacts and breadth of experience working with these companies. It was an excellent analysis.
- Randall Newton
- - -
Your column about Russian software developers was interesting, and is the sort of thing one would never find in mainstream media.
The move to focus on the development of totally domestic programs in Russia carries a danger of its own: the current “Tsar” will not be around forever and what happens after he is gone? If Russia then re-embraces international cooperation and trade, does all that domestic software then die on the vine, because the problems you mention about selling to the West?
Although moving to Linux is possible (I’ve used that myself for over 15 years and, as a result, BricsCAD), I wonder what happens to Linux when Torvalds is no longer at the helm? He’s only in his mid-50s, so he probably has a good run left, but can a committee-run Linux succeed the same as Torvalds-run Linux?
As always, thank you for the writing!
- Steve Schuller
The editor replies: A headline today reads, “Russia imposes measures against TikTok, Telegram, Zoom, Discord, Pinterest…in response to the companies’ failure to remove content that it had flagged as illegal.” The headline could just as easily read “USA imposes measures against…”.
- - -
Great talk about the weight of Russia in CAD . You have forgotten BricsCAD, a big name in Europe, of whom 50% of its development center is in Russia, too.
- Oli
The editor replies: I wrote only of home-grown Russian firms, and made generic reference to the Western firms who have programmers in Russia.
- - -
I make my living using software that is owned by a French company (Dassault). Can you picture a scenario where the US government and the French government might get into a pissing contest? Not necessarily a military conflict — just a squabble over tariffs, or emissions regulations, or using the word ‘Champagne’ for a California wine. Anything that causes the French government to say to a French company, “Stop doing business with the US.”
If that were to happen, and I fell for went with the subscription model for my CAD software, I would be out of business, several of my customers would be severely crippled, and we would be unable to develop new products.
So when the salesmen are frantically pitching SaaS [software as a service], I just keep on saying no, because they can never come up with a scenario where it benefits me.
Keep up the wonderful work of reporting on our very peculiar industry.
- Jess Davis
The editor replies: The only SaaS I pay for is Netflix; all other software runs on permanent licenses. A business is foolish to do otherwise.
Re: Running Generic CADD in 2013
I got my first introduction to Generic CADD when it was bundled with a three-button Logitech mouse. I first ran it on a Tandy 1000TX with an Intel 286 CPU and added the 80287 coprocessor — no hard drive, just dual 3-1/2" and 5-1/4" floppies with a CGA color monitor and dot matrix printer. At that time I booted straight into it from DOS.
I later ran it up through Windows XP on a Pentium 4 with up to four monitors thanks to Simon Hradecky’s VgaFix, which allowed the use of VESA graphics on nVidia cards.
I recently found a need for Generic 3D for some 3D CAD work, as I found the interface extremely friendly and am now figuring out how to best run it without resorting to firing up one of my old XP computers. Glad to have found this thread at worldcadaccess.com/blog/2013/01/running-generic-cadd-in-2013.html! Will give the DOSBox-SVN-Daum a try, along with saving to DXF, and then printing with AutoCAD.
- Art C (via WorldCAD Access)
Re: Twitteratti dunk on Zukerberg's interpretation of France
Takes me back to walking the Vegas strip, outside Caesars, and an older couple in front of me pointed at the ‘Eiffel Tower’ and said unironically ‘Everything is here, you don't need to travel’.
- Robin Capper (via WorldCAD Access)
Re: Retirement
I started working as a mechanical draftsman after I graduated from Ryerson Polytechnical Institute in 1978 (now Toronto Metropolitan University). I progressed to machine designer, and now tool and die designer and purchaser at EL-MET-Parts in Ontario.
After the drafting board became obsolete, I learned AutoCAD, then Inventor, and currently back to AutoCAD 2019.
It’s been a wonderful career. I was blessed. I, too, am now looking to retire, maybe at the end of this year. It’s time to do other things. I have really enjoyed your articles about the CAD world. Best of luck!!!
- Harold Genz
The editor replies: Those of us who started with manual drafting and watched the transition to computer-assisted drafting lived through fascinating times.
Notable Quotable
“Three stages of career development are: I want to be in the meetings, I want to run the meetings, I want to avoid meetings.”
- @Katiohead
Thank You, Readers
Thank you to readers who donate towards the operation of upFront.eZine:
-
Jure Spiler of BASIC (small business donation)
-
Barry Dietz
-
Dan Wiseman
-
CAD Bloke
-
G. W. Sloof of Talenting Investments (small business donation)
To support upFront.eZine through PayPal.me, then I suggest the following amounts:
-
$25 for individuals > paypal.me/upfrontezine/25
-
$150 for small companies > paypal.me/upfrontezine/150
-
$750 for large companies > paypal.me/upfrontezine/750
Should Paypal.me not operate in your country, then use www.paypal.com to send funds to the account of [email protected].
Or ask [email protected] about making a direct bank transfer through Wise (Transferwise).
Or mail a cheque (US$ or CDN$ only, please) to upFront.eZine Publishing, Ltd., 34486 Donlyn Avenue, Abbotsford BC, V2S 4W7, Canada.
*4649
Recent Comments