A quick refresher: cloud vs. subs
It seems many people are still confusing the buying mechanism and the delivery mechanism for today’s software, so here’s a quick recap:
You can buy software in many ways, from a one-time payment for an app to an ongoing subscription, to purchasing a pool of licenses that give access to a specific number of concurrent users. Or some other creative mechanism to appeal to a specific class of buyer. This is the business part of the transaction and should be evaluated like any other purchase: what gets me what I need at a price I’m willing to pay?
How you use software is another matter entirely. You can download it to your phone or desktop, you can use it in the cloud, or your can stream it to your VR goggles. That has to do with how the software works, if your IT infrastructure allows cloud access and other considerations. The question here is: does it do what I want in a way that’s useful to me?
A non-PLMish example. My business uses Quickbooks for accounting. I would be perfectly comfortable using the cloud version, but my accountant isn’t. Apparently, some accountant-magic-features aren’t available in the cloud version, so we use the desktop one. That’s functionality, not how we pay for it.
The last time I bought Quickbooks, it was a CD in a box from Staples. No maintenance, no ongoing business relationship between my company and Quickbooks. If I were to buy it again, given my accountant’s preferences, it’d be a download to a desktop since that’s the feature set he wants. And it might be a subscription or a one-shot buy, whatever Quickbooks is offering at that point.
The point here: to say that Autodesk is successful because of a “transition to cloud revenue” may someday be true, but we’re not there yet. Autodesk is successfully moving customers to subscriptions, which may be for desktop products, for BIM apps in the cloud, for Fusion 360 in the cloud, for simulation products run on an HPC cluster, or lots of other products that run on all sorts of hardware. CEO Andrew Anagnost told investors last week that Autodesk added 31,000 net cloud subscriptions in the fiscal second quarter, up from 18,000 in the prior quarter. That’s 31,000 out of a total of a total of 290,000 subs added in the quarter While a near-doubling in FQ2 of cloud subs is nice, it’s still a small part of the total.
As we saw with my accountant, there are reasons to prefer one or another delivery mechanism for the products we buy. What we pay for them may be tied to that decision, but it’s only one factor. Subs and cloud are not at all the same thing!
I’ll be at the Siemens analyst event in Boston this week, an extravaganza of everything NX/SolidEdge/Teamcenter/SimCenter/Tecnomatix and, likely, MindSphere, Mentor and a lot more. Look for a recap later this week and quick updates if there’s a major announcement. In the meantime, stay cool and enjoy the last days of Summer (in the Northern hemisphere).