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Solidworks, Dassault Systèmes and PTC — Oh my!

It’s been an interesting week. Like you, dozens of emails and press releases cross my desk
every day, some of which are far more relevant and interesting than others. Of interest:

Bernard Charlés appeared for the first time ever at a SolidWorks-sponsored event – and the
earth shuddered to a stop, at least for a moment, or so the reports would have us believe. It’s
true that M. Charlés, the CEO of SolidWorks’ parent company Dassault Systémes, has
generally stayed in the background, preferring to emphasize SolidWorks’ stand-alone nature
and the independence it has from the parent company. But it’s also true that just about
everyone knew of the connection between the two companies, so his presence at the
SolidWorks event should not have been a big shock. SolidWorks has long been one of the
chief revenue growth drivers for the parent company; the business has since its inception
used a very attractive reseller model that the parent now seeks to emulate (and perhaps
leverage for its own products?) and the SolidWorks base is sophisticated and ready to use
some of the products for which the parent seeks a wider market. So why the shock and
awe? Apparently some SolidWorks users are worried that tighter business oversight and
product integration may cause them to lose some of the attributes they most value about
SolidWorks. But not to worry too much: When asked if users can look forward to easier data
exchange between CATIA and SolidWorks, users were reportedly told: “That’s currently
handled by solution partners and that’s the way it’s going to be for the foreseeable future.”

On a somewhat related note, a piece appeared not long ago in the Financial Times that said
that PTC was for sale. PTC’s headquarters are in suburban Boston, as are (and were in
1997) SolidWorks’. This similarity led one Boston business paper to opine that “[i]f fellow
CAD software maker SolidWorks Corp. is any indication, an acquisition [of PTC] may not be
a bad thing for the local economy” because SolidWorks went on to spectacular growth after
Dassault Systèmes acquired it. But one can’t really compare the two – apples and oranges.
PTC could see $1 billion in sales this fiscal year; SolidWorks was in very early stage product
shipment, with sales of under $30 million in the year of its acquisition. PTC is a large,
complicated company, addressing many markets, huge customers, a diverse geography ….
SolidWorks was a much simpler business on a huge growth trajectory because its
technology was barely ready for the market; PTC’s technologies span the spectrum from
moderately-early to very mature. One could not expect PTC’s acquirers to see the same
level of growth as did Dassault Systèmes.

That same article also mentioned that, in addition to Autodesk, Cadence Design Systems
and ANSYS could be possible PTC acquirers. Cadence because of a perceived
complementarity between its semiconductor and circuit board design tools and PTC’s MCAD
technology. The case for ANSYS isn’t made in the article, but I can’t see that any more than
I can an acquisition by Cadence. I still think a potential acquirer is likely to be a financial
buyer that will allow the company to create a business model that can compete on price on
the low end (against Autodesk and SolidWorks) and on functionality against high-end
competitors like Siemens PLM and Dassault Systèmes.

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