A reader asks,
I am quite curious how this subscription change shakes out for Autodesk. I find that everyone is considering alternatives now, which is new.
I think that all of Autodesk's customers who want to be on subscriptions have already signed up. They have had several years to get on board. That's about a couple of million, less than half of the total number of customers who use Autodesk's mainline software.
As of January 31, Autodesk stopped selling software with permanent licenses. Two exceptions: LT lost the permanent license option last year (it was used as the test case), and bundles (suites) lose the option at the end of July this year.
Of the remaining several million customers not already on subscriptions, this is how things will fall out:
- Some will reluctantly sign up for subscriptions when they are forced to, and then meekly accept the new way of doing things (like cablevision customers)
- Others will sign up because they have to, but then start looking for alternatives like Solidworks, BricsCAD, ARES, and IntelliCAD (like people who today increasingly "cut the cord") -- especially after they learn the hard lesson of no-pay no-play.
- Still others will refuse, relying on their permanent licenses to ride it out (like people who watch tv with an antenna)
Autodesk was shocked that their Q4 showed a downturn, as they had been expecting a last-minute rush of permanent license sales. I have been predicting for more than a year that ADSK revenues will now start to decline due to customers resisting enforced subs.
Autodesk ceo Carl Bass has several times expressed his admiration for Adobe's full-stop on sales of permanent licenses, and so modeled Autodesk's approach on Adobe. Adobe's wild success is, however, not due to halting sales of permanent licenses, but due to their subscription prices being dirt cheap relative to the permanent license prices.
By contrast, Autodesk is expensive. Here are some subscription prices:
- Adobe charges $600 a year for ALL its software
- Autodesk charges $360/yr just for AutoCAD LT, a 2D-only CAD program. A one-year subscription to AutoCAD LT today costs nearly as much as a permanent license of LT when it first shipped!
When we compare oranges to oranges, we find Autodesk charging $2,730/year for its most expensive suites, which do not include all its software, unlike Adobe. Expect pricing to rise. Once customers are made captive on the subscription treadmill, software companies are free to jack up prices, like cablevision companies do.
In the end, no-pay no-play works both ways: if customers don't pay, then Autodesk doesn't get to play. At one time Autodesk was the largest CAD vendor in the world, based on annual revenues. For the last couple of years, it has fallen to second place, and last year earned half-a-billion dollars less than Dassault Systemes. I think that the revenue gap will grow in the years to come as customers go elsewhere in search of choice.