Archive for September, 1994

Release XIII

Thursday, September 1st, 1994

(First published in the CAD++ Newsletter in late 1994)

As you may have gathered by now, this issue of CAD++ has a distinct AutoCAD Release 13 flavor, and, in keeping with that theme, this month’s column will give you a view at what opportunities and pitfalls this latest AutoCAD release will offer.

The first hurdle this latest AutoCAD release has to leap over is the fact that it is numbered 13. Triskadecaphobes (those afraid of the number 13) are unlikely to upgrade. After all, with a version number like that, it’s likely that some nasty thing will happen to what ever system you install it on, never mind the type of bugs a 13th release might hide, just waiting to spring out at the least opportune moment.

Before I get into some of the details of supporting Release 13 with your products, it’s important to explain the core reason Autodesk does what it does. As a publicly held company, Autodesk’s Board of Directors – the group that sets Autodesk’s goals and direction – bows to a greater power, namely Autodesk’s stockholders. The directors have a fiduciary responsibility to the stockholders, which translates to making decisions that will benefit the stockholders. More simply put, if Autodesk can make its stock price increase, the stockholders remain happy. As of this writing, Autodesk’s stock is at an all-time high (it’s at $67/share), which implies that investment community is quite happy with all of Autodesk’s recent actions. That’s something to keep in mind as you read the rest of this column.

Changes in the Dealer Channel
A few weeks ago, Autodesk delivered a major ultimatum to existing U.S. AutoCAD dealers: “In order to sell Release 13, you must sign a new dealer agreement.” That in itself would not be a major deal, except for the fact that the new agreement significantly changed the way dealers have to do business when selling AutoCAD.

The first major change is that AutoCAD dealers may only sell AutoCAD face-to-face (yes, you have to be close enough to touch, handshake, etc. – no phones, FedEx, or UPS permitted). Previously, AutoCAD dealers could sell AutoCAD over the phone, and ship it out to customers anywhere in the country, as long as they offered to support the product at the customers site (for a fee, if they were inclined to charge one). This previous arrangement created a lower price for AutoCAD because selling it mail order required less overhead on the dealer’s part. Also, it allowed educated AutoCAD users to deal with a dealer they wanted to work with instead of their local dealer (many customers on CompuServe have complained about their local dealers being rather inept). Note that this change is retroactive to pre-Release 13 versions of AutoCAD as well.

The second change is that Autodesk cut dealer margins on AutoCAD, which means that AutoCAD’s retail price and street price will be close to the same. One dealer I spoke to indicated that the price he has to pay Autodesk for Release 13 will be about the same as the price he used to charge customers for Release 12. That’s quite a difference if you figure that Release 12 street prices ran about $500 to $1000 below the retail price of $3750.

Why Did Autodesk Do This?
Simply said, to help keep their stock price up. Autodesk has been between a rock and a hard place of late. Their product value has been eroded by highly competitive dealers who’ve been selling AutoCAD at near cost in order to get customers in the proverbial door. Mail order sales of AutoCAD have helped decrease those prices. Smaller dealers  with less grandiose plans found it difficult to compete, and therefore, stay in business. Add to that rumors that Autodesk would itself help kill the dealer channel by selling  direct or using general distribution to sell AutoCAD, and you end up with a dealer channel that’s very nervous, and a few mega-dealers who, for the time being, account for a large part of Autodesk’s sales.

Autodesk had no real choice if they wanted to strengthen their dealer channel (which is technically a huge outside sales force). They had to tighten their grip on their dealers. The new agreement does just this – it helps remove some of the uncertainty that was demoralizing the dealer channel, it will increase the sales of smaller dealers who previously  couldn’t compete easily, and it pares down the power that the self-made mega-dealers had over Autodesk. Analysts like this type of move.

However, many customers will not benefit from the new dealer agreement, as they will now have to pay higher prices for the same product (in the case of Release 12), or a significantly higher price to get Release 13. Also, the more aggressive dealers who had invested in mail-order sales of AutoCAD will be quite resentful that Autodesk has changed the rules all of a sudden, and may look to move their customer base to other CAD packages.

Upgrade Resistance
If you read various PC trade journals, you’ll find that more and more editorials are suggesting that users don’t really need all the upgrades that the big software companies are  foisting off on them. After all, there are only so many features you can add to a word processor, spreadsheet, or CAD package before such features start bordering on the  useless or very specialized (and not applicable to the masses). I think Release 13 is guilty of some of those foibles as well, and based on comments made by AutoCAD users at  trade shows, user group meetings, and on CompuServe, some others seem to feel the same way.

