Customers are rightfully reluctant to pay Autodesk rent

0.9% switch

 

Autodesk is on an adrenalin-fueled rush to complete a two-prong change of its entire business that affects customers negatively:

• Customers will only be allowed to pay repeatedly for using the software; no pay, no play
• Customers will only be allowed to run software through network connections; no Internet, no play

Autodesk is experiencing dismal financial results as customers with permanent licenses are rightfully reluctant to switch from freely using the software on their computers to paying rent. How bad is the switchover for Autodesk? Here's how bad:

With the end of permanent license sales of stand-alone software at the end of January, Autodesk made a big marketing push in Q1 (February-April) to convince 2.8 million permanent license holders to switch. (The "2.8 million" figure consists of customers who Autodesk determined used the software sometime within the last five years.)

Autodesk called the marketing push "one of the most successful promotions we've ever run," and was pleased that over 25,000 switched. Percentage-wise, this is a disappointing 0.9%.

Even worse for Autodesk, the newer the license the less likely the customer would switch. Autodesk found that about half of of those switching were running an AutoCAD that was seven years or older, so AutoCAD 2010 or older. This averages a mere 2,000 per recent release.

(When a financial analyst asked about the discrepancy between "five years" and "seven years," Autodesk felt that some who in the seven-release-and-older cohort perhaps were ex-users [used a competitor's program] or non-paying users [pirates].)

As a result, Autodesk is warning financial analysts that Q2, Q3, and even Q4 will also result in dismal results like Q1.

 

 

Comments

[Greg Eden]

As Autodesk has done since the ‘80s, we issued a news release detailing our first quarter results. You should check it out (www.autodesk.com/investors). When you do, you’ll see our total subscriptions grew by 132,000 in the past three months, which is greater than 5x the number you reported (and more than many were expecting). We ended April with a total of 2.71 million subscriptions.

[João Tavares]

Hi,
you wrote: "Customers will only be allowed to run software through network connections; no Internet, no play".

Is it really like this? Every time you open the software will it check online the license? Or does it check the license only periodically (like 1x per month) ?

Thank you
J Tavares

[Ralph Grabowski]

There are two sets of numbers and two sets of sources discussed here. Mr Eden refers to the number of new subscribers from all sources, using a press release from Autodesk as his reference. This is fair.

This blog entry, however, discusses a somewhat different topic, specifically a subset of those new subscribers -- those who were permanent license holders -- and quotes Mr Bass as its source.

(We always provide a link to the original source material so that our readers are able to check the context for themselves.)

[Ralph Grabowski]

To answer your question: "Every time you open the software will it check online the license?"

Yes. In fact, it does this already -- as of AutoCAD 2015, to the best of my knowledge.

[Anonymouse]

The question isn't "does it check the license every time you open the software". The question is, will it fail to run if you're not connected to the internet. Surely it doesn't prevent using it if you're not connected right now. Could they change it, sure. By the way, Bentley does the same thing with Microstation, at least with the license server. I have no idea how tight it is now, but there used to be a 30 day grace period. I would expect Autodesk to do something similar with future versions.

[Chris]

This subscription/rent policy is nothing short of extortion.
The current user base should tell Autodesk to "step off" (as the Ozzies say) by ceasing to pay for any new product.
Why not learn to be happy and content w/your current permanent license?
What further functionality can Autodesk provide that isn't already in the software?
New is not better, esp. where empty promises are made by software developers.

[Ralph Grabowski]

There is a theory of organization development that all organizations begin by serving the customer, but by 25 years or so, the organization changes orientation to become inward looking -- its reason for existence changes to meet the on-going existence of the organization, whether or not it has any reason to still exist. This theory applies to ones that are for-profit and non-profit.

[Chris]

Common sense says that theory applies to governments.
Problems is, when a government is established, there's no turning back!
That's why I was wondering if anybody has done any sociological-political studies on why that happens, and how to prevent or delay it from happening for centuries instead of decades.

[Steve Johnson]

I don't believe AutoCAD 2015 and later (standalone perpetual) phones home for licensing reasons after the initial activation. It does attempt to phone home for other reasons, but if it can't connect the software will still work.

