No Pay, No Play

Enforcing subscriptions

 

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.
- G.R.

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.

 

 

Comments

[Dave Ault]

Hi Ralph,
Institutional investors now on the Autodesk board says all we need to know as customers. Divorced from prudent planning and R&D for the future since that will become an "unnecessary" expense to creating immediate profits things will at the least stagnate. What I figure will be their undoing will be when it is decided for Autodesk by these hostile investor types to end permanent seats entirely and to renege on the promise made to support them forever. Loot and plunder and make captive your customers and then make their expenses go through the roof.

It is all about our money in their pockets and the break even point for permanent seats at full price plus maintenence at the current levels is just under five years for Inventor Pro HSM. At the end of 15 years subs will have cost $22,000.00 more at today's prices which are sure to go up once the captives have been contained. Many people never did pay full price as deals could be made with Autodesk and many were so the true break even point for lots of buyers was probably three years or less. I am laughing at the latest greatest offer from Autodesk to expired Inventor seat holders from 2015 back. Cash in your permanent seat for three years subscription at the cost of one year. Whoo hoo and enter the world of never stop paying whatever they ask in the future because you gave up your choices. Trouble in investor Piranha paradise is coming.

I really hate to see this happen to Autodesk especially since they have acquired so much top drawer CAM programing. The future was theirs to give away or take the market over and I think the Investor piranhas have determined which it will be now.

[Eric Q]

The market started buzzing when Bentley started handing out overage invoices. Autodesk is about to kick the beehive.

[Neil]

Dave > because you gave up your choices

Well the truth is customers have been manoeuvred bit by bit into a situation where they have no choice - i.e. continually pay corporate welfare or have no access to CADCAM tools. This is basically the same rent seeking extortionist scam Dassault tried by stealth with Solidworks/Catia Lite. Really there needs to be a class action pushback on these wanton abuses. The trouble is most users are far too passive about their consumer rights and don't offer an organised opposition so these corporations push it to the max and write their own one sided rules. Bernard Charles did not blush when he told SW users their CAD was the best, by far, and there was no alternative to move to.
Until these people get slapped around for their impudence and arrogance they will keep regarding their customers as a ready source of money for nothing....

[Shawn Graham]

What to do about Autodesk's apparent indifference? It's like the relationship between drug dealers and junkies. Except in this case the junkies are mostly to blame.

I've been trying to make this point for years now, albeit without much enthusiasm due to my perception that there is a general lack of interest in changing the status quo, but perhaps that is now changing. Simple truth is, we don't have to be victims. In years past no one was interested because everyone has always been so convinced they needed the newest and shiniest version available, but the truth is you don't. Before the take over of CAD, I worked for years with a pen and pencil. Remember those days boys and girls, when the work was about design and not about the process? Back when architectural firms could afford to hire draftsman because a new employee didn't come with all the expense and overhead that technology brought with it? Sorry, I digress, I realize there's no going back to those days, but.... we still have a choice.

Yes, Autodesk has done a masterful job of steering us all to the cliff, but it's not too late, we don't have to jump. The customer has the power and the ultimate last word. At this point I don't honestly know if this will work across all platforms and programs, because I only follow Revit and AutoCAD, but all we have ever needed to do, to get their attention, is to just stop upgrading! Even if only for a time. If in 6 months they don't collect a single dime from the boobs, they will pay attention and if we could keep that up for a year, they might even display a bit of contrition for years of abusing their children. Just say no babies.
The question is, how do we organize such an effort and can we get a pledge / petition started? Just a thought. Cheers.

PS, if you're looking for an excuse to take an Asian vacation, you can pick up all the software you need for about $10. It's like pharmaceutical drugs, only the Americans are crazy enough to pay what the drug companies want.
.

[Ralph Grabowski]

Autodesk has figured out its workaround for your plan: if you are on maintenance (that's the annual subscription you pay with permanent licenses to get upgrades and support included), if you ever go off maintenance, you can never get back on.

Once off maintenance, your options are:
- stay off forever.
- switch to making those annual subscription payments, which are designed to be more expensive than maintenance.

[Shawn Graham]

Thanks for the quick feedback.

Yes I'm sure that's what they want you to think, but consider that the point is to get Autodesk to change their ways. Our fathers and grandfathers (and mothers), risked life and limb and even their jobs when they stood against the robber barons of their day to form the first labor unions. Well this is no different except that it doesn't require nearly so much effort or risk. Conscious consumerism is the new labor movement.

The point being, you just stop giving them money until they are open to reconsidering the wisdom of their path. Yes, there could be a small risk but if you have a permanent license now, what can they really do? Perpetual means forever. You just have to be okay with not having the latest version. So, once we do this, we all send letters to our clients, sub-contractors, whoever, and let them know we will not be upgrading until further notice. And invite them to participate. I suspect most firms would be more than happy to save the annual fees, provided we all hold hands and sing kumbya together. Unless of course, your client is another publicly owned company that refuses to go along out of solidarity with ADSK.

Worst case, they don't blink and you have to buy in fresh after 5 years when the cost of an annual subscription basically zeros out. They have the most to loose and that will quickly become apparent. Especially with new software coming on line. In less than 5 years there will definitely be alternatives. And after 30 years of using Autocad, I wouldn't mind finding something new.

Personally I don't think it would take that long. If there was a pledge forum, if there was a bit of media coverage, and if the numbers of pledgees was substantial enough, the war would end before it even starts. We only have to stick together, just like the early union movements - and they are done. It's not complicated. They sell software for goodness sake, not air and water. It's not like we really need them.

For the record, I like ADSK software, I've been using it since the days of DOS; and I have nothing against the company. I just don't like being forced to drink the cool-aid and I think corporations should be required to serve their customers needs first and their investors second. A stupid idea I know, but hey!