Alibre Blog

Whistling Past the Graveyard, Dassault Earnings and the IBM PLM Acquisition

It’s been an interesting couple of days for those that like to watch high-priced CAD software companies. Dassault Systemes surprised everyone with an eleventh-hour announcement happily proclaiming the demise of their decades long exclusive PLM sales agreement with IBM. Only a day later, in an unlikely coincident, came the release of Dassault’s earnings report, which revealed an annual software revenue decline of 12%, based in large part on a 37% fall in new licenses sales, including a 34% decline in Enovia. Enovia plus CATIA are the two primary products sold by IBM for Dassault.

After acknowledging a "challenging" third quarter and cutting its full-year sales guidance, Dassault executives went on to voice optimism for 2010 and call the separation from IBM “a boon to customers.”

Oddly, executives at Siemens and PTC joined the cheerleading chorus by pronouncing the IBM deal a “leveling of the playing field” that would benefit the industry. Somehow, losing IBM as a channel partner is good news for both Dassault and its competitors.

Apparently, skeptics of the “great news” have all been transported to a parallel universe where independent critical analysis still exists, leaving only those analysts and writers behind that readily accept executive pronouncements at face value. I searched in vain for anyone who put these two announcements together. Surely, there must be some linkage between the rushed, last minute IBM announcement and the 37% decline in new license sales.

Dassault is paying IBM $600M to acquire between $450-$600M of annual revenue and approximately 700 IBM employees. Significantly, this marks the first time that Dassault Systems will take direct responsibility for selling any of their own software products. With this comes the responsibility to manage a large direct sales force. The opportunities for failure are huge, but completely unspoken by Dassault and unasked by analysts and the media. Rather than a win-win arrangement we have:

• The Winner. IBM dumps a loss making business that has been crushed by the economy, while also shedding highly paid personnel and overhead costs. A one-time gain of $600M ices their cake nicely.
• The Loser. Dassault Systemes, desperately makes omelets from broken eggs while struggling to rebuild and integrate a collapsing sales channel no longer able to dependably produce a third of its revenue.

Dassault and 700 individual IBM employees are going to have to decide whether they like each other or not. Given the unit’s recent sales performance and Dassault’s emphasis on cost reduction, many of these positions could be on the block. Severance costs could be considerable. Plus, how many dyed in the wool blue suits will eagerly leave their careers at IBM to join a French software developer?

Massive chaos in the ranks seems inevitable, and a culture clash of epic proportions certain, as IBM’s “take no prisoners” sales team moves into the headquarters of technology driven Dassault. Don’t forget, these IBM guys are the same ones that routinely go straight to the top to get anyone standing in their way fired.  Direct sales teams can easily establish cultural dominance in large publicly held companies, as excellent sales execution is required to meet investor expectations.

One of Dassault’s strengths has been its ability to acquire and successfully manage the growth of companies such as Solidworks and Enovia. The key to their success has been the independent management of sales channels, allowing Dassault to remain neutral and avoid product / channel conflict. Companies such as PTC, Autodesk, and Siemens quickly absorb the sales operations of their acquisitions, resulting in sub-optimization of combinations.

How long before clashes between product-aligned organizations, the new direct selling PLM headquarters versus the Solidworks VAR channel, develop over which products should be sold and who should get credit for them?  Will Solidworks become like Solid Edge at Siemens, an increasingly marginalized stepchild of a foreign parent with better loved and better looking offspring?

Alibre $99 Challenge Offer Goes Viral with “Refer-a-Friend” Marketing Program

Alibre’s very popular $99 Challenge offer for Alibre Design Standard V11.2 ended on September 29th, the same day we began shipping Alibre Design Version 12.  

The results exceeded our expectations. We are happy to report that we had record sales and profits in August and September. We added thousands of new customers worldwide, including hundreds of multi-seat business customers. Approximately 40% of new customers were business and 60% individual designers. Unit sales increased by an order of magnitude and lead volume more than doubled. We also received excellent blog and media coverage, with more than a dozen articles including several blogs that discussed the offer more than once. German, Japanese, UK, Australian and other Alibre VAR’s reported similar results.

CAD users apparently haven’t gotten enough though. Every day since September 29th folks are telling us why “they” still deserve to get the $99 offer. We have heard everything from “I didn’t realize it was the 29th already” to the equivalent of “the dog ate my sticky note.”

So to reward our customers, and because we don’t like to turn down business, we are going to authorize existing customers to offer the Alibre Design V11.2 for the $99 price to their friends and associates. Effective immediately, existing customers can authorize up to 10 of their friends or associates to buy V11.2 for only $99 each. Existing customers must use the Alibre “Refer-a-Friend” process to authorize the new referrals. In other words, to qualify for the $99 price, an existing Alibre customer must refer you.

Refer-a-Friend leads are the best ones to get, so we reward customers with free maintenance when their referrals buy. You can get complete details on Alibre’s Refer-a-Friend program and begin inviting others immediately at http://www.alibre.com/company/programs/refer.asp.

Customers that purchase Alibre Design Standard V11.2 for $99 can also upgrade to V12 by purchasing a maintenance agreement for $299. In addition to V12, the $299 maintenance agreement includes one year of telephone and online technical support and rights to any new versions or upgrades released in that 12-month period.

Oh, one more thing, for those lonely folks that don’t know anyone that already owns Alibre Design, or for those that just want to get V12 at the best possible price, we are selling Alibre Design Standard V12 plus maintenance for $398 ($99 + $299) to all comers, through the end of October.