Carl Bass Brings Autodesk Into Its Golden Age
Roopinder Tara posted on January 05, 2016 |
The biggest CAD company in the world has grown to be much more than CAD - but challenges lie ahead.
Autodesk's CTO Jeff Kowalski (left) and CEO Carl Bass address the press at Autodesk University 2015.
Autodesk's CTO Jeff Kowalski (left) and CEO Carl Bass address the press at Autodesk University 2015.
“People may have said we are like Toyota. Now we are more like Tesla.” 

Bass is jovially fielding questions from the press along with Jeff Kowalski, Autodesk’s CTO. We are at the end of two days of press meetings at Autodesk University, the company’s annual user meeting that recently took place in Las Vegas. With approximately ten thousand in attendance, it is the biggest gathering of CAD users in the world.

For a couple of years, Bass, with Kowalski at his side, has dispensed with the traditional press conference format. There is no podium; there are no suits and ties, no prepared statements—and no agenda. They banter with the media. CEOs of billion-dollar companies don’t usually meet the press this way—they couldn’t pull it off.

But these two are comfortable, confident . . . and modest. Autodesk is more than Toyota and Tesla. The company not only provides a dependable ride for all manner of design and engineering professionals, it has also become a showcase for leading-edge technology.

It was not always so. The Autodesk we had at the turn of the century was flirting with being a billion-dollar company—profitable but content to fine-tune the design software it had become famous for, most of it based on AutoCAD. By that time, architects and designers worldwide had embraced AutoCAD. Its user base was in the millions. Its success was self-perpetuating. You would not get fired for buying AutoCAD. And as the company’s then-CEO, Carol Bartz, was fond of saying, “Look around. If God didn’t make it, AutoCAD did.”

Innovation began creeping back into the company about 10 years ago. That was also the time Carl Bass became CEO.

This is not a coincidence.

Back to Technology

Today, Autodesk is a font of cool, innovative technology. Name a technology or initiative that is hot (cloud, mobile, 3D printing, robotics) and Autodesk is on it—and may even be on top of it.

Bass is a technologist and maker at heart. No one could blame the more business-minded for fretting when Bass began to refashion Autodesk. Would he break the gold mine? Would he be the kid in charge of the toy factory?

Financial performance of Autodesk under Carol Bartz and Carl Bass. (Original chart made by L. Stephen Wolfe for GraphicSpeak.)
Financial performance of Autodesk under Carol Bartz and Carl Bass. (Original chart made by L. Stephen Wolfe for GraphicSpeak.)

Bass had already begun leading Autodesk out of its AutoCAD dependency and out of its near-billion-dollar rut when he came back to the company in 2001. There was an insane gamble on a New England company with zero revenue and a $133-million-dollar price tag, which remains to this day one of Autodesk’s most expensive acquisitions ever.

Revit was a revolutionary parametric BIM technology. Autodesk’s marketing and distribution were its rocket engines. It hurtled past established BIM software leaders to become the single most popular BIM software, now in use by architects worldwide. Autodesk passed the $2 billion mark in 2008 two years after Bass became CEO.

Autodesk suffered in the ensuing recession and dipped below $2 billion again but seems to have recovered and is on a trajectory to reach $3 billion before this decade is up.


We meet with Bass at the company’s ipso facto headquarters near San Francisco’s waterfront.* The architect of what may be seen as Autodesk’s golden age sees Autodesk as having gone through three distinct phases (see the full interview).

“There was the founders’ period, led by John Walker,” said Bass. “Then there’s the Carol Bartz era. Then a new era ten to twelve years ago.”

Autodesk Founder Era

Autodesk’s first era was led by John Walker, who, along with his merry band of programmers, brought about the revolution of CAD on a PC with AutoCAD in the early 1980s. The staff had a reputation for playing with Frisbees and dogs during the day and writing code into the night. But then, the revolution began petering out. Walker moved to Switzerland. The company growth slowed down. The AutoCAD cash cow was getting old.