If you add to the new bells and whistles in Release 13 that it will come with a higher price tag (more or less artificial based on the new dealer agreement), Release 13 starts looking like a less attractive upgrade to customers. It’s even worse when Autodesk tells those of us who are dedicated DOS users (because we want performance and better reliability) that they plan on converting everyone to Windows real soon.

We Don’t Do Windows
While most of us have Windows (and most AutoCAD users do too), Autodesk officials recently stated that only 10% of their installed user base was licensed to use AutoCAD  Release 12 for Windows, and I would be willing to bet that some notable percentage of those users still used their Release 12 DOS versions illegally instead of being quagmired under Windows.

These numbers are a painful reality for all the 3rd party AutoCAD developers who enthusiastically jumped on the Windows bandwagon at Autodesk’s urging a year or two ago.  The numbers mean that close to 90% of all licensed AutoCAD users use DOS versions of AutoCAD. Certainly helps define the market for developers,
doesn’t it?

Multiple Platform License
In my mind, probably the best thing, all things above considered, that Autodesk is offering as part of the Release 13 package is a multiple platform license that lets you run both  the DOS and Windows versions of Release 13 interchangeably. That’s something users have been asking for for nearly two years. One might assume that they didn’t want to  hold back upgrade sales for DOS users, especially since only a small percentage of AutoCAD users use it under Windows. Just a warning though – the pre-release versions of  Release 13 require gobs of disk space if you install everything, including all the versions, all the samples, and the multiple language dictionaries. By my count, well over 140MB of disk space.

Recommended System Configurations
As it was recently explained to me, for Release 13 users, Autodesk recommends at least a 486/50 system with a 150MB hard disk, SVGA, and 12MB (DOS) or 16MB (Windows) of  RAM. Add 4MB to the RAM requirements if you plan on doing solid modeling. For some users, this will require a sizable investment in upgrade hardware.

The Impact on Developers
I’m not going to cover the impact on dealers, as you’ve already committed yourself to the new contract, or are looking for other CAD products to sell to your customers in lieu  of AutoCAD.

I’m also not going to cover how Release 13 impacts end users beyond what I’ve already covered.

I will touch on the topic of AutoCAD consultants briefly – many of them are probably screwed by virtue of the new Autodesk dealer agreement, for a couple of reasons. The first  is that most consultants can’t qualify (or don’t want to) as AutoCAD dealers. The second reason is that by forcing customers to deal face-to-face with their dealers, the dealers are in the best position to sell consulting services to the customers, and independent AutoCAD consultants won’t even get a chance, unless they ally themselves with a dealer network.

Outside of those three categories, that pretty much leaves AutoCAD add-on developers. Based on everything I’ve already covered, here are some basic rules that all AutoCAD  3rd Party Developers should follow (or at least consider):

Rule #1: Don’t restrict how dealers can sell your product. Unless your dealers are in a hole without your product (they rarely are) you can’t excise this sort of leverage. And even if they are very dependent, any strong handedness will tend to build resentment against your products and your company. Build relationships – not ultimatums.

Rule #2: Do try to create standalone versions of your add-ons. With Release 13, the cost to a user to use your Release 13-based add-on will be about $3800 plus the cost of your product. If you do not require AutoCAD to run your product, your market potential increases significantly. If you need a drawing engine to run your product, a number are available at much less than AutoCAD’s entry price.

Rule #3: Don’t develop only for Windows, if you’re developing AutoCAD add-ons. DOS has by far the greater market share, and with the Release 13 multiple OS license, every Release 13 user is potentially a DOS user.

Rule #4: Don’t name your product with a “13” in the title.

Rule #5: Do make sure your add-ons work with Release 13. This means you shouldn’t cut yourself out of any potential sales and may mean some more development effort for you. Make sure to keep compatibility with Release 12, and possibly earlier versions if you already have that support. There’s still a large untapped market among current users for most any add-on.

Rule #6: Don’t scramble in a mad rush to make Release 13 specific versions of your software. If you do, you may suffer a lack of sales due to slow acceptance of the “c0” release  of an AutoCAD release or as a result of “Upgrade Resistance”. Using new API technology like Rx might be attractive, but take your time and do it right. Don’t rush. The market will still be there a year from now, and probably a lot more ready for your R13-specific product.

Rule #7: If you ever go public, keep in mind that your target audience will no longer be your customers. Instead, it’ll be your stockholders. Stockholders can make your nastiest customer look angelic when your stock price starts dropping.

While Autodesk may tout Release 13 as “the most significant release of AutoCAD yet”, it’s difficult to know if they mean that in terms of hard disk space requirements or technology.

Either way, armed with the seven rules I’ve posed above, you should be able to more safely tackle the next major release of AutoCAD without loosing your shirt.