Randall Newton today describes in GraphicSpeak that Autodesk's Q2 revenues are down 1% from a year ago. (The result is in contrast with its largest competitors, whose revenues keep going up.) This, despite all the initiatives the company launched over the last several years that were meant to smooth out revenue fluctuations and at the same time grow them too. Before the recession hit in late 2008, the company planned to grow at 15% a year; shrinking was not in the plans.
Ceo Carl Bass said this during yesterday's conference call. On the one hand...
Our cloud offerings are unmatched in the marketplace, and customer acceptance and feedback has been enthusiastic.
...and on the other hand:
While challenges in some of our end markets have led us to lower our third quarter revenue forecast, we're taking action to rekindle growth.
The two statements point to the problem that the company created for itself. The very actions Autodesk is taking to diversify its software away from CAD and to diversity its revenues away from licenses+upgrades is leading to the fall in revenue its shareholders are seeing.
Many of the new actions it took over the last years are designed to take in less money. For instance:
- Suites means a (roughly) 40% lower income over individually-priced software
- Subscriptions means 4x lower income over upgrade pricing ($500 vs $2000)
- Rental software means 10x-100x less income over perpetual licenses
- Giving away software to education institutes, instead of selling licenses (2% loss)
And so on.
CEOs of other big CAD software companies have been telling us for several years now that they sell to a closed environment; the CAD market has become a stagnant one. A customer win for them is a loss for their competitors; there are few new customers, primarily poached customers. No longer is there a win-win, only win-lose.
In this limited market of our CAD world, Autodesk has decided that offering its software for free (as in education, mobile apps), partly free (as in suites), and pretty cheap (as in rentals and subscriptions) makes sense.