Autodesk’s “flying founders.” From left to right: Rudolf Künzli, Mike Ford, Dan Drake, Mauri Laitinen, Greg Lutz, David Kalish, Lars Moureau, Richard Handyside, Kern Sibbald, Hal Royaltey, Duff Kurland, John Walker, Keith Marcelius. (Image courtesy of Shaan Hurley, Between the Lines.)
Autodesk’s “flying founders.” From left to right: Rudolf Künzli, Mike Ford, Dan Drake, Mauri Laitinen, Greg Lutz, David Kalish, Lars Moureau, Richard Handyside, Kern Sibbald, Hal Royaltey, Duff Kurland, John Walker, Keith Marcelius. (Image courtesy of Shaan Hurley, Between the Lines.)

Autodesk realized it needed real management to get to the next level. Under the iron rule of Carol Bartz, Autodesk buttoned down. Autodesk was going to be a billion-dollar company, dammit. The forceful, often profane Bartz set about trying to diversify Autodesk. Vertical product suites were a way for professionals to dig deeper into their pockets, but most were still based on AutoCAD code. Motion pictures and GIS were going to be the next big things. They weren’t.

The aging cash cow, AutoCAD, reeled and almost went under when its much-anticipated major release in 1994 (R13) was so bug-ridden that a universal outcry from users threatened to become a mutiny. It took years of patching to get AutoCAD back on its feet.

AutoCAD release timeline. (Image courtesy of Shaan Hurley, Between the Lines.)
AutoCAD release timeline. (Image courtesy of Shaan Hurley, Between the Lines.)

Each year of the new millennium saw Autodesk come close to a billion dollars—but unable to reach it. Clearly, a new approach was needed.

Who Is This Guy?

Bass came to Autodesk as the former CTO of Ithaca Software after the New York-based graphics software company was acquired by Autodesk in 1993. Bass was known to roam the executive hallways of Autodesk in his locally sourced Birkenstocks, freely dispensing advice.

How irritating this must have been to a CEO who may have believed advice was better given than received. It didn’t take Carol Bartz long to fire Bass—only to rehire him five months later. But around the time the Internet bubble was the biggest, he left Autodesk to start Buzzsaw, an online AEC project and collaboration software company.

Bartz reeled Bass in again in 2001, this time by buying Buzzsaw. Bartz would be passing the Autodesk reins to him five years later.

Chief Maker

A technologist at heart, Bass has imbued Autodesk with the same desire to tinker, to make. His predecessors may have been content with a company that led in making design software. That was not enough for Bass. That was just part of the picture. After designing it, one needs to analyze it and make it.

Bass is happiest in his workshops. (Image courtesy of CNET.)
Bass is happiest in his workshops. (Image courtesy of CNET.)

CEOs of big companies used to wear suits and use spreadsheets. Bass is more likely to wear a t-shirt (he favors Instructables these days, representing a maker community site that Autodesk acquired) and use a cutting machine. Near his home in Berkeley, California, are two massive machine shops, one for woodworking and another for metal. Making things is really what Bass is all about.

The fact that Autodesk made only design software—even if it is the most popular one and made a lot of money doing it—well, that just wasn’t good enough. Design was just a part of the process. Seeing it on the screen is okay, but users still have to get it into their hands.

Autodesk was supplying a partial solution. Why should users be left on their own to cobble together applications from different vendors, reach out to different service providers, or worse, wing it to get a part into their hands?

Moving Beyond CAD

Before a part is made, should it be analyzed? Autodesk has bought enough CAE companies (Algor, NEi Nastran, Blue Ridge Numerics and others) and spent enough doing so ($500 million) to validate its claim that it is now a simulation company, too. Similarly, it has bought enough CAM companies (HSMWorks, Delcam and more) to qualify as one of the biggest CAM companies. The CAD, CAM and CAE picture may be in parts, but now it shows a more complete company.


Going beyond CAD. Simulation of airflow over a racecar. Autodesk acquisitions have made it into a CAE and CAM company. (Image courtesy of Autodesk.)
Going beyond CAD. Simulation of airflow over a race car. Autodesk acquisitions have made it into a CAE and CAM company. (Image courtesy of Autodesk.)

Autodesk was not the first and is certainly not alone in offering CAD, CAM and CAE software. A few software vendors have CAD, CAM and CAE applications under one roof. Dassault Systèmes, Siemens PLM and PTC have for a long time catered to large companies with integrated solutions for design, analysis and manufacturing. Big companies mean big prices and big sales.

