8:39am -- Alright, I'm here with the Dassault Systemes conference call explaining their acquisition of IBM PLM.
8:41am -- Bernard Charles is explaining that by 2007 Dassault and IBM began to realize that the sales arrangement of PLM sales was getting complicated -- after 28 years of working together. Dassault began to take over some of IBM's sales.
As they were thinking of the next ten years, they realized that all of Dassault's software is getting so integrated that the parts cannot really be sold separately. One driver was customers wanting an easier way to integrate.
8:44am -- The slowdown of the last 12 months is getting consumer goods companies and others to adopt PLM faster. The question then became, who would invest writing software for new sectors -- DS or IBM?
Came to the conclusion that simplification and expansion required a single direct sales force. This was the right moment to transfer 700 professionals in 60 countries to Dassault, all of them dedicated to large companies.
8:46am -- This is also building up the future of Dassault, even as it is a very large [financial] investment. Will continue to work with IBM as a Global Alliance partner, but no longer need to share royalties on applications.
Customers are very pleased, no negative comments.
8:49am -- Deal to conclude probably in Q1 of next year, the major job being integrating IBM employees with DS. It could not happen unless one was ready to sell and one ready to buy.
Q&A Session
Steve Wolfe: Clarification on remark that this simplifies the customer engagement process. In the past, IBM has decided on a case-by-case basis whether to carry a new Dassault product, even if the customer wanted it. Will this change?
Answer: Yes.
Wall Street Journal: What % of revenue was sold by IBM last year?
Answer: About 30-35%.
WSJ: Does this make IBM freer to work with rivals like PTC, and you freer to work with IBM rivals like Oracle?
Answer: There never was exclusivity in our contract for the last 20 years. IBM allowed customers to use Oracle and non-IBM hardware.
Managing Automation: IBM is a partner in your cloud computing. Does this increase the level of IBM's involvement?
Answer: Cloud is important for providing subscription-based services for small and medium size companies who could not otherwise afford our software. IBM is a great company to lead the activity on private clouds. But it is still up to the customer to choose; nothing exclusive.
Simply Media: It is not clear to me how this changes for customers. Does this mean they go to an office with 'Dasasult' on it instead of 'IBM.'
Answer: That is a very simple way to put it. We have six Dassault brands right now. But IBM focuses mainly on CATIA and ENOVIA, marginally on the others, and not at all on SolidWorks. It is not the plate on the shop, but the simplification of the contract for the customer.
Ray Kurland: Do all 700 IBM PLM employees have to join Dassault? What is IBM's ongoing involvement -- can you detail it? Where is IBM middleware going?
Answer: IBM PLM is a well-defined entity; its head [Al ...] will join DS. We want to hire all of them, they are all welcome to Dassault. If they have contracts with IBM, they are required to join Dassault.
IBM middleware is a powerful organization, we need them for consulting and business transformation.
Many of the 1000+ IBM PLM customers had already been contracting with us.
RK: Revenue is $400 million for nine months -- how much is license and how much service revenue?
Answer: It is mostly license revenue.
Kenneth Wong: My understanding is that PTC and Siemens are also IBM Global Alliance partners. How does this deal give you advantage over your two main rivals.
Answer: I think anyone can claim to be an IBM GA partner, but there is reality. I think this move makes it easier for us to work together. The question is How do you trust each other to move on? There was some activity by our competitors with IBM, but we don't care. I think there is significant value for IBM to be with us. As long as IBM applaud the move, it is a good sign.
9:14pm -- end of call.
From the content of this call, I see that the other advantage to Dassault is a $530 million pop to its annual revenues. Combined with Autodesk recently declining revenues, I wonder if this is enough to make Dassault Systemes the #1 CAD vendor based on annual revenues? We'll find out as DS and Autodesk reveal their quarterly numbers in the next month.
8:41am -- Bernard Charles is explaining that by 2007 Dassault and IBM began to realize that the sales arrangement of PLM sales was getting complicated -- after 28 years of working together. Dassault began to take over some of IBM's sales.