I also believe you are not entirely correct about how the "no Internet, no play" thing works with Autodesk's rental scheme. I'm surprised nobody from Autodesk has bothered to request a correction, but I'll step up and do it for them:

"Our software will ask you to login with an Autodesk ID and password at least once in 30 days to keep the software running. There are no activation codes or serial numbers required. You simply launch the application and it will prompt you for the email address or Autodesk ID and password. You can work offline if you have logged in at least once in the prior 30 days. If your subscription expires, you will not be able to use the software. It is important to remain current while you have need for the software." - Cat Wolf, Autodesk

So while a connection is required every so often on rental, it's not quite as bad as you're stating. Yet. That is, if the connection works in your environment and you trust Autodesk to ensure that it will always continue to work, despite a history that suggests such a level of trust would be foolhardy.

Thanks for covering this important subject, Ralph. You may have noticed I've fired up my own blog again and am discussing this and other such subjects.

[Jason Bourhill]

On Desktop subscription, the advertorial "Straight Talk About Autodesk Subscription" from Cadalyst (http://info.cadalyst.com/autodesk-software-subscription-consideration) states the following:

"Myth: Without an Internet connection, I can’t use my Desktop Subscription software.
Fact: An Internet connection is required for the one-time activation of your software; after that, Desktop Subscription software will work offline for up to 30 days, at which point you must connect to the Internet to continue using the software. You’ll receive a reminder seven days prior to having to reconnect."

This confirms Steve's statement. This requirement looks to impact on users that can't make an internet connection. For them it would seem that their only option is to move to a network subscription.

[Ralph Grabowski]

The "no Internet, 30 days to play" spin is a diversion from the more serious issue: "no pay, no play" with Desktop Subscription. Right when the next recession hits (projected for later this year or next), your company can't afford the next $1,680 Autodesk wants out of you for for every license.

[Jason Bourhill]

Or $1915 USD if you are located in the provinces such as Australia! 14% more for what??? This has actually been significantly higher in the recent past.

With the internet check-in, I wonder whether they now actively enforce the Territorial limitations of the license agreement?

[Ralph Grabowski]

Part of the wholesale drive to subscription enforcement is to tackle piracy. Illegal copies won't run for more than those 30 days -- or at all.

[Steve Johnson]

It wouldn't surprise me if pirate copies of AutoCAD bypassed the phone-home requirement, putting pirate users at an advantage over legal users, not for the first time in Autodesk history. (Unless the pirate users get found out, in which case they get slugged hard).

But let's assume Autodesk could totally prevent the illegitimate use of its most recent products. It wouldn't be a safe assumption that pirate users would then all rush over to Autodesk, waving the large sums of cash required to rent those products. A handful might, but the vast majority would likely:

a. pirate earlier versions of Autodesk products;
b. pirate other vendors' products; or
c. pay much smaller amounts to legitimately use other vendors' products.

[Dave]

I can say that at my company we were on subscription and own a perpetual license. Once our subscription runs out we will no longer upgrade our product. We will not rent a license, it just won't happen. As of today we are looking at alternative options and putting them through testing. We are sick of the Autodesk monster to be honest. The monster that leaves you virtually no options with them, you are bullied into what they want you to do. We used to use over 5 different Autodesk products. We are now down to 2. I am pretty sure soon that will be 0. We are in the process of extortion phase out.

[keir]

DraftSight is good, with a low cost perpetual licence It takes a bit of getting use to, its good.

[Anonimoose]

I recently got Maya LT and Mudbox on a yearly basis. While I do agree with most of the complaints on Autodesk's utility driven model, it seems we are stuck with this kind of business practice and it isn't just Autodesk pulling this kind of thing. I sure would like to actually own (not the ip) the software I'm working with like the next person. But it seems there is no end in sight of this kind of mechanical sales practice, I also have a ZBrush license which is probably the most forgiving out of all the 3d software I ever used. If more companies could follow suit of Pixologic's licensing model it would be awesome. Problem with Autodesk is that they have always sold their software on a yearly term basis. So if you needed a basket list of fixes you ended up shelling out money every year, which is still much better than what we get now which is basically nothing except a term contract for how long we need their software. Its like a magazine subscription now, rent your property and get the latest issue.