Enterprise software, as it is known, can entail intricate installation; consulting contracts, paid training and a near lifetime commitment with annual maintenance agreements. Companies such as Boeing or GM were putting planes in the air and cars on the road and considered integrated CAD, CAM and CAE mission critical, no matter what the cost. Accounts at these top-tier manufacturers were fought over and winning one was a great source of pride. With thousands of licenses at a big automobile company, for example, there were millions of dollars at stake.

But it was not a game Autodesk was playing. Autodesk favored democratization: making software available to the masses. Its most expensive software was a few thousand dollars, not tens of thousands. An order of magnitude less in pricing made it accessible to several orders of magnitude in more customers. For every thousand users at Boeing, there were millions of potential customers in small manufacturers, mom-and-pop shops, architecture firms and sole proprietors.

Autodesk has always been about democratization, though back in the day it was more likely to refer to the 80/20 rule: 80 percent of the functionality at 20 percent of the price of CAD as it currently existed. Autodesk applications may not be as robust as enterprise software, but they are probably robust enough and are usually easier to learn and use—and always less expensive.

Autodesk first started espousing democratization after it began offering simulation to the designer. CAE, or simulation as it is now more commonly known, was once the exclusive province of specialists (often with advanced engineering degrees) who were the only ones who could learn and understand FEA and CFD programs. Changes in the interface, wizards, putting advanced functions “under the hood” and other changes have succeeded in putting simulation in the hands of more engineers and even some designers.

Democratization in simulation has been resisted by specialists afraid that planes would fall from the sky when advanced tools were put in the hands of the less educated, the less enlightened and the less certified. So far, none have (knock on wood). The concept of democratization has certainly succeeded in expanding the user base—and the customer base—for simulation software.

Autodesk is trying it again with PLM. Its PLM 360 software is going up against the giants: Dassault Systèmes’ ENOVIA, PTC’s Windchill and Siemens Teamcenter, each so precious that their companies are afraid to list the price. Similar to simulation, PLM was in the realm of specialty and high cost. Autodesk’s PLM 360 is opening PLM up for many more customers, especially small companies and younger users who are not interested in expensive, hard-to-use, forever-to-learn applications.

For all those to whom PLM was previously denied, to those who felt PLM was something only big companies with IT departments could figure out, Autodesk has offered a solution that can be learned in an afternoon and installed without an IT department. And the price? It’s right on the website. You don’t have to call a salesperson. It’s $75 per month per user. Simple. Convenient. Modern.

Autodesk did not invent pay-per-use or cloud-based PLM. Aras and Arena Solutions were already in the race and offer similar pricing models. Autodesk won’t beat them with an 80/20 rule. It’s more like a giant that has stepped into a ring in which dwarfs were fighting.

No Such Thing as Too Much Technology

Expanding from just a CAD company into a CAD, CAM, CAE and PLM company might be a good thing for Autodesk’s stockholders and board of directors who see an ever-rising top line and corresponding dividends. But Bass is still restless. After the circus that is Autodesk University, Bass finds some comfort in his workshop. But having more things to make also means more things to question and more that frustrates.

Why can’t my shop tool share information with my iPhone? Bass duct tapes an iPhone and sensors to a metal cutting machine—but it occurs to him that he is piecing together an IoT system. Why not buy an IoT company? Autodesk buys SeeControl, an IoT company.

Autodesk’s “reality capture” uses photos to make 3D models. A castle is recreated by stitching together aerial photos taken with a drone. (Model by Mark Brogan, from Autodesk gallery.)
Autodesk’s “reality capture” uses photos to make 3D models. A castle is recreated by stitching together aerial photos taken with a drone. (Model by Mark Brogan, from Autodesk gallery.)

The restlessness follows Bass outside his shop and into an architect’s studio. Why do architects have to design buildings on a blank screen? Are they not going in among other buildings? They shouldn’t have to model every existing building. Why can’t they photograph the existing buildings and turn those photographs into 3D models? All processed on the cloud?

A camera does much better at capturing a shape—and it can do it with a push of a button. Oh, our software can’t do that? Let’s buy software that can. Or the company that makes it. Autodesk buys photogrammetry software and positions itself as a leader in “reality capture.”

Autodesk is certainly not the first successful company to have generated a reserve of cash from which it finances acquisitions. But with Autodesk in the Carl Bass era, there seems to be a method—to complete the whole picture, from concept to design to analysis all the way through to its manufacture. Autodesk is putting all the pieces in place.

Establishing a Culture of Youth

Every successful business needs to bring in the young buyers or risks fading away with its aging user base. Witness one of America’s once most vaunted luxury brands, Cadillac. Its attempts at courting youth have been largely unsuccessful. For Cadillac, youth has moved on.

Kids at Autodesk Day in the San Francisco office. An outreach to youth is quite apparent at Autodesk. (Image from Autodesk blog, It’s Alive in the Lab.)
Kids at Autodesk Day in the San Francisco office. An outreach to youth is quite apparent at Autodesk. (Image from Autodesk blog, It’s Alive in the Lab.)

Autodesk may have turned the corner on youthful acceptance and is now solidly in a position to provide the tools of choice for the young as it becomes their turn to make things. Autodesk’s involvement in Maker Faire proved it knows the new generation was not about to make the same things their fathers made.

While other CAD companies stay locked on to the professional customers in their offices and factories, Autodesk is getting into playgrounds and schools, finding out what kids want and giving it to them. By the time they arrive in the corporate world, they will have drawn on SketchBook (the iPhone app had more than a million downloads in the first two months it became available in 2009), traded 3D figurines with their friends at high school graduation (senior photos are so yesterday) and zipped through engineering statics (Autodesk ForceEffect, dude, because you can’t see the whole mechanism on a calculator).

All free or cheap apps, all easy to use. You do not want to be the salesperson pitching Windchill 10 years from now and hearing, “How much is that?” If you can even get anyone to answer your call. Or your text. Or your last desperate tweet.

Come and Get It, Kids

Under Bass’s watch, software for students and schools was made free. On Dec. 1, 2014 Autodesk boldly declared all its software would be free for every student and teacher in the world. It had been made free for all students and teachers in the United States since earlier that year. It was a gutsy move, considering that sales to educational institutions were part of the revenue stream. Autodesk does not break out educational sales in its annual reports, but one Autodesk employee was heard to lament, “Well, there goes a $100-million business.”

The trend toward making software that the young want to use—and understanding how the software is being used—is not lost on the new Autodesk. Autodesk leads all CAD, CAM and CAE companies in the number of apps available on mobile devices. While none have been wildly successful in terms of revenue (millions of downloads aside, most are free or just a few dollars each), another CEO would shut it down for being a drain. For Bass, it’s an investment in youth.

Who Wouldn’t Want to Work Here?

Carl Bass, 57, knows he’s not the right person to carry his company’s message to the youth. That would be like your uncle insisting that Cadillacs are cool. It’s not going to work. People listen to those with whom they can relate. Want to reach young people? You need to hire young people.

Easier said than done. Autodesk’s official headquarters are in bucolic Marin County. Cross the Golden Gate Bridge and go another 20 miles north. Looking through the towering glass walls of the lobby, it’s not unusual to see deer on the hills. It’s the ideal place for peaceful, undistracted work. After a full day in your cubicle, there is a free gym for all employees.

In Autodesk’s previous era, you could get some treadmill time with Carol Bartz. Friday beer busts, a holdover from the Walker era, were tolerated. You could still bring in your dog. But recruiting proved to be difficult. For the young and everyone else thinking of a life outside of work, Marin had its place. Hiking and biking is great here. Downtown San Rafael did have its shops and restaurants but it was miles away. You ended up eating in the company café—or at your desk.

They pay people to work here? A relaxation area at Autodesk offices in San Francisco. (Image from Office Snapshots.)
They pay people to work here? A relaxation area at Autodesk offices in San Francisco. (Image from Office Snapshots.)

Carl Bass, on one of his sojourns from Autodesk, set up Buzzsaw in the heart of San Francisco. He has made a point of setting up his own office in the building at One Market Street in San Francisco’s Financial District where Autodesk occupies several floors. Come during the day and you are at the bustling center of one of the country’s hippest and coolest cities.

Recruiting just got a whole lot easier. The HR spiel to a wide-eyed new college graduate might go something like this:

“Welcome to Autodesk. You had the opportunity to see our gallery. Yes, those projects were all made with our software. Would you like a drink for our beverage stand? The view—yes, we never tire of it. That’s the Bay Bridge—and over there is the Golden Gate. The Ferry Terminal across the street has shops, restaurants and a farmer’s market—so, no shortage of places to eat. Later, we’ll head out to Pier 9 so you can see our manufacturing facility—we have so many 3D printers! And robots. A lot of stuff going on there. Wait till you hear of our artist-in-residence program. Work? Very funny. We do work here. You might have a stand-up desk, an open area with your team. But if you need a break, stretch out on a beanbag chair. Kind of cliché, I know. They came with the ping pong table.”

Still, it’s no slam-dunk. Autodesk, being a software company based in the Bay Area, has to compete with the likes of Google, Facebook and a slew of well-funded startups all falling over themselves and going over the top with perks to attract the best and the brightest. Company cafeterias, three meals a day, endless snacking; it’s more like a cruise ship than a corporation. Bass tells of one company that went so far as to have an open bar. But while you’ll not be making cocktails at Autodesk, you may be working at the coolest location in the CAD, CAM and CAE universe.

But suppose you are not ready for a commitment. Autodesk hires interns—a lot of them, over 400 (Autodesk has a total of more than 7,000 employees worldwide). As more companies use an intern pool for permanent hires and as interns tend to be young, this in itself ensures that Autodesk will have a steady supply of young smart brains.

Changing the Culture for the Next Revolution(s)

Despite leading Autodesk into what can be considered its golden age, Bass’ true genius may just lie in setting up a company that can recognize the genius of others. A big guy (he’s 6-feet 4-inches tall) without an ego to match, Bass does his best to foster ideas in others.

Other CEOs busy themselves thinking they have brilliant ideas (they mostly don’t) and most of their time is spent executing on the original brilliant idea they inherit with incremental variations. A CEO’s office is usually not where innovation comes from. Big innovations tend to be disruptive. That’s the last thing a CEO wants. Those CEOs are not named Carl Bass.

AutoCAD was the original brilliant idea for Autodesk. It caused a revolution in how things were designed. It entered the world in the 1980s, when drafting technology for most consisted of drafting boards and T-squares. Then, for 20 years, Autodesk had the bulk of its revenue from AutoCAD and made incremental improvements. Consider industry suites incremental, most still being based on AutoCAD code. If you consider 3D a revolution, you are in too deep. To a distant observer, you are still sitting, pecking away at a keyboard, moving a mouse, picking things off a menu.

Maybe an automotive analogy would help. The car was a revolution compared to the horse. But the internal combustion engine has been in it since the beginning. Although tweaked and improved, it’s still based on exploding gasoline in cylinders. Would you argue that a revolution is happening right now with electric cars—that we don’t have to haul a fossil-fueled power plant around? Yes, but you are still in a car, four wheels on the ground.

From where is the next brilliant transportation idea coming? Probably not from the CEO of an existing car company who is in too deep to think freely. The next idea for technical innovation, whether transportation, technology, design or manufacturing, is probably not going to happen from inside the executive offices where everyone is working to keep the fires lit, the engines turning, the revenue flowing. Disruption is a bad word.

Bass has created an environment conducive to innovation by affecting its corporate culture.

“A lot of it is cultivating a culture [in which] new ideas are appreciated,” said Bass, in our followup interview. “I've gone from thinking that the most important thing a CEO does is make lots of important decisions and I've subsequently learned that that's not true. The most important thing you can do is influence the culture. I would've said, you make lots of decisions and culture is kind of a nice byproduct. Now I say the opposite. Ninety-five percent of what you can influence is the culture and there are a handful of important decisions.” 

And it’s working. Ideas are coming in fast and furious. It’s as if there is no wave Autodesk does not want to catch.

Autodesk Labs

Hardly a week goes by without a new and interesting technology being exposed in Autodesk Labs. Announced in 2006 and loosely based on Google Labs, Autodesk Labs has over the years come up with many good ideas, some which have been developed into technologies and some that have “graduated” into commercial products.

The fact that Autodesk Labs even exists, founded right before a severe downturn in the company’s finances, is a credit to Bass’s vision for a technological future. Since then, it has flourished, with some of the most exciting new technology in the CAD world making its debut there. This was the first place we saw 3D models being created from digital photos. A CFD app appeared on an iPad. Fusion 360 first appeared here as Inventor Fusion Technology.

While most companies hide their technology out of fear of it being stolen, Autodesk promotes it—and reaps the benefit of feedback from users. It has become a valuable testing ground for new ideas and most importantly, new ideas from a variety of sources—not just the office of the CEO.

3D Printing

Several large-capacity 3D printers at Autodesk's Pier 9 workshop.
Several large-capacity 3D printers at Autodesk's Pier 9 workshop.

Take the 3D printing wave. Autodesk not only caught the wave, it is riding on top of it. Short of 3D printing companies themselves, no other CAD, CAM and CAE company has done so much with 3D printing. Bass has become a regular at shows and conferences about 3D printing (such as Maker Faire). Autodesk created its own 3D printer, the Ember, and is trying to create industry standards for 3D printing. The Pier 9 workshop has seven large-capacity 3D printers which employees are encouraged to use.


Autodesk experiments with how robots can work alongside humans in its robotics lab at Pier 9 in San Francisco. (Image courtesy of Fast Company.)
Autodesk experiments with how robots can work alongside humans in its robotics lab at Pier 9 in San Francisco. (Image courtesy of Fast Company.)

The recently introduced robotics lab at Pier 9 proves that Autodesk does not want to miss a new technology—even if it is far from its original core technology. Robots, once seen mostly in factories (for spot welding, for example) and movies, have jumped into everyday life. Personal robots can be ordered from catalogs to help with household chores and remind you when to take your medication. Autodesk whipped up a lab and staffed it with talent to study robotics in this new age.

A Wealth of Riches—What to Do with It All?

An abundance of technology, as has occurred at Autodesk in the current era, would be something most companies would envy. However, technology without business follow-through can just sit there.

One example is photogrammetry.

How many people know that you can use a digital camera to make a 3D model? How many know that Autodesk has software that can do that?

The idea of clicking a button a few times and getting a 3D model made from photos is borderline miraculous. Since its first inception, photogrammetry had the potential to up-end traditional photography. Imagine high school graduates being able to give 3D figurines of themselves instead of photos. Or a real estate agent who is able to show a house to someone in a different state, letting his or her client “walk” through it.  

How disruptive could this be? At a recent 3D surveying conference, news that Autodesk had purchased a photogrammetry company sent waves of panic to LIDAR service companies, many of which make a business from charging tens of thousands of dollars to fly planes outfitted with laser scanners to map out a scene with millions of points. That an amateur with a GoPro camera could generate a 3D model was rocking their world. It could mean the end of business as they know it.

That was the SPAR International conference in April 2014. Since then, Autodesk has tried to increase awareness in “reality capture” with REAL 2015 and the upcoming REAL 2016, a new 3D technology conference.

Too much technology and too little time. Autodesk cannot absorb all the technology it creates. It is similar to big movie studios, which might get thousands of ideas but can only react to five or maybe 10 movies per year. After all, it takes marketing, distribution and sales.

Whereas Autodesk has succeeded in creating a technology incubator, perhaps now Autodesk needs to create a similar incubator for business. Each great technology incubated could be spun off, given seed money and an entrepreneurial team.

The CEO Report Card

Given all the success Autodesk has achieved, what’s the best way to stay on course and continue? Technology for technology’s sake can’t survive. Bass has to run a business. Business is about making money. And that brings up a subject no CEO wants to hear.

Autodesk lost $44 million in the third quarter of 2015. It lost $236 million the quarter before that.

Will Autodesk’s high-minded initiatives of late suffer? Any one of them could be criticized for their expense and intangible benefit.

Were the Pier 9 workshop, the gallery, the great education giveaway and the artist-in-residence program all mistakes? Will those programs be allowed to survive? Was Bass allowed to play in his technology sandbox only as long as stockholders got their dividends?

Bass is ready with an answer.

“Let’s put this in perspective,” said Bass. “We spend on the order of $2 billion a year. That’s $10 million every working day. People who don’t do this for a living have no idea about the things that really cost money and the things that don’t.”

What critics might call ostentatious displays such as the gallery and Pier 9—they are not significant, Bass is saying. And they actually work as marketing tools.

“Close to 80 percent of our cost is people,” said Bass.

Bass seems ready to stay the course. After all, he has weathered downturns before.

The Switch to Subscription

Steering Autodesk over the next year or two will take a steady hand. Over its long history, Autodesk has based its revenue on selling software with perpetual licenses. Software companies with big user bases love quarters in which major upgrades are released. Revenue spikes. But in between, revenue is based only on new software sales. Big releases could be a year or even two years apart.

CAD users got quite used to the idea of owning their software outright with an option to pay for an upgrade if they wanted to. It became common for users to skip releases to save money because the upgrade cycle was seen as too big of an effort or because the enhancements offered in a release just didn’t seem important.

It was a time-honored way of buying and selling software—but that time has come and gone. CAD, CAM and CAE software continues to be the notable exception. Perpetual licenses for anything over a few hundred dollars seem to be going away, replaced by what is more or less a software-for-rent scheme.

Autodesk took longer than most of the rest of the software giants to decide that all of its “desktop” software would now be on subscription beginning on Feb. 4, 2015. Now, here’s the rub. Instead of getting a huge chunk of revenue on an annual release cycle, it comes in much smaller increments over the course of the year—if the customer shifts to subscription. Who knows how long customers will sit on their perpetual license?

Autodesk will have to brave its way through critics and curmudgeons who hold on to the idea that they should own software, often because that is what they are used to. There’s also something about ownership, even if it is only perceived rather than actual. The critic may live in a house that is owned by a bank, although he perceives of himself as a homeowner. The bank also holds his car title until his loan is paid. He will argue that eventually the house and car will be his.

Under subscription pricing, the CAD software will never be owned outright. A user will have to pay to use it forever. Autodesk will have to successfully argue that what users were paying for the initial cost plus their upgrades can in effect be evened out over the course of time with subscription, plus list other benefits of being on subscription.

Downward Price Pressure

A bigger gamble is pricing. While the shift to subscription is inevitable, it remains to be seen what prices and what product will emerge to create a successful new business model. Selling thousands of CAD seats at thousands of dollars each was an easy model to understand. Now there is a strong downward pressure in software pricing. Customers are used to getting cheap or free applications, a change Autodesk seems to be encouraging with its releases of many apps.

Will professionals continue to pay even hundreds of dollars per month? Pricing threats are coming in from well-funded startups. Onshape is giving away the use of its software (though the premium version costs $100/month). SketchUp, probably the most widely used AEC software, is still free for most users.

Autodesk continues to provide low-cost or free apps (Fusion 360 and A360, for example) while its desktop software (AutoCAD, Inventor, Revit, the Suites) can still provide the bulk of its revenue but as customers shift to the lightweight and often cloud-based apps, Autodesk can only hope that the pricing model it settles on allows it to sustain and grow its business.

Who’s Paying for My Cloud?

Autodesk’s strategy seems to be to move all its users to the cloud. The pricing will sort itself out. To sell it, Autodesk puts forth the concept of “infinite computing,” in which users can access any number of computers as needed for whatever they are doing. Bass is all in.

“I think this big bet we made on the cloud is a really important thing. I think it's probably the biggest platform shift […] in my entire professional life. It's bigger than mainframes to PCs or workstations,” said Bass. “We’re going from using the computer that's in your pocket or on your desk that's on your job site to using a million cores sitting in a data center somewhere.”

Autodesk is kind of giving the impression that you don’t have to pay for infinite computing. But then, who is? Autodesk is a huge customer of Amazon Web Services. That is not a service Amazon provides from the kindness of its heart. Yet Autodesk continues for the most part to give away cloud computing to its customers, in the hope of converting them (though some users can buy “cloud credits”). At some point, Autodesk will need to pass that full cost along and probably charge a premium, as with all business services.

Bass has succeeded in making the present era of Autodesk its most successful—both from an internal and external point of view. From the inside it looks like a great place to work, where ideas and new technology is valued. This is bound to attract good talent to perpetuate its success. Brilliant technology is appearing in droves and Autodesk has emerged as a technology leader in ways even the original founders could not have imagined. Autodesk has succeeded in expanding its business from its CAD roots to include CAE, CAM and PLM. Autodesk can say it is in its golden age. Challenges lie ahead and chief among them in the long term is the shifting of a user base from its main moneymaking product lines to modern cloud-based applications in a way that sustains or grows its business.


*Official headquarters are in San Rafael, about 20 miles north of San Francisco.

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