As they were thinking of the next ten years, they realized that all of Dassault's software is getting so integrated that the parts cannot really be sold separately. One driver was customers wanting an easier way to integrate.
8:44am -- The slowdown of the last 12 months is getting consumer goods companies and others to adopt PLM faster. The question then became, who would invest writing software for new sectors -- DS or IBM?
Came to the conclusion that simplification and expansion required a single direct sales force. This was the right moment to transfer 700 professionals in 60 countries to Dassault, all of them dedicated to large companies.
8:46am -- This is also building up the future of Dassault, even as it is a very large [financial] investment. Will continue to work with IBM as a Global Alliance partner, but no longer need to share royalties on applications.
Customers are very pleased, no negative comments.
8:49am -- Deal to conclude probably in Q1 of next year, the major job being integrating IBM employees with DS. It could not happen unless one was ready to sell and one ready to buy.
Q&A Session
Steve Wolfe: Clarification on remark that this simplifies the customer engagement process. In the past, IBM has decided on a case-by-case basis whether to carry a new Dassault product, even if the customer wanted it. Will this change?
Answer: Yes.
Wall Street Journal: What % of revenue was sold by IBM last year?
Answer: About 30-35%.
WSJ: Does this make IBM freer to work with rivals like PTC, and you freer to work with IBM rivals like Oracle?
Answer: There never was exclusivity in our contract for the last 20 years. IBM allowed customers to use Oracle and non-IBM hardware.
Managing Automation: IBM is a partner in your cloud computing. Does this increase the level of IBM's involvement?
Answer: Cloud is important for providing subscription-based services for small and medium size companies who could not otherwise afford our software. IBM is a great company to lead the activity on private clouds. But it is still up to the customer to choose; nothing exclusive.
Simply Media: It is not clear to me how this changes for customers. Does this mean they go to an office with 'Dasasult' on it instead of 'IBM.'
Answer: That is a very simple way to put it. We have six Dassault brands right now. But IBM focuses mainly on CATIA and ENOVIA, marginally on the others, and not at all on SolidWorks. It is not the plate on the shop, but the simplification of the contract for the customer.
Ray Kurland: Do all 700 IBM PLM employees have to join Dassault? What is IBM's ongoing involvement -- can you detail it? Where is IBM middleware going?
Answer: IBM PLM is a well-defined entity; its head [Al ...] will join DS. We want to hire all of them, they are all welcome to Dassault. If they have contracts with IBM, they are required to join Dassault.
IBM middleware is a powerful organization, we need them for consulting and business transformation.
Many of the 1000+ IBM PLM customers had already been contracting with us.
RK: Revenue is $400 million for nine months -- how much is license and how much service revenue?
Answer: It is mostly license revenue.
Kenneth Wong: My understanding is that PTC and Siemens are also IBM Global Alliance partners. How does this deal give you advantage over your two main rivals.
Answer: I think anyone can claim to be an IBM GA partner, but there is reality. I think this move makes it easier for us to work together. The question is How do you trust each other to move on? There was some activity by our competitors with IBM, but we don't care. I think there is significant value for IBM to be with us. As long as IBM applaud the move, it is a good sign.
9:14pm -- end of call.
From the content of this call, I see that the other advantage to Dassault is a $530 million pop to its annual revenues. Combined with Autodesk recently declining revenues, I wonder if this is enough to make Dassault Systemes the #1 CAD vendor based on annual revenues? We'll find out as DS and Autodesk reveal their quarterly numbers in the next month.
After the call, I learned that Siemens and PTC belong to IBM Global PLM Alliance Partnership (Dassault does too, for that matter), but with this acquisition, Dassault hopes to be elevated to IBM Global Alliance Partnership, which (according to Dassault) represents a smaller inner circle of IBM partners.
Posted by: Kenneth | Oct 27, 2009 at 11:52